The first annual strategy report from the new Director of Labour Market Enforcement, Sir David Metcalfe, which includes a proposal for the Employment Agency Standards (EAS) Inspectorate to expand its remit to cover Umbrella Companies, has drawn broadly favourable responses from the Confederation of British Industry (CBI) and the Freelancer and Contractor Services Association (FCSA).
The CBI’s UK Director of Policy, Matthew Fell, commended the report for “striking a good balance” in its proposals for more investment in helping companies understand their legal obligations, which he said “should always be the first step to ensuring high compliance, and it is right that firms who flout the law are punished.”
However, on the issue of asking the EAS Inspectorate to regulate Umbrella Companies and other employment intermediaries, he emphasised that implementation was the core consideration: concerns remain over the Inspectorate’s ability to enforce agency workers regulations alongside an additional new duty for including Umbrella Company compliance in its scope.
Julia Kermode, CEO of the FCSA (Britain’s largest trade association for Umbrella Companies) applauded Sir David’s inclusion of many of the proposals the FCSA itself had suggested to eradicate unethical working practices in the UK. The FCSA, she said, had been “very proactive” in building its relationship with Directorate of Labour Market Enforcement team and was “delighted” that it had taken heed of the association’s advice.
Singling out the Directorate’s proposals for tackling non-compliance within the supply chain for particular praise, Kermode endorsed the plan to place joint responsibility on end clients and their suppliers to instil good working practices and ensure that no workers were being exploited. Applauding Sir David’s promise to punish unscrupulous employers who undercut businesses as “a very significant and positive move” toward creating a genuinely fairer environment for compliant businesses. She noted that, previously, the government had merely paid lip-service to dealing with this issue and simply ignored the FCSA’s warnings about the serious consequences of rogue firms exploiting loopholes in the system. She added, “Today we have been heard.”
Welcoming the proposal for the EAS Inspectorate to extend their regulatory powers to Umbrella Companies and other intermediaries, Kermode said:
“FCSA has long campaigned for such regulation so that we can drive out the unscrupulous firms which have tarnished the reputation of the sector. Without regulation, we will not rid our industry of rogue businesses so it needs to be tackled head-on and as a matter of urgency to allow the great many compliant intermediary businesses that provide a valued and professional service to all parties in the supply chain to thrive unhindered.”