Gangmasters (Licensing) Act 2004 - Licensing

Licensing

Before 1994, all such agencies were required to be registered under the Employment Agencies Act 1973. However, the Deregulation and Contracting Out Act 1994, a wide-ranging measure designed to trim government, removed this requirement. The 2004 Act requires licences for any business involved in labour placement in the agricultural and shellfish sectors (s.7) and they are contingent on the rules that the Secretary of State lays down (s.8), found in the Gangmasters (Licensing Conditions) 2006.

To obtain a licence, the rules require payment of a fee linked to the agency's turnover (r.7) ranging between £250 and £4000 for businesses turning over under £1m to over £10m respectively. Agencies also have to pay for inspections of their work environment in order to obtain licensing approval (r.8). Based on turnover in the same way, the fees range from £1,600 to £2,500.

Charging fees to labourers directly is prohibited by Schedule r.4(10)(2) and by the Employment Agencies Act 1973 s.6. The rules make the end-user the only one allowed to pay the worker (r.6), restrict the agency's power to contract with the end-user to prevent the worker taking up permanent employment (r.7), prohibit the practice of withholding pay from labourers as a sanction (r.8), require the agency to provide the end-user with a document containing the terms of the agreement on fees, and what to do if the worker is unsatisfactory (r.11); they also prevent gangmasters giving each other workers unless the worker has properly consented (r.16), and require keeping of records for each worker (r.19).

The agency must give the labourer information about his legal rights (r.15). The status of such rights is uncertain, but it would appear that under s.230 of the Employment Rights Act 1996 a worker will be considered the employee of the end-user. Certainly every worker must be paid the minimum wage, receive holiday pay, and must not be subject to discrimination.