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  • International Workplace
  • 17 April 2018
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Calls for employers to be made liable for abuses in UK supply chains

The TUC has called on the government to give UK supply-chain workers the right to challenge their parent employer over minimum wage and holiday pay abuses.

A new TUC report estimates that five million UK workers cannot enforce their basic rights with their ‘parent company’:

  • 3.3 million are employed through outsourced companies.
  • 615,000 are employed by franchise businesses.
  • At least one million are employed by recruitment agencies, umbrella companies and personal service companies.

The TUC says that unless joint liability is extended to parent employers, many supply chain workers will remain at risk of being cheated out of holiday pay and the national minimum wage.

Minimum wage

The Low Pay Commission estimates that as many as 580,000 workers do not receive the legal minimum.

However, under the current law a fast food worker at a McDonalds’ franchise couldn’t bring a claim against McDonalds’ HQ if they were paid less than the national minimum wage.

The same applies for other supply chain workers.

Holiday pay

The TUC report reveals that two million UK workers missed out on £1.6bn of holiday pay entitlements last year.

However, a hospital cleaner working for an outsourced company in the health service couldn’t bring a claim against an NHS trust if they weren’t given their correct holiday pay.

The same applies for other supply chain workers.

New laws

The TUC wants joint liability laws extended so that workers can bring a claim for unpaid wages and holiday pay against any contractor in the supply chain above them.

This would be similar to countries like Australia where Fair Work laws extend liability to franchisors like McDonalds.

The TUC’s call comes as the government’s new labour market tsar, Sir David Metcalf, prepares to publish his first report.

TUC General Secretary, Frances O’Grady, said:

“This is an issue that affects millions, from fast food workers to people working on building sites. Employers have a duty of care to workers in their supply chains. They shouldn't be allowed to wash their hands of their responsibilities.

“Joint liability must be extended to parent employers. Without it they can shrug their shoulders over minimum wage and holiday pay abuses. Our labour enforcement laws urgently need beefing up. We look forward to raising this with Sir David Metcalf.”

A copy of the report can be found at: https://www.tuc.org.uk/sites/default/files/Shifting%20the%20risk.pdf