Construction workers who are posted to the UK from another EU Member State will soon enjoy additional rights under new regulations. The Posted Workers (Enforcement of Employment Rights) Regulations 2016 are due to come into force on 18 June 2016. We explain below what the regulations mean for the construction sector.
What should you do?
UK organisations which contract with EU-based contractors to carry out work within the construction sector in the UK should carry out due diligence to ensure that such contractors comply with UK minimum wage requirements for workers posted to the UK.
There is no prescribed form of due diligence and while the government has said it will publish guidance in due course it has also stressed that due diligence will mean different things in different circumstances.
A prudent organisation should seek details of the policies and practices which are applied by a prospective contractor to staff remuneration, and details of the proposed remuneration for workers who will staff the contract. It would also be sensible to include a contractual obligation on the contractor to provide pay details and to seek warranty protection confirming that the contractor will comply with minimum wage requirements and has not been found in breach, or investigated for breach, of minimum wage requirements in the past.
Commercially, it may also be helpful to seek an indemnity from the contractor in respect of any potential wage liability. An alternative approach would be to build a retention or price adjustment mechanism into the contract to protect against such potential liability.
Why is this necessary?
The regulations protect construction workers who normally work in an EU Member State outside the UK, but are temporarily posted by their employer to carry out work for an organisation in the UK. In particular the regulations give such workers, known as posted workers, the right:
- to be paid at least the UK national minimum wage; and
- if their employer underpays them, to bring a claim against the company immediately above their employer in the supply chain. This could be a private sector developer, public sector procurer or a main contractor.
The effect of the regulations is to make organisations responsible for ensuring that their contractors pay their workers at least the UK minimum rates of remuneration.
It will, however, be a defence for an organisation to show that it exercised all due diligence to ensure that the worker's employer would properly remunerate the worker.