Labour's 'New Deal for Working People': A more powerful enforcement body to govern staffing companies and platforms?
Published on 1st Jul 2024
Our third report considers how staffing companies and platforms can prepare for a super-regulator
The long-awaited merger of the Employment Agencies Standards Inspectorate (EASI), the National Minimum Wage (NMW) team within HMRC, and the Gangmasters and Labour Abuse Authority (GLAA) seems likely to happen – Labour have announced the need for super-regulators and this may be one of them. There will be a process to go through including clarification of the new powers of the merged entity. That may require primary legislation (by way of amendment to the Employment Agencies Act 1973 and legislation relating to NMW and gangmasters) so this merger may not happen immediately, but we believe it will happen as soon as practicably possible.
The key questions for users and suppliers of contingent workers will be, first, whether the relatively more interventionist approach of the GLAA or the more collaborative approach of EASI will become the dominant culture of the new body, secondly whether the body will be given wider powers, and thirdly whether it will have greater resources (EASI in particular having had very limited resources at certain stages in the last decade).
New powers?
Wider powers could include powers to name and shame or even take enforcement action in relation to not just NMW breaches but also failure to pay holiday pay (such as for agency workers who have worked a short assignment and then left without claiming accrued holiday) or comply with the Agency Workers Regulations (AWR). That sort of extra power would probably require primary legislation and so it may be a year or so before it applies.
This body may also become the regulator for umbrella companies and (perhaps) EORs, and may have specific powers relating to them, although probably not in relation to tax compliance which would likely remain with HMRC, albeit the enforcement body may take an interest in tax structures and pass information on to HMRC, similar to how the GLAA currently works with HMRC.
What about compliance by people platforms and staffing platforms?
It may also likely take more action against platform models, some of which may be deemed to involve technical breaches of current recruitment law. We are advising on three separate investigations into gig worker platforms by EASI at the moment and have advised on seven others in recent years. EASI has, in our experience, generally acted reasonably and collaboratively in trying to find a way forward for the platforms which allows the platforms to continue trading, sometimes with grace periods applying whilst changes are made. It is unclear if that approach will continue. In any event it seems that EASI will have far more resource to investigate a wider range of intermediaries.
Preparing for the new enforcement body
Enforcement activity will be better resourced and more widespread and the new regulator may be far more activist relating to gig platforms.
In our view this, among other things, means platforms may need to start tightening up their commercial models in relation to checks on workers, their payment agency role and any charges they make to workers. They may also need to consider how their models might be restructured to be more sure of falling outside the relevant regulatory regimes without losing their competitiveness. This will take some planning and so it would be wise to carry out a review now, rather than have to make the changes in a hurry, at some commercial risk.
Users and suppliers of agency workers and gig workers should keep an eye out for announcements about enforcement of holiday pay rights and AWR, and the regulator's powers relating to umbrellas and potentially EORs.
What to do next
Let us know if you would like to discuss which types of worker this will apply to and the detailed actions you will need to take to minimise risks.
Our series of reports
Read our other reports covering further aspects of Labour's plans:
Report one: the right to predictable hours
Report two: further crackdown on 'dodgy' umbrella arrangements and increased IR35 enforcement
