Labour exploitation in the supply chain - what to look out for - and what we do to prevent it

Labour Exploitation in the Supply Chain: What Employers Should Look Out For – and What We Do to Prevent It 


Modern slavery and labour exploitation can be much closer to a business than many employers realise. It doesn't always involve obvious signs of trafficking or somebody being physically prevented from leaving a workplace.


It can involve workers having their wages withheld, being charged excessive fees, having identification documents controlled by somebody else, being threatened, living in poor employer-controlled accommodation or being placed into debt that makes it difficult for them to leave their employment.


And where businesses use recruitment agencies, labour providers, subcontractors or outsourced payroll companies, exploitation can potentially happen further down the labour supply chain.


Businesses might be asking themselves:


“Are our own employment practices compliant?”


They should also be asking: 


“Do we understand how every worker in our supply chain is being recruited, employed and paid?”


During Anti-Slavery Week, we're looking at some of the warning signs employers should understand – and the steps we take at Elite to reduce the risk of exploitation within our own labour supply chain. 



What Is Labour Exploitation?


Labour exploitation covers a spectrum of abusive employment practices.


Government guidance describes modern slavery as sitting at the extreme end of that spectrum, including slavery, servitude, forced or compulsory labour and human trafficking.


https://www.gov.uk/guidance/find-out-how-you-report-labour-exploitation#what-is-labour-exploitation


Serious exploitation can involve a worker being controlled, threatened or manipulated. 


It can also include situations where somebody:


  • Cannot freely leave their employment 
  • Has wages withheld 
  • Has their passport or identification documents taken away 
  • Is controlled by another person 
  • Is subjected to threats or intimidation 
  • Is forced to work excessive hours 
  • Is trapped through debt 
  • Is forced to live in accommodation controlled by their employer 

 

Not every employment-law breach is classed as modern slavery, however, poor employment practices can be warning signs of wider exploitation and shouldn't simply be ignored. 



Why Should Businesses Look Beyond Their Immediate Recruitment Supplier?


Labour supply chains can become complicated.


A business might believe it is simply hiring temporary workers through a Recruitment Agency.


  • But who actually employs the workers? 
  • Who recruited them? 
  • Who pays them? 
  • Is payroll outsourced? 
  • Is an umbrella company involved? 
  • Is another labour provider supplying workers into the agency? 
  • Are workers paying somebody else for transport or accommodation?


The further removed a business becomes from the individual worker, the harder it can be to see what is happening.


HMRC's labour supply-chain guidance recommends that businesses understand where workers are coming from, how they are paid, whether their labour supplier is legitimate and whether the commercial arrangement is sustainable.

 

That last point is particularly important.



Warning Sign 1: A Labour Rate That Doesn't Add Up


All businesses want to control costs, and price is important when appointing a recruitment agency. But a charge rate still needs to cover the legitimate costs of employing and supplying a worker.


If one supplier is substantially cheaper than everyone else, businesses should understand why.


HMRC specifically warns businesses to check whether their labour supply is commercially sustainable. It says a charge rate that is too low may mean a supplier cannot meet its statutory tax obligations while making a profit and can also be an indicator of exploitation, modern slavery or illegal working.


A client should be able to ask a recruitment agency: 


“Can you explain what sits behind this charge rate?”


A compliant agency should be comfortable answering that question and be able to provide a breakdown of statutory costs.



Warning Sign 2: Workers Don't Appear to Control Their Own Money

 

Pay arrangements can provide important warning signs.


Questions might arise if:


  • A worker doesn't appear to control their own bank account 
  • Several workers appear dependent on the same person for financial matters 
  • Wages are being withheld 
  • Unexpected or excessive deductions are being made 
  • A worker appears frightened or uncomfortable discussing their pay 
  • Workers don't understand what they are being paid or why deductions are being taken 
  • Workers are paid less than the National Living Wage 


Withholding wages and excessive deductions are among the recognised indicators that can be associated with exploitation. 

Businesses using temporary labour should therefore understand how the worker at the other end of that supply chain is actually being paid.



Warning Sign 3: Someone Else Controls the Worker's Documents


A worker's passport, identification and other personal documents should not be controlled by another individual as a means of controlling that worker.


Potential warning signs include:


  • Somebody else holding a worker's passport 
  • Workers unable to access their own identification 
  • One person repeatedly providing information or documents on behalf of several workers 
  • Workers appearing unable or unwilling to speak for themselves 
  • Suspicious, altered or inconsistent documentation


Retention of passports and identity documents is a recognised indicator of potential modern slavery.



Warning Sign 4: Workers Appear to Be Controlled by Another Person


Exploitation is often about control.


A worker may technically arrive at work every day and appear to be functioning normally, while somebody else controls significant parts of their life.


Things that may warrant further investigation include workers who:


  • Seem frightened to speak without another person present 
  • Allow somebody else to answer questions for them 
  • Are constantly accompanied 
  • Appear fearful of authority 
  • Have very limited freedom of movement 
  • Seem frightened about losing their job or accommodation 
  • Appear isolated from other people 

 

No single sign proves exploitation. But patterns of concerning behaviour shouldn't be ignored.


 

Warning Sign 5: Recruitment Fees or Unexplained Debt

 

One of the areas businesses should understand is how a worker obtained the job in the first place. 


  • Has somebody charged them to find work? 
  • Do they owe money to a recruiter, intermediary or another individual? 
  • Are deductions being made to repay that debt?


Government supply-chain guidance specifically identifies worker-paid recruitment fees as an issue that businesses should address within modern slavery policies and due diligence.


A worker starting employment already owing significant amounts of money to the person who arranged the work can create vulnerability to exploitation.


A legitimate Recruitment Business will NEVER charge a worker fees to obtain employment.



Warning Sign 6: Accommodation and Transport Are Controlled


Transport to work or accommodation supplied alongside employment isn't automatically a problem. But it can become a warning sign when workers have little choice or when excessive charges are involved.


For example: 


  • Workers are transported everywhere as one group 
  • A worker cannot easily travel independently 
  • Accommodation is overcrowded or unsuitable 
  • Workers are required to live in accommodation controlled by their employer or another intermediary 
  • Excessive deductions are made for accommodation or transport 
  • Losing the job would immediately mean losing accommodation 

 

HMRC guidance specifically identifies accommodation and transport arrangements as areas that can reveal potential exploitation.



Warning Sign 7: The Agency Can't Clearly Explain How Its Workers Are Employed


Ask your recruitment suppliers a simple question:

“How are your workers employed and paid?”


The answer shouldn't be complicated.


If an agency uses an umbrella company, outsourced payroll provider or another labour supplier, ask who they are and what checks have been completed.


Businesses should understand:


  • Who employs the worker 
  • Who pays the worker 
  • What employment status is being used 
  • Whether another organisation sits within the supply chain 
  • What deductions are made 
  • How National Minimum Wage compliance is checked 
  • How holiday pay is managed 
  • Whether workers are charged any fees 


HMRC's current labour supply-chain guidance specifically encourages businesses to establish who is making employment-status decisions, who pays the workforce, how they are paid and how workers are protected from exploitation.



Warning Sign 8: Registrations and Right to Work Checks Are Treated as a Box-Ticking Exercise


Registrations and Right to Work is an important part of recruitment compliance. But checking a document alone doesn't tell you everything about a worker's circumstances. Recruiters should also be alert to unusual behaviour or inconsistencies during registration.


For example:


  • Is someone else trying to answer every question? 
  • Does the candidate understand the role they've applied for? 
  • Do they control their own contact details? 
  • Are there inconsistencies in the information provided? 
  • Does the person appear frightened or coached? 
  • Are several applications being controlled by the same individual? 

 

Good compliance is about engaging with the individual worker, not simply collecting documents. 



What Do We Do at Elite to Help Prevent Labour Exploitation? 

 

For us, Anti-Slavery Week is an opportunity to review the processes we use every week and remind our team why those processes matter. 



We Know Who We're Recruiting


Our candidates go through a registration and compliance process before being supplied to a client.

 

For HGV drivers this includes checks such as:


  • Right to Work 
  • Driving licence 
  • Driver CPC and Digital Tachograph Card 
  • Relevant experience 
  • References 
  • Assignment suitability 

 

Importantly, our recruiters also have direct contact with the candidate. 

That gives us an opportunity to identify inconsistencies or concerns rather than relying solely on documents submitted through an automated process. 



We Employ Our Temporary Drivers Through PAYE and Safe Rec Certified Umbrella Companies

 

Our core temporary HGV driver model is PAYE and Safe Rec Certified Umbrella Companies.

 

That gives us visibility over how our temporary drivers are employed and paid rather than passing responsibility through multiple layers of labour supply. We complete regular due diligence checks on the approved Umbrella Companies that we engage with to ensure they are upholding the required standards.


Workers receive payslips showing their pay and holiday pay, and we operate weekly payroll.



We Don't Charge Candidates to Find Them Work


Candidates will never have to pay a recruitment fee to access work through Elite.


Recruitment fees charged to workers can increase vulnerability and are an important area for businesses to examine when reviewing their labour supply chain.



We Complete Right to Work Checks


Right to Work checks form part of our registration process. Our team needs to be satisfied that the person we are registering is the person they say they are and has the appropriate right to work.



We Train Our Team to Recognise the Signs


Processes only work if the people using them understand why they exist. All of our team completes training through Stronger Together and  during Anti-Slavery Week, we're refocusing the Elite team on: 


  • What labour exploitation can look like 
  • Warning signs during candidate registration and throughout their assignment 
  • Unusual behaviour or documentation 
  • How exploitation can enter a recruitment supply chain 
  • What to do if something doesn't feel right 
  • How concerns should be escalated 

 

Modern slavery isn't always obvious, and training helps recruiters recognise when something warrants further investigation.


 

We Review Our Processes


Anti-slavery compliance shouldn't be something written into a policy and forgotten.

 

We regularly review our recruitment and compliance procedures and use initiatives such as Anti-Slavery Week to challenge ourselves:


  • Are our current checks still effective? 
  • Would our team recognise the warning signs? 
  • Do workers know who they can speak to?


Is there anywhere within our process where exploitation could go unnoticed?


Those are much more useful questions than simply asking whether the business has a modern slavery policy.



What Should Transport & Logistics Businesses Ask Their Labour Suppliers?


If your business uses temporary labour, you should be able to ask your recruitment suppliers direct questions about their labour supply chain.


Start with:


  1. Who actually employs the workers you supply to us?
  2. Who processes and pays their wages? 
  3. Do you use umbrella companies or other labour providers? 
  4. How do you check Right to Work? 
  5. Do you ever charge candidates recruitment or work-finding fees? 
  6. How do you make sure workers receive at least the National Minimum Wage? 
  7. How is holiday pay calculated and paid? 
  8. What training does your team receive on modern slavery and labour exploitation? 
  9. What would happen if one of your recruiters identified a potential exploitation concern? 
  10. Can you explain your full charge rate and demonstrate that it is commercially sustainable?

 

Don't just ask these questions when appointing an agency as supply-chain assurance should continue throughout the relationship.


HMRC recommends businesses reassess risk during contracts, understand changes within their supply chain and have procedures for workers to report concerns. 



What Should You Do If You Suspect Labour Exploitation?


If someone is in immediate danger, call 999.

 

Suspected modern slavery or forced labour can also be reported to the police on 101 or to the UK Modern Slavery & Exploitation Helpline on 08000 121 700. Concerns about serious abuse or exploitation at work can also be reported to the Fair Work Agency. 


It's also important to remember that somebody experiencing exploitation may not describe themselves as a victim and may be frightened of what will happen if they speak out. Government guidance recommends taking a victim-centred approach rather than acting in a way that could unintentionally make their situation worse.


You can find further information here -




Does My Business Need a Modern Slavery Statement?


Under section 54 of the Modern Slavery Act 2015, certain commercial organisations carrying on business in the UK and supplying goods or services must publish an annual modern slavery statement where annual turnover is £36 million or more.

 

The statement should explain the steps the organisation has taken to address modern slavery risks within its own business and supply chains.


But preventing exploitation shouldn't begin at £36 million turnover. Smaller organisations can still have vulnerable workers in their supply chains and can still adopt appropriate due diligence, training and reporting processes.



Frequently Asked Questions


What are the main warning signs of labour exploitation?


Warning signs can include:

 

  • Shared Personal Details such as multiple people sharing the same address, bank account, telephone number and next of kin. 


  • Withheld wages, excessive deductions or not being paid the NLW 
  • Confiscated identification documents and not having access to their bank account or bank card 
  • Debt bondage – unable to pay back excessive debt for recruitment fees, Transport and Accommodation costs 
  • Excessive working hours, being forced to work additional shifts and overtime 
  • Restricted movement which could include being dropped off and picked up from site 
  • Poor quality or overcrowded accommodation and shared transport 
  • Workers appearing frightened or controlled by another person, and workers being unable to speak freely.


One indicator alone doesn't necessarily mean someone is being exploited, but concerns should be taken seriously.



Can labour exploitation happen through a recruitment agency?


Yes. Labour supply chains can involve recruitment agencies, subcontractors, umbrella companies and other intermediaries. This is why businesses should understand who employs and pays their temporary workforce and what organisations sit within the supply chain.



Is a very low agency charge rate a compliance risk?


It can be a warning sign. HMRC advises businesses to check whether labour supply is commercially sustainable and notes that a rate too low to cover statutory obligations and profit may indicate risks including exploitation, modern slavery or illegal working.



Should businesses audit their recruitment agencies?


Businesses should conduct proportionate due diligence and continue monitoring their labour supply chains. Government guidance recommends understanding how workers are recruited and paid and maintaining visibility through the supply chain rather than relying solely on initial supplier checks. 



Final Thoughts


Labour exploitation isn't always easy to spot and that's exactly why businesses need to look for it.


If your organisation uses temporary workers, recruitment agencies or other labour providers, understanding the full labour supply chain should be part of your supplier due diligence.


  • Know who employs your workers. 
  • Know who pays them. 
  • Understand how the charge rate works. 
  • Ask whether any other organisations sit between you and the worker. 
  • Make sure the people managing temporary labour know what warning signs to look for.

 

And most importantly, create an environment where workers can speak up if something isn't right. 


At Elite Logistics & Transport Recruitment, compliance isn't something we only discuss during Anti-Slavery Week. It forms part of how we recruit, register and supply temporary HGV drivers throughout the year. 


This week gives us another opportunity to review those processes, refresh our team's knowledge and make sure we continue asking the right questions. 


Skilled. Reliable. Elite.



This article provides general information and does not constitute legal advice. Businesses should refer to current government

guidance and seek appropriate professional advice regarding their individual responsibilities.


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