GLA and Marks & Spencer crack down on worker abuse and illegal working in London
1st June 2009
A GLA investigation supported by Marks & Spencer and Maple Leaf Bakery UK Ltd has uncovered shocking abuse by an Ilford gangmaster who supplied workers, some of whom were suspected as being illegal, to the French Croissant Company (a subsidiary of Maple Leaf Bakery UK Ltd). The licence of 1st Universal Services Ltd, the gangmaster business that supplied the workers has been revoked, after the company withdrew its appeal against the GLA decision.
The workers were preparing dough for croissants. They were found to be mostly males in their twenties and thirties and their documentation suggested they were from Somalia, Sweden, India and Eritrea. However checks the GLA made with partner agencies suggested that some were in fact illegal immigrants.
The GLA led inspection involving Marks & Spencer found:
Mr Waqar Naqvi the Director of 1st Universal Services Limited, failed to demonstrate any ability or knowledge to run the business and has been declared „not fit and proper‟ to hold a GLA licence
The contracts manager for 1st Universal Services Limited, who previously worked for S J Services (UK) Ltd who had already been revoked by the GLA, was found in reality to be running 1st Universal, and he too has now been declared as „not a fit and proper‟ person to hold a GLA licence
Workers were not paid the minimum wage, after checking timesheets against wages indications were that one worker received only £3.27 per hour. With others receiving £4.19 per hour, £4.95 per hour and £5.23 per hour. Numerous others workers reported that they received £5 per hour in cash
Workers who were due wages on a weekly basis were not paid on time, one worker had not been paid anything for almost a month
Payments were made in cash with no evidence that payslips were ever issued. A number of illegal workers had been employed, and many fabricated documents were found including National Insurance cards with handwritten numbers and letters, alongside unsigned false passports and expired visas Workers stated they had not received a contract and on closer examination contracts and other documents found on file appeared to have forged worker signatures.
The contracts seen on the workers files did not cover basic legal requirements such as statutory sick pay, notice periods or an undertaking to pay the workers, even if the client did not pay the business All workers interviewed stated that they were unaware of their holiday pay entitlement and none had been paid the correct amounts. They also stated they dare not take any time off for sickness as they would not receive anything. They were completely unaware about entitlement to Statutory Sick Pay. The French Croissant Company were found to be paying a low rate to the gangmaster which was almost 40 pence for each worker per hour less than the GLA indicative rate which at the time was £7.22. The GLA indicative rate does not include any profit for the gangmaster. It was also found that the French Croissant Company, despite having audited the gangmaster business themselves, and clearly identified problems, that had been left unresolved.
Paul Whitehouse, Chairman of the GLA said:
“This is a scandalous case of exploitation, with failures to follow basic employment law that cannot in any sense be considered mistakes. A tough approach is needed to deal with these crooks and we will not stop until we have dealt with all rogue gangmasters.
“If the gangmaster had paid their workers properly they would have made a financial loss as the French Croissant Company was not paying in accordance with the GLA‟s minimum advisory rate. The French Croissant Company therefore must share the blame.
“The GLA welcomes the help provided by Marks & Spencer. They helped to speed up the investigation and made sure that the situation was dealt with swiftly.”
M&S and its supplier, the French Croissant Company, fully supported the GLA with their investigation. Since uncovering the issues M&S and the French Croissant Company have worked together extensively to ensure this issue does not happen again - the French Croissant Company has undertaken a series of ethical audits and the completion of a comprehensive action plan, as well putting a new HR structure in place to ensure they are better equipped to deal any future issues. The French Croissant Company also stopped using First Universal, and is working with a new labour provider that has been audited by a credible third party as well as the GLA.
Paul Willgoss, Head of Technology at Marks & Spencer said:
“Marks & Spencer takes the welfare of all workers very seriously and this is the type of behaviour that we find totally unacceptable. We have worked closely with GLA not just on this investigation but since its inception to give clear guidance to labour users and providers on responsible behaviour, through both our conferences and regular communication with the supply base.
“When our supplier found out about these issues they reacted immediately and have invested heavily to ensure this does not happen again. They also stopped using the labour provider and have started working with a new provider who has been audited by the GLA.
“We expect all of our suppliers and their Labour providers to conform to our Code of Conduct, which clearly sets out the standards we demand – including worker health and safety, freedom of employment, hours of work and wages."
David Camp, Director of the Association of Labour Providers said:
"Labour users are responsible for what goes on in their fields and in their factories - they cannot abdicate this obligation. If a charge rate offered by a labour provider looks too good to be true, that's because it almost certainly is!
“Unrealistically low charge rates inevitably means either worker exploitation or tax evasion and probably means both. Labour users must pay a fair charge rate to labour providers that allows labour providers to meet their legal obligations with regard to pay, holidays and tax and enables them to earn a reasonable and sustainable operating margin. Charge rates have been cut too far and this encourages malpractice.
“Where labour users do not pay a reasonable charge rate they risk potential VAT penalties and face severe damage to their brand and reputation”.
The GLA has recently launched a consultation with suppliers in the food industry on an initiative to drive out exploitation issues in supply chains. All major supermarkets have agreed a protocol for action against worker abuse, and with the involvement of the retailers‟ supply base, this protocol represents a major step forward in stamping out exploitation of vulnerable workers.
The GLA currently licence 1,230 gangmasters and the GLA has uncovered worker exploitation and illegal activity that led to the revocation of 93 licences to date.
Notes to editors
1. The GLA indicative Rate of £7.22 for companies to pay gangmasters per worker per hour includes: Minimum Wage - £5.73, Employers National Insurance Contributions - £0.40, Statutory Sick Pay - £0.07, Annual holiday pay (4.8 weeks entitlement) - £0.62 and a overhead cost for the gangmaster - £0.40. The indicative rate does not include any profit for the gangmaster. This rate has now increased to £7.34 due to the increased Holiday Pay entitlement introduced in April 2009.
2. The full decision of the appeal by 1st Universal is available from the GLA press office.
3. The GLA stepped up its fight against those who abuse workers with the launch of Operation Ajax in June 2008. The operation was set up to increase the GLA‟s activities with an 18 month programme of unannounced raids.
4. The GLA has recently launched a consultation at the House of Lords on a protocol between the GLA and leading supermarkets to help combat labour exploitation in the UK. The consultation ends on 31 July 2009 and the GLA encourages everybody in the food supply chain to participate.. A copy of this protocol is available at www.gla.gov.uk
5. The Gangmasters Licensing Authority was set up to curb the exploitation of workers in the agriculture, horticulture, shellfish gathering and associated processing and packaging industries. It was set up following the death of 23 Chinese cockle pickers in Morecambe Bay in 2004. The majority of workers involved in these industries come from countries such as: Romania, Poland, Slovakia, Hungary, Bulgaria, Lithuania, Latvia, India Pakistan and Portugal.
6. There are currently 1230 gangmasters licensed by the GLA
7. A gangmaster is an individual or business who:
supplies labour to agriculture, horticulture, shellfish gathering and food processing and packaging
uses labour to provide a service in the regulated sector, eg harvesting or gathering agricultural produce
uses labour to gather shellfish
To be granted a GLA licence all businesses must meet the GLA licensing standards and the principle authority of the business must meet "Fit or Proper‟ person criteria. Cross government checks are made on all licence applications.
8. Paul Whitehouse, Chairman of the GLA is available for interview.
GLA Media enquiries: 0115 900 8963 Out of hours
Press Office contact: 07825 797130
Marks and Spencer Press contact: Liz Williams - 020 8718 6369