The UK government recently announced that it is to set up a Single Enforcement Body (SEB) to protect workers, guard against modern slavery and enforce minimum wage. The department will effectively be an umbrella, merging three outdated groups into one; The Gangmasters and Labour Abuse Authority, EAS and HMRC’s National Minimum Wage enforcement department.
This new department marks the first tentative steps towards regulating the currently unregulated umbrella industry, noted for its complexity due to its crossover between tax and employment law, and often subject to exploitation by non-compliant companies.
Regulation is welcomed on all sides, to crack down on providers who are flouting the rules and exploiting workers, all of whom damage the reputation of the industry.
But the announcement has been criticised by many in the sector for having an unspecified timeline and being vague on the details. The report simply stated that the body “…will be established through primary legislation when parliamentary time allows” which doesn’t seem to reflect the need for urgency, despite many in the industry recognising that regulation is long overdue.
Any regulation designed to protect workers can’t come a moment too soon, especially with the effects of the pandemic leaving many people struggling.
Last month, the government started its new policy of naming and shaming employers who failed in their responsibility of paying the national minimum wage to workers.
The named firms have been demanded to pay 34,000 workers the £2.1 million they should have received between 2011 and 2018, as well as pay fines of an additional £3.2 million.
The published list contains many household names (many of which will likely raise a few eyebrows) and proves that the government is taking non-compliance of NMW seriously. “Employers that short-change workers won’t get off lightly,” says Business Minister Paul Scully.
While the government made it clear that not all underpayments were intentional, it also reiterates that it is the responsibility of all employers to ensure that their minimum wage responsibilities are met. This includes paying workers for all hours worked, correctly making deductions for uniform and expenses, and paying the correct rates for apprenticeships.
Sadly, the lack of regulation of the payroll industry as well as the increase in the gig economy has increased the number of non-compliant providers looking to exploit workers and promote unethical “solutions” to the temporary labour market.
But how do you ensure that you and your workers are protected? There are a number of ways to spot a non-compliant company:
Look at the take home pay. Many dodgy schemes will advertise rates as high as 90% retention, which usually signal an offshore business. Using these can lead to HMRC trouble for agencies as well as contractors themselves. Also avoid any company that uses a loan scheme to pay contractors, this is not how people should be paid!
Look for accreditation. Accreditation can provide peace of mind that companies are operating compliantly and are paying the right amount to workers according to local laws.
Look at where the company is based. Non-compliant companies are often located in known tax havens, such as the Isle of Man, the Channel Islands or the Cayman Islands. Companies who are based in the country where your contractors work are more likely to be compliant.
JMK are committed to providing effective and compliant payroll solutions, talk to us today about how we can help you achieve your business goals.
Since 2002, JMK have been compliantly consolidating back-office, accountancy and payroll functions.
We have evolved to provide a range of expert services; such as Professional Employer Organisation (PEO), or Back Office Support (BOS) or Funding, becoming a leading provider to the contracting industry.
We know every agency is different in some shape or form, even if only by a little, but important bit. Combining our knowledge and experience of multiple sectors enables JMK to support you all from recruiters and payroll, through to finance, compliance and management.
With JMK as your trusted partner, even the smallest team can process the largest payroll, regardless of payroll type.
Have a look at the wide range of services our Professional Employer Organisation (PEO) or Back Office Support (BOS) can provide to you and your business, it is far more than just payroll and finance.