Opinion: What the Gangmasters Licensing Authority’s new remit means for retail

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Sports Direct has hit the headlines for what the Business, Innovation and Skills Committee described as “appalling working conditions and practices”.

It has been reported that the company’s workers had been paid below the national minimum wage and that there had been a series of accounts of worker mistreatment, including allegations of some workers being promised permanent contracts in exchange for sexual favours.

In response, the MPs called upon the Gangmasters Licensing Authority (GLA), a non-departmental public body which operates a licencing system in certain sectors (agriculture, food and drink processing and packaging and shellfish gathering) with the aim of protecting vulnerable and exploited workers, to look into employment practices at Sports Direct.

But it is not just Sports Direct that is going to cross paths with the GLA in the near future.

From October 2016, the retail sector will be subject to the gangmasters regime.

What is the gangmasters regime?

The gangmasters regime ensures that, in certain sectors, as outlined above, businesses who supply workers - such as labour providers and agencies - and businesses who need workers meet the employment standards that are required by law.

Labour suppliers, known as ‘gangmasters’, need to apply for an annual licence from the GLA - soon to be renamed the Gangmasters and Labour Abuse Authority - and to meet certain licensing standards including:

the licence holder, the person responsible for the day-to-day management of the business and any person named on the licence must at all times act in a ‘fit and proper’ manner;
workers must be paid at least the national minimum wage and must be able to take the rest periods, breaks and annual leave to which they are entitled;
workers must not be subjected to physical or mental mistreatment;
and the licence holder must keep appropriate records, for example to show that a worker is being paid the minimum wage.

It is illegal to act as a gangmaster without a licence and there is penalty of 10 years’ imprisonment and/or an unlimited fine for non-compliance.

In addition, businesses who obtain workers, such as agency staff, from labour suppliers must only use registered gangmasters. It is illegal to use an unlicensed gangmaster and the offence carries a maximum penalty of 51 weeks in prison and/or an unlimited fine.

What does this mean for the retail sector?

It is not yet clear whether businesses in the retail sector will be subject to the full gangmasters regime.

Given the large number of agencies supplying staff to the retail sector, it seems unlikely that every labour provider will have to obtain a gangmaster’s licence.

However, at the very least, we can expect the GLA’s investigative and enforcement powers to be expanded to allow a more flexible approach to preventing the abuse and exploitation of retail workers.

For businesses who already treat their staff in a lawful manner, the gangmasters regime will have little impact. For other businesses, the regime may cause more concern.