Memorandum submitted by the National Farmers'
Union (NFU)
1. The NFU welcomes this opportunity to
submit evidence to the EFRA Committee inquiry into the activities
of gangmasters. The whole area of seasonal/casual-type workers,
including those supplied by gangmasters is of immense importance
to members of the NFU, particularly those involved in horticulture.
2. Before addressing the specific questions
raised by the EFRA Committee, the NFU wishes to stress the importance
to the agricultural/horticultural industry of labour suppliers/gangmasters.
The inability of businesses to attract sufficient staff to harvest,
pack and process produce is one of the main elements militating
against expansion in the industry. Whilst successive increases
in the number of SAWS (Seasonal Agricultural Workers Scheme) permits
have been welcomed in this respect, there remains, and in our
view will continue to remain, the need for a system of short-term
labour supply to deal particularly with peaks of activity. This
system in agriculture is currently delivered by gangmasters, although
similar systems operate in many other areas of the economy (eg
temporary office workers, agency nurses, supply teachers, etc.).
Workers supplied by gangmasters are typically used to meet peaks
of activity, such as planting, harvesting and packing. The ability
to access a pool of such short-term workers underpins the employment
of the regular workforce on many holdings. The value of the system,
provided it operates legally and ethically, is fully recognised
by all stakeholders (references: Operation Gangmaster report—1998;
Ethical Trading Initiative Briefing note 2003.)
3. For many years the NFU has been concerned
about reports of illegal, and exploitative, activities concerning
gangmasters. For this reason we have consistently been calling
for the introduction of statutory policing and licensing of gangmasters.
Successive governments, primarily it appears due to a lack of
parliamentary time to bring forward the necessary legislation,
have not acted on this request. Whilst hard evidence is, understandably,
difficult to come by, experience and information received suggests
that the problems surrounding certain gangmasters is getting worse.
This is despite efforts by the industry to introduce codes of
practice/conduct at both the field and packhouse level. Such codes
have played an important role, but lacking the force of underpinning
legislation have only partly succeeded in addressing the problem
areas. Accordingly, we believe that the time is now right for
legislation resulting in the registering and policing of gangmasters.
4. Although this system of temporary work
is legal, there is evidence that some providers of temporary labour
and their sub-contractors are operating outside the legislative
framework. There is also evidence of collusion between the providers,
the sub-contractors they employ and the workers they supply, with
criminal intent to defraud.
5. What evidence is available suggests a
system in which abusive, evasive and fraudulent activities are
frequent:
— non-compliance with national and/or
agricultural minimum wage—the Agricultural Wages Order (AWO)
applies to any worker employed in agriculture anywhere in England
and Wales. (Agriculture is defined in the AWO as including 1.
Dairy farming. 2. The production of any consumable produce which
is grown for sale, or for consumption or other use for the purposes
of a trade or business or of any other undertaking (whether carried
out for profit or not). 3. The use of land as grazing, meadow
or pasture land, or orchard or osier land or woodland or for market
gardens or nursery grounds);
— non-compliance with Working Time
Regulations;
— unlawful deductions from wages;
— use of casual workers who are DSS
recipients;
— use of illegal immigrant labour;
— use of underage workers;
— acceptance by providers of a bogus
self employment status from workers causing a loss of NICs;
— evasion of the declaration and payment
of tax and NICs;
— non-registration for VAT; and
— evasion of the payment of VAT.
THE IMPACT
OF ILLEGAL
ACTIVITIES ON
FARMERS AND
OTHER HIRERS
6. Prior to, and since the inception of
"Operation Gangmaster" enforcement authorities have
taken a particular interest in the illegal activities of gangmasters.
Included in these activities has been the employment, by gangmasters,
of those who should not be working. This might either be because
the individuals are claiming benefits, or their immigration status
means that they are not at liberty to undertake work in the United
Kingdom. This interest has resulted in visits to farms and packhouses
by enforcement officers and in some cases the stopping of minibuses
en route to businesses.
6.1 In today's highly competitive produce
industry it is essential that growers harvest crops at the optimum
time. The last thing that a grower needs is being unable to fulfil
an order because his workforce, supplied through a gangmaster,
is unable to do the work because they have been removed by enforcement
officers. The mayhem that such an event can cause to a business
could be very expensive and jeopardise commercial relationships.
6.2 Accordingly most users of gangmasters
will do what they can to satisfy themselves of the legitimacy
of their gangmaster and the workers the gangmaster supplies. This
will very often take the form of physical checks of paperwork
and individuals. An example of how this operates, supplied by
Exotic Farm Produce Ltd is appended to this evidence.
6.3 However, it must also be recognised
that in an industry mainly made up of micro, small and medium
enterprises, not all businesses have the human and managerial
resources to go to these lengths, which are obviously time-consuming
and expensive.
6.4 Even when businesses do take all necessary
precautions to defend their position, they can still fall foul
of unscrupulous gangmasters, resulting in considerable expense.
A classic example of this is the case of Donaldsons Flowers Ltd.
In February 2001, Donaldsons negotiated with a Hampshire-based
labour agency for workers. As recommended by the NFU, Donaldsons
insisted on "legal workers" being supplied. In April,
Donaldsons requested the paperwork to check on the status of 8
Polish workers. Despite assurances, after a number of weeks the
paperwork had not arrived. Then the workers did not arrive and
it transpired that they had been working illegally. The agency
supplying the labour chased Donaldsons for payment, even though
the individuals had been working illegally. After considerable
time and expense arguing the case, it culminated in an appearance
at Gloucester County Court, where the judge dismissed the claim
saying that Donaldsons was not liable for the debt.
THE IMPACT
OF ILLEGAL
ACTIVITIES ON
THE COMPETITIVENESS
AND VIABILITY
OF CERTAIN
AGRICULTURAL PRACTICES
7. As stated earlier, the provision of sufficient
workers to harvest, pack and process crops is crucial to the success
of UK horticulture. The gangmaster system provides a vital role
in supplying labour, often in large numbers at short notice. In
the experience of the NFU, the impact of illegal activities on
competitiveness and viability is negligible. This is because,
for example, to secure labour, growers will have to pay the going
rate in the marketplace. By their very nature, gangmasters operating
illegally are unlikely to undercut the market rate significantly
as that would only draw attention to themselves, and reduce their
illegal profits.
THE IMPACT
OF ILLEGAL
ACTIVITIES ON
SUPERMARKETS AND
OTHER RETAILERS
8. A succession of investigative media reports
has undoubtedly imposed pressures on major retailers to know what
is happening at their suppliers, in terms of labour used. This
has witnessed itself in a number of areas, not least the creation
of the Ethical Trading Initiative (evidence already submitted
to this inquiry) and the increasing imposition of ethical audits
on growers and suppliers. Retailers and Trade Associations have
co-operated in the production of the various codes of practice
previously referred to. Some form of voluntary registration system
has also been considered, but retailers in particular are concerned
at the competition legislation implications of insisting that
suppliers only use labour supplied by an agency on a voluntary
register.
9. DEFRA has recently seconded an official
to work with the Ethical Trading Initiative Working Group in order
to define a code of practice for gangmasters and a system for
its independent verification. Whilst welcoming this move, the
Group still maintains that it is no substitute for a proper statutory
register of gangmasters. The NFU is a member of the Group and
fully endorses this view.
10. In conclusion, the NFU believes that
the only means of driving out exploitative and illegal practices
in the labour supply industry is to have an adequately resourced
and policed statutory register of labour suppliers (gangmasters).
Such a register would give all in the chain confidence that illegal
practices were being addressed. In our view, such a register would
be self-financing as the savings to the nation if the abuses highlighted
above were stamped out would outweigh the costs involved. Voluntary
actions within the industry have been attempted and worked to
some degree. However, evidence suggests that problems continue.
Since voluntary actions seem unable to fully address the problems,
legislation should be enacted, as a matter of priority.
23 April 2003
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