Compliant not complacent, it’s time to check your contract & temporary staff

Guest blog from Julia Kermode, chief executive of the Freelancer and Contractor Services Association (FCSA)

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Sports Direct, Deliveroo and Hermes are just three companies that have been hitting the headlines recently and not for the right reasons.  The spotlight has been on their poor employment practices with Sports Direct facing intense scrutiny from MPs who accused the company of providing “Victorian workhouse conditions” and treating staff like commodities rather than human beings.

In one shocking case a pregnant employee went to work during labour, afraid of losing future work if she took a day off.  She gave birth in a toilet.  Thankfully, such occurrences are a rarity, and following all the media coverage Sports Direct will now be forced to take action to improve its practices.  In the cases of Deliveroo and Hermes, these companies have been taken to task for allegedly not paying their staff the minimum wage – their drivers are self-employed basis paid on a commission basis leading to a very low income for the workforce.

There have also been reports from zero-hour employees exposing working practices including at a leading sports venue:

  • surplus staff being sent home without pay
  • long security check-in procedures meaning 45 minutes unpaid before and after shifts
  • mobile phones and personal items locked away for duration of shifts
  • staff subject to inappropriate “banter” unable to complain for fear of losing future work

Controversially, I don’t believe that it is the much maligned zero hour contracts are at fault in these cases, it is the corporate culture and working practices of such companies.  I was recently on BBC Radio 4’s Moneybox programme discussing the modern workplace, and I heard first hand from both employers and employees who opt to work on zero hour contracts because they provide them with the flexibility they want and, in the case of one charity, it was essential for its operation. .  I heard evidence that zero hour contracts can be positive if conducted properly, preferably as an informed choice for both parties, and with non-exploitative working practices.   Which brings me to Uber.

Currently, Uber is facing a tribunal case as its “driver partners” believe they are workers and not self-employed due to the amount of control exerted over their work by Uber.  If the courts find in their favour, this means that Uber drivers will be entitled to significant worker benefits including minimum wage, holiday pay and other statutory benefits as well as protection rights.  It will also open the flood gates for many similar cases.  It is interesting to note that Deliveroo’s supplier contracts include a clause that prevents delivery cyclists from going to an employment tribunal if they are unhappy with their status.  Lawyers are unconvinced that the clause is enforceable, and may be designed to put people off taking up a case.

And it’s not just the contracts of employment, whether zero hours, employed or self-employed that are in the news.  In July, we saw Byron Burgers in trouble for hiring illegal migrant workers which could have cost the firm £700,000 in fines if they hadn’t colluded in a Home Office sting to catch the workers.  The burger chain had undertaken the correct right to work checks, but had been shown counterfeit documentation.  So even if you believe you are operating compliantly, it is all too easy to end up at risk of significant penalties.

So why am I pointing out all of these stories?  Well I started wondering about best employment practices and how these can easily become a lower priority when faced with an urgent need for temporary workers.  In this situation, the role of recruitment agencies is key, and they do a lot of work on your behalf to minimise your risk and ensure compliance.  As employers you stand or fall by your reputation so it is vital for that to be protected – the potential for your reputation to be damaged irreparably if you get caught up in an exposé that hits the headlines could be disastrous. This means that you should not need persuading on the importance of compliancy over complacency.

Employers and HR Directors should consider how they assure themselves that employment practices are appropriate throughout the whole supply chain.  Large firms that outsource some business functions could be forgiven for thinking that they are unaffected by the practices of their supplier, however that is not the case.  I know of a current case involving a well-known high street retailer that outsources distribution to a firm which in turn uses large numbers of temporary workers, and employment practices regarding the temps have come into question.  If mainstream media become aware of the situation no doubt the high street retailer will be the focus of their attention as well as the distribution firm.

Good employment practice is essential throughout the whole recruitment supply chain.  And for any companies out there which are complacent then perhaps they will reconsider given these facts about the Sports Direct case:

  • It will cost £1m in back-pay for its staff that earned below minimum wage
  • Its staff turnover rate is a costly 22%, almost 3 times the UK average
  • Sports Direct has issued 3 profit warnings in the last year
  • The value of Sports Direct shares have lost almost half their value this year
  • Large shareholders in Sports Direct are considering voting against the reappointment of the company’s chairman and other directors at the AGM

The message is clear – we must all shun complacency over compliancy if we don’t want our names to be splashed all over the news and suffer the fallout that ensues.

Author: Editorial Team

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