Following the Morecambe disaster which happened over 10 years ago, gangmasters licenses have been a prominent issue and the law around them developed rapidly to help protect vulnerable workers prone to exploitation.
But have you been wondering whether your recruitment agency need a gangmasters license, or what a gangmasters license actually is? In this article we will explain when a gangmasters license is required, which entities in the contractual chain should have one, and what happens if you break the law.
Who Needs a Gangmasters License?
You need a gangmasters license if you are a labour provider who supplies workers to the following sectors or to do any of the activities set out below:
- Shellfish gathering,
- Any associated processing and packaging of any product derived from agriculture, fish, or shellfish.
A license is needed for any work carried out in the UK, even if the business is located overseas.
A 'worker' includes a:
- Agency/temporary worker
- Permanent worker
- Self-employed person
- Family member
- Voluntary worker
Any individual or business needs a license if they supply a worker to a labour user to carry out the work in the sectors outlined above. 'Supply' has a wide meaning, and includes:
- Supplying temporary workers,
- Introducing candidates for direct employment or providing permanent recruitment services,
- Introducing a worker in any way to a labour use, not matter how informal the arrangement,
- Sourcing candidates and forwarding details onto another labour provider or labour user to do work in the sectors set out above. This includes screening CVs or completed application forms.
- Any kind of screening of candidates for work in the aforementioned sectors, regardless of whether the end client employs the worker.
Supply also covers the entire process of agreeing the provision of a worker and the duration of the arrangement taking place.
Given the definitions set out above, both an employment agency and an employment business operating within the sectors outlined above would need to apply for a license. Managed service companies, master vendors and neutral vendors also need to be licensed if operating in the areas.
Payroll companies need to be licensed unless the payroll company only administers payroll for a labour provider and does not have any contractual relationship with the worker, in which case it does not need to be licensed. Similarly, umbrella companies should be licensed if they operate in the sectors mentioned previously.
A license is only granted to legal entities, and only cover one business. Therefore, any individual companies within a group company would need to have individual licenses.
Application for a License
If you are caught by the definitions set out above, you need to apply for a gangmasters license. The Gangmasters and Labour Abuse Authority ('GLAA') is responsible for both the licensing of gangmasters and ensuring that licensed gangmasters comply with their obligations.
Once you have made an application, you will be assessed by the GLAA to make sure you meet the GLAA licensing standards, which cover health and safety, accommodation, pay, transport and training. The GLAA will also check that tax, NICs and VAT regulations are met.
The GLAA will gather intelligence, conduct unannounced inspections and work with other government departments and enforcement agencies before making a decision on the license application. You may be asked to give details of current contracts with labour users and their premises may also be inspected. You may also be required to provide documentary evidence such as wage books and worker's terms and conditions.
Once the GLAA carries out their assessment they will make a decision on whether to grant the license. The license may have Additional License Conditions which will need to be corrected within an agreed time or you may lose your license.
It is possible for a license to be revoked, and in certain cases this may happen with immediate effect which means the business must stop operating in the regulated sectors.
There are certain exclusions where a license is not required (these are set out in the Gangmasters Licensing (Exclusions) Regulations 2013 and its NI equivalent). Some exclusions are:
- Apprentice Training Agencies,
- Back to work programmes,
- Company groups,
- Chick sexing,
- Where a worker processes or packs produce supplied to a catering establishment, a shop or other retail establishment, a wholesale market, a wholesale establishment or a distribution warehouse,
- Gathering shellfish via a fishing vessel,
- Forestry sector,
- Skilled workers.
Please note that this is not an exhaustive list and there are many more exclusions. You should contact the GLAA if you want any further information.
Offences and Punishment
Anyone who operates as a gangmaster without a license and does not come within an exclusion will be committing a criminal offence.
The Gangmasters (Licensing) Act 2004 sets out four individual offences:
- Acting as a gangmaster without a license,
- Possessing a document which is either false, improperly obtained or belonging to someone else, with the intention of inducing another person to believe that a person acting as a gangmaster is licensed,
- Using an unlicensed gangmaster,
- Obstructing a GLAA officer in the course of their duties. It is also an offence to fail to comply (without reasonable cause) with any requirement made by a GLAA officer.
The maximum penalty for offences 1) and 2) is up to 10 years imprisonment and/or a fine. The maximum penalty for offences 3) and 4) is 6 months in prison and/or a fine.
The Immigration Act 2016 introduced Labour Market Enforcement Undertakings and Labour Market Enforcement Orders which can be used as an alternative or additional sanction for breaches of labour market legislation.
Gangmasters licenses can be a difficult area to navigate and the punishment for non-compliance is serious. For more information on gangmasters licenses please go to www.gla.gov.uk, contact the GLAA directly or seek independent legal advice.