Should bad bosses fear Sir David Metcalfe's proposed labour market crackdown?

The head of Labour Market Enforcement has put forward some good ideas but they're in the gift of ministers in a do nothing government

Low wage workers were underpaid by £3.1bn in 2016 (Getty)

Should Britain’s bad bosses fear Sir David Metcalf?

The head of the Government’s Labour Market Enforcement has put out a report that aims to tackle the daily injustices and exploitation that are a depressing feature of the British labour market.

With an estimated 342,000 workers paid less than they are entitled to under the minimum wage as just your starter for ten, it shouldn’t surprise anyone that it’s a biggie. The executive summary alone runs to 16 pages and contains 37 recommendations. The full document clocks in at just over 140. That’s some heavy reading for ministers and their civil servants.

Some of its reform proposals should prompt more than just a shudder from certain employers, the most obvious being the proposal to make companies jointly responsible for what happens in their supply chain.

What this would mean if adopted is that a burger company using a franchise model would be held jointly responsible for any cheating on the minimum wage by franchise operators. A contractor would be on the hook for sub contractors' flouting of the law. A retailer using staff from an employment agency would be in the same position.

This is a bold recommendation that will provoke howls of outrage in certain quarters, but it's a very good one. Scandals over practices at big name companies such as Sports Direct and collapsed contractor Carillion may be just the tip of a very big iceberg. It also shows that Sir David has been willing to listen to bodies such as the TUC, which put forward the idea in a report of its own, and it's far from the only good thing in the report.

A startling fact that it highlights is that there is no state agency charged with overseeing and enforcing holiday pay regulations.

Sir David cites research suggesting workers were paid £3.1bn less than they should have been in 2016. Let’s put it more simply than that: the money was stolen from them. Over half of this “wage theft” is accounted for by holiday pay.

The solution? Give HM Revenue & Customs or another agency the job of enforcing the rules and chasing up arrears. Sir David was cute enough to note that the exchequer is losing out here too (holiday pay is taxed) so perhaps the Chancellor might like to put in a word if there’s any attempt to water down that proposal.

And there’s more: A recommendation that every worker should be given information on their legal rights and receive a payslip. A call for bad bosses to face significantly higher civil penalties. There’s no recommendation on how much higher, but there is a hint with a reference to the Health & Safety Executive’s turnover linked penalties that can hit £10m plus.

Of course, a report of this size is always going to be a bit of a curate’s egg. There are two main weaknesses with this one, and they are significant.

The first is that while it proposes more resources for the Employment Agency Standards Inspectorate, which has just nine inspectors covering 18,000 agencies, it doesn’t call for more for either HMRC or the Gangmasters & Labour Abuse Authority. It is true that they’ve seen their funding upped to £33m from around £25m but it is very clear that still more is needed. Those two numbers - 342,000 workers and £3.1bn stolen from them - ram home the point.

More important still is the fact that the report only makes recommendations. It is in the gift of ministers as to whether they get enacted, ministers from a government that has a record of favouring talk over action.

Sir David really ought to have argued for more powers for himself.