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Big Companies Could be Fined for Failings within Their Supply Chains

Written by: Keith Tully

Published: 25th July 2017

woman workingBig companies could soon find themselves being fined for failings in relation to labour laws identified at businesses within their supply chains.

Plans to that effect are being prepared by the UK’s new employment enforcement tsar Sir David Metcalf, who is aiming to crack down on a variety of labour law abuses.

Particular areas of focus for Sir David are expected to be issues within the retailing and construction sectors, and violations of minimum wage laws.  

Speaking to the Financial Times, Sir David explained that industry giants could soon find themselves facing fines and legal proceedings if their suppliers are found to have been involved in any wrongdoing.

The hope is that by bringing major industry players into the frame in relation to supply chain abuses, illegal or problematic practices will become less and less commonplace and widespread.

“It may be that you get the household names – the Sainsbury’s or the Balfour Beattys, as it were – to organise certification of their supply chain,” he explained.

“In other countries for example, in Australia and in Belgium, they have what’s called joint liability. So the household name could in principle become jointly liable for the non-compliance further down the supply chain.”

Sir David was appointed as the government’s first director of labour market enforcement in January of this year and assigned the task of identifying sectors and regions vulnerable to labour law violations and informing of the most effective responses.

He is responsible for setting the priorities of HMRC’s National Minimum Wage enforcement team, as well as the Employment Agency Standards Inspectorate and the Gang masters and Labour Abuse Authority.

Explaining his plans, Sir David said that his intended enforcement model would see larger companies informed by HMRC of wrongdoing by suppliers and given a chance to clamp down on any unlawful practices before they were then held partially responsible and fined.

“You give them the chance to go to the sub-contractor and say, ‘get your act together or we’ll get rid of you’, but if for some reason that doesn’t happen they can be jointly liable,” he explained in conversation.

Keith Tully

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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