Transport & Logistics: Changes to the Gangmasters Labour and Abuse Authority (“GLAA”) Licensing Regime

Our Transport and Logistics team have recently acted for a market leading distributor of fresh produce in relation to potential liabilities (both civil and criminal) potentially arising under the Gangmasters Licensing Authority regulations. Our client approached us for advice on their position in light of internal due diligence which had identified a number of potential compliance issues with the regime across their supply chain.

The GLAA regime is designed to protect workers operating in, amongst other places, pack houses, warehouses and other similar businesses from being exploited. The ambit of the regime itself is considerable extending, amongst other things, to any packaging work involving packing products by hand or by using machinery.

All types of packaging materials are covered, including bottles, cans, bags, foil and paper. It does not matter if the worker does not actually directly handle the food product. Activities which are considered part of packaging work include selecting suitable packaging, preserving perishable products, quality checking, labelling packaged products, breaking down pallets of food and drink into cases or part pallets, or putting already packed food items into other containers.

The relevant rules were subject to potentially wide (and unintended) interpretation and a number of clients in the warehouse / packing / distribution sectors who are otherwise entirely in compliance with the regime have been operating unwittingly in breach of the regulations.

The firm has advised a number of businesses in this sector on their obligations under the regime and have advised clients in the logistics sector on liabilities to sub-contractors and customers in addition to the licensing authority itself.

Following our initial advice our Transport and Logistics team supported clients in their efforts, co-ordinated through their trade body, to lobby the GLAA / Government in relation to these issues. This has resulted in a successful revision and clarification of the relevant rules by the GLAA.

Under the previous rules, a licence was required where a worker was being supplied in the United Kingdom to do work to which the Act applied.

A licence was also required when an individual or business used a worker in the United Kingdom to provide a service to another person to do work covered by licensing (definitions which are set out in the relevant rules).

Businesses needed a licence if they made arrangements for the work to be done. It does not matter if the worker worked directly for the business, works for another person or is self-employed.

Certain activities are excluded from needing a license. Many businesses relied on this provision. These are set out in the Gangmasters Licensing (Exclusions) Regulations 2013.

A person using a worker to provide a food and drink processing and packaging service is able to claim exemption from the regime where that person:

Employs the worker, and
owns, hires or leases any equipment, tools or machinery used by the worker necessary to do the work and
owns or leases the premises where the work is carried out.

In order for this exemption to apply all three of the above were required to apply.

Many modern supply chains outsource part of their operation. For instance many businesses meet these criteria save for the fact that they may engage temporary or seasonal labour through third party providers rather than acting as the worker’s direct employer. Notwithstanding that a business may otherwise be entirely in compliance with the regime this was not sufficient under a strict interpretation of the rules to exempt that business from requiring a license.

A large number of businesses in the sector were unwittingly operating in breach of these regulations due to their own particular outsourcing operations notwithstanding the fact that they might otherwise operate entirely in accordance with the regime. A significant number of businesses would have been required to incur the cost and administrative burden of licensing themselves as labour providers to comply with the regime.

However, following pressure from our client amongst others, the GLAA has adopted a sensible and pragmatic approach and revised the application of the regime.

Accordingly, where a business now meets the exclusions in relation to packaging activities except that is uses temporary labour, the GLAA will relax the licensing requirement providing a number of conditions are met.

The key condition (which many businesses in the sector were already doing) is that the business only sources its temporary labour from a GLAA licensed labour provider. However, the business must subscribe to the GLAA’s active check service in respect of the labour providers it uses (this is an online facility which sends direct updates from the GLAA to the business informing the business of any changes to the labour provider’s licence). Other conditions include, as appropriate, complying with the “Transparency in Supply Chains” section of the Modern Slavery Act 2015 (ie publishing its transparency statement and requiring the same of its sub-contractor/s)) and holding certification (which the GLAA will take into account as earned recognition, reducing the risk that the business is non-compliant (eg: BRC Global Standard for Food Safety). There is a further requirement for the business to advise the GLAA of its business model and obtain confirmation as to whether or not a licence application will be required.

In respect of enforcement, save for in cases where there is evidence of exploitation of workers, the GLAA will until 5 November 2018 adopt a proportionate approach to allow businesses to adjust to the revised licensing regime. After that date the GLAA reserve the right to adopt a more robust response for those businesses that should either have obtained a licence or have sought and obtained agreement to the licensing requirements being relaxed for their circumstances.