Interventions: education and due diligence: end user: post visit action
Depending on the scale of operations and findings, recommendations should be made to address any risks or perceived risk.
The end user should be following due diligence checks as described in the Use of Labour Providers leaflet (PDF 316KB). The details obtained can be analysed looking at subcontractors - this may highlight further subcontractors either up or down the supply chain that merit further enquiry.
Post Visit -Due Diligence checks
A range of options are available depending on your findings. You may wish to make recommendations that will help the end user to minimise risks; along the lines of the following examples:
- Entering a clause in contract (or signed statement) with a labour supplier that subcontractors are not permitted
- If a labour supplier is not able to supply enough labour, it is recommended that the End User engage additional sub-contractors rather than leave this to the first tier labour supplier who may engage third parties that may or may not be compliant - obtain signed statement confirming that all workers are provided by the tier 1 supplier and no subcontract labour will be used (without notifying the End User)
- Enter a clause in the contract confirming that the workers provided by the labour supplier are not engaged via offshore company
- VAT detail checks to verify a valid VAT number is being used - Coventry office - 03000 538254 (see LPOG4510)
- If not already undertaken, introduce or improve current controls in place to provide an audit trail for workers supplied and hours worked:-
- Time sheets procedure
- Introduce daily time sheets to include names, hours worked and signature from worker and foreman. This will provide an audit trail that will confirm:
- National Minimum Wage (NMW)/National Living Wage (NLW) is being achieved
- Identity check to combat fraud
- Risk for End User is they could lose the right to claim back VAT on invoices connected to fraudulent evasion of VAT by any labour market supplier used
- If wages are paid cash - change to using banking system. This will provide an audit trail of amounts received and evidence that the labour market supplier is responsible for the workers.
- Due diligence leaflet provides advice on replacement businesses. If new business is supplying same workers as before - End User should obtain an explanation.
- Does the labour market supplier have sufficient insurances?
During a compliance check you may need to gather information from workers or other intermediaries involved in the contractual chain, i.e. interactions with third parties. You must not contact a third party as a matter of course. It must be proportionate given the facts of the case. You must keep a clear audit trail in the case papers showing why you consider third party enquiries to be necessary. Further guidance is available in COG906025