HOW WELL DO YOU KNOW YOUR SUB-CONTRACTORS?

15th June 2016 

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You may feel you want to know your sub-contractors a little better following the implementation of the Posted Workers (Enforcement of Employment Rights) Regulations 2016 on 18 June 2016 because you will be jointly liable if they fail to pay the national minimum wage to any workers posted to the UK from another member state.

Under the Regulations you will have a defence if you can show that you exercised all due diligence to ensure that the sub-contractor would pay the national minimum wage to workers.

The government intends to issue guidance on what constitutes due diligence in due course. The guidance will include some best practice principles for you to consider when carrying out due diligence checks in relation to sub-contractors. These could include:

  • understanding the service provider’s operating context;

  • establishing that the service provider:
  • is set up legally;
  • can prove financial transparency and robust financial monitoring;
  • has a good track record in paying employees correctly and on time;
  • has outstanding judgements against them relating to breaches of employment rights;

You should also consider getting a guarantee or indemnity from the sub-contractor that they will pay their workers no less than the minimum wage. Another option would be setting a turnover or reserve threshold for sub-contractors as part of the tendering criteria.

Let us know if you’d like any further information on the impact of these Regulations on you by contacting  Tony Norris or Joga Singh.

RELATED: EMPLOYMENT >> CONSTRUCTION >>


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Tony Norris

TONY NORRIS

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Joga Singh

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