Manifesto mania: NMW enforcement not a job for the Home Office

So, we’ve had the Labour manifesto. And the Labour manifesto for Work, the Labour manifesto for Women, the Labour manifesto for Young People, and the Labour manifesto for Black and Ethnic Minority communities. I imagine before 7 May we’ll have the Labour manifesto for Dog Owners, and the Labour manifesto for People Who Listen to the Archers. But today it seems we will get the Labour manifesto for Home Office officials.

According to a report in the Guardian, the main feature of this will be a new “Home Office investigative unit” to target “the illegal exploitation of migrant workers”. This will consist of a “team of more [than] 100 police officers and specialists from the Gangmasters Licensing Authority”, who will be given “new powers to stop the abuse of workers and increase the prosecutions and fines of employers who breach employment laws”.

It’s far from clear how much this new unit will cost, but the Guardian reports “it will be paid for by levying a charge on non-visa visitors to the UK which is expected to raise £55 million”. And the unit will have “one overriding duty”:

To stop the abuse that makes the working families of Britain poorer. This new unit will have the powers and funding it needs to increase the prosecutions and convictions of Britain’s worst employers: those who exploit workers and drag down the wages of everyone else.

All of which glosses over the fact that we already have not one but four public bodies (or units) with much the same overriding duty: the aforementioned Gangmasters Licensing Authority, the national minimum wage (NMW) enforcement unit of HMRC, the BIS Employment Agency Standards Inspectorate (EAS), and the working time directive unit at the Health & Safety Executive. And, to access one or more of these bodies, you have to contact a fifth: Acas.

All of these bodies/units are severely underfunded: HMRC currently gets just £12 million a year to enforce the NMW, the GLA just under £3 million, and the EAS is about five people. And, if you were a government minister with a blank sheet of paper and some £15 million to spend on ‘tackling Britain’s worst employers’, you wouldn’t design a system with four (or five) separate bodies or units. You might, as Vince Cable suggested last year, create a Workers’ Rights Agency (or, say, a Fair Employment Agency), with “the powers and funding it needs” to tackle Britain’s worst employers. (Sadly, that suggestion hasn’t got much further than the inside of Dr Cable’s head, but at least he and the Lib Dems are thinking on the right lines).

So, if you are a new minister on 8 May, charged with the same remit, and have as much as a further £55 million to spend, you really shouldn’t create yet another public body (or unit). And YOU CERTAINLY SHOULDN’T PUT IT IN THE FUCKING HOME OFFICE.

headdesk

[Postscript: here’s the Labour press release on Miliband’s speech]

 

The penalty spot miss that should go to the Court of Appeal

Customarily, the dawn of a new year is a time for looking forward, to what the future might bring. But, employment law-wise, 2015 looks so bleak that I’m going to kick the Hard Labour year off by looking back, to the Enterprise & Regulatory Reform Act 2013 and its creation of a power for employment judges to impose a financial penalty of up to £5,000 on employers found to have breached a worker’s rights in a way that “has one or more aggravating features.”

First mooted in the January 2011 BIS consultation on ‘resolving workplace disputes’, the penalty regime was presented as a key plank of the Enterprise & Regulatory Reform Bill unveiled by Vince Cable in May 2012. However, unloved both by the employer bodies and by the trade unions, the then clause 13 was the subject of some debate at the Bill’s Commons Committee Stage in July, and also at Report Stage in October, by which time it had become clause 14 (it would go on to become section 16 of the 2013 Act).

During the latter debate, Jo Swinson, who had replaced fellow Liberal Democrat Norman Lamb as BIS employment relations minister just a few weeks previously, told MPs:

“When we first proposed the introduction of [the financial penalty regime], we had thought to make the imposition of the penalty automatic when there was a finding in favour of the claimant, but we listened to the concerns expressed by business during the resolving workplace disputes consultation last year and revised our proposals to give the tribunal discretion to decide when a penalty was appropriate. Good employers—those who try to do right by their employees—have nothing to fear, regardless of their size. A genuine mistake will not be grounds for the imposition of a penalty. However, those businesses which the tribunal considers have acted deliberately or maliciously will rightly, I believe, face the prospect of a financial penalty. They will no longer be able to gain a competitive advantage over businesses that abide by their obligations.

This is not some kind of revenue-raising scheme; it is about ensuring that the right incentive structure is in place by creating a further penalty for businesses that deliberately flout the law. That will incentivise the right kind of behaviour. That will be fairer on the vast majority of businesses that are good employers and that should not lose out to those employers that gain some kind of advantage by treating their employees badly.

Although they make up a small portion, there are clearly too many employers who do not comply properly with their obligations. I think that it is quite right that we send a clear signal and make it clear that those employers can expect to face a bigger consequence at a tribunal than those well-intentioned employers who try to do the right thing but fall foul of the law because of an error—after all, we are all human.”

We are indeed – even those of us who are government ministers prone to make grandiose claims for their draft legislation. And it is fortunate for Ms Swinson and her Coalition colleagues in HM Treasury that section 16 of the 2013 Act was not ‘some kind of revenue-raising scheme’. Because, in reply to a written question by shadow BIS minister Ian Murray, Ms Swinson has just revealed that the number of financial penalties imposed since the regime came into force on 6 April 2014 is … none.

Yep, nine months, and not a single section 16 penalty. Nada. Zip. Rien.

Which could be good news, of course. Maybe the financial penalty regime has so incentivised the right kind of behaviour that there are no longer any businesses deliberately flouting the law to gain some kind of advantage over their law-abiding competitors. Rejoice!

However, I doubt even Ms Swinson would claim that is what has happened. I imagine the Minister might try to suggest that the fault lies with the employment judiciary, for failing to take up the tool so cleverly crafted for them by Vince Cable, Ed Davey and Norman Lamb. But it seems unlikely that a judiciary so often criticised (mostly by employer bodies) for an alleged lack of consistency would have acted quite so … well, consistently.

A far more likely explanation, it seems to me, is that the hefty, upfront tribunal fees introduced by the Ministry of Injustice in July 2013 have eradicated exactly the kind of tribunal claim that Cable, Davey and Lamb evidently had in mind when they came up with the section 16 penalty regime: a relatively low value claim (because the claimant is or was low paid) against a deliberately exploitative employer. For why would a vulnerable, low paid worker subjected to ‘wage theft’ of a few hundred pounds gamble up to£390 on trying to extract the unpaid wages or holiday pay from their rogue (former) employer?

Which means that the deliberately exploitative employers supposedly targeted by section 16 of the 2013 Act are able to break the law with near impunity. And that is something that really ought to be of concern not just to Dr Cable and Ms Swinson, but to the Court of Appeal when it hears UNISON’s appeal against the High Court’s dismissal of its two applications for judicial review of the fees regime.

(As an afterthought, it is worth noting that, during those two Commons debates in July and October 2012, Norman Lamb and then Jo Swinson firmly resisted amendments tabled by shadow BIS ministers that would have reworked the unloved s16 penalty regime to focus it on those employers who fail to pay a tribunal award. Having belatedly seen the light on that long-standing issue, Ms Swinson has sought to make amends by including provisions to establish a parallel penalty regime to exactly that effect in the Small Business, Enterprise & Employment Bill, currently in the House of Lords.)