TUC calls for employers to be made liable for abuses in UK supply chains

By agency reporter
April 3, 2018

The TUC has called on the government to give UK supply-chain workers the right to challenge their parent employer over minimum wage and holiday pay abuses.

A new TUC report estimates that five million UK workers cannot enforce their basic rights with their ‘parent company’:

  • 3.3 million are employed through outsourced companies
  • 615,000 are employed by franchise businesses
  • At least one million are employed by recruitment agencies, umbrella companies and personal service companies

The TUC says that unless joint liability is extended to parent employers many supply chain workers will remain at risk of being cheated out of holiday pay and the national minimum wage.

Minimum wage

The Low Pay Commission estimates that as many as 580,000 workers do not receive the legal minimum.

However, under the current law a fast food worker at a McDonalds’ franchise could not bring a claim against McDonalds’ HQ if they were paid less than the national minimum wage.

The same applies for other supply chain workers.

Holiday pay

The TUC report reveals that two million UK workers missed out on £1.6 billion of holiday pay entitlements last year.

However, a hospital cleaner working for an outsourced company in the health service could not bring a claim against an NHS trust if they were not given their correct holiday pay.

The same applies for other supply chain workers.

New laws

The TUC wants joint liability laws extended so that workers can bring a claim for unpaid wages and holiday pay against any contractor in the supply chain above them.

This would be similar to countries like Australia where Fair Work laws extend liability to franchisors like McDonalds.

The TUC’s call comes as the government’s new labour market tsar Sir David Metcalf prepares to publish his first report.

TUC General Secretary Frances O’Grady said, “This is an issue that affects millions, from fast food workers to people working on building sites.

“Employers have a duty of care to workers in their supply chains. They shouldn't be allowed to wash their hands of their responsibilities.

“Joint liability must be extended to parent employers. Without it they can shrug their shoulders over minimum wage and holiday pay abuses.

“Our labour enforcement laws urgently need beefing up. We look forward to raising this with Sir David Metcalf.”

The TUC believes there are many reasons for establishing a system of joint and several liability:

  • Organisations should take greater responsibility for the people that do work for them
  • Joint liability opens up multiple avenues for a worker to seek compensation
  • Joint liability ensures that where a company goes insolvent, in phoenix cases or where the employer disappears, workers still have a course of action to enforce their rights
  • Widened liability would make contractors more diligent and careful in choosing their subcontractors
  • Widened liability would strongly incentivise the lead contractor to risk assess and tackle potential breaches of employment standards in their supply chains
  • Joint liability incentivises the creation of more secure, permanent employment, as less contractors are willing to take the risk of working with subcontractors who might create liabilities for them.

* Read the TUC report Shifting the risk: Countering business strategies that reduce their responsibility to workers - improving enforcement of employment rights here

* TUC https://www.tuc.org.uk/

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