15 May 2018

The government has published the UK Labour Market Enforcement Strategy 2018-2019 which sets out recommendations to strengthen state-led enforcement of employment rights which include:

  • HMRC enforcing holiday pay and recovering holiday pay arrears.
  • Making it law that employers provide a statement of rights for employees within week one of employment starting, using a government-provided template.
  • Making it law that a payslip is provided for all workers and, for hourly paid workers, payslips should include the total hours worked and the hourly rate of pay.
  • Introducing licensing for nail bars and hand car washes, identified as sectors at risk of labour exploitation.
  • Tackle ‘phoenixing’ where directors dissolve companies to avoid paying workers tribunal awards and other enforcement penalties.
  • Higher financial penalties and more prosecutions for employers who exploit their workers.

Nail bars have been targeted because intelligence gathered by the authorities suggests that organised crime groups are exploiting workers with threats, debt bondage and withholding travel documents to control workers.  The strategy therefore recommends that the Gangmasters and Labour Abuse Authority pilots a licensing scheme for nail bar businesses on a limited geographical basis.  As legislation to allow this to happen would be needed before any trials could start, a voluntary accreditation scheme could be developed in the meantime.

Almost one in five hairdressing apprentices were underpaid in 2017 so it is not surprising that the strategy also notes that, because of their past record of failing to pay the correct rates for the National Minimum Wage / National Living Wage, hairdressing and barbering businesses will continue to be actively targeted by enforcement bodies. 

Hilary Hall, NHBF chief executive said:

“We handle 25,000 calls a year and the top reason for those calls is employers struggling to calculate holiday pay accurately because part-time working is common and hours are often irregular and change frequently.  Employers also need to be sure that holiday pay reflects what an employee would normally have earned if they had been at work, including bonuses and commissions. If these proposals are adopted, HMRC will be enforcing holiday pay in the same way that they currently enforce NMW/NLW.  On a more positive note, HMRC are being encouraged to be more supportive when businesses ask for advice.” 

Hilary added, “The NHBF has always stressed the importance of having legally drawn up contracts of employment plus a handbook for all employees, including apprentices, so employers and employees both know exactly where they stand right from the outset.  In a climate of increasingly tough enforcement, having the right processes and documents in place will be essential if salons want to avoid big fines and public naming and shaming.”