Agriculture Newsletter: Summer 2017
Welcome to the Summer 2017 Agriculture Newsletter
Although the nights are drawing in it is still Summer here at Freeths so I am pleased to introduce the (late) Summer newsletter for the agriculture team. In this edition we concentrate on questions close to landowners’, employers’ and farmers’ hearts being compliance with legislation in the employment of workers. To that end, Sepideh updates us on the requirement for adhering to the regulations arising from the Modern Slavery Act 2015 and the need, in certain cases, for a statement of compliance. Tom Bradford, a new member of the team in our employment department, takes us through the UK Government’s proposals for employment of EU Agricultural workers. Finally, Christopher Sing highlights the perils of not paying the minimum wage. We also have an update from Victoria Teece in our Environmental team on sentencing in cases of pollution with some alarming lessons.
This has been a very busy quarter for the team and we have had some excellent new recruits. Masood Ahmed and Mohammed Ali (not that one) join us as solicitors in the Oxford team, working on property matters. We also have the very useful addition of Tom Bradford in London who is an expert on immigration and who will be able to assist on matters to do with the inevitable fallout from Brexit. A full list of the members of the team can be found here.
Click on the links below to take you straight to the article:
- EU agricultural workers post-Brexit
- Modern Slavery Act 2015
- Failure to pay the minimum wage
- Where there’s blame… there’s the Environment Agency
Tom Bradford, Immigration Partner, summarises the UK government’s proposals and how employers can avoid the pitfalls.
The Home Office’s proposals leaked earlier this month will do nothing to calm the concerns of rural land and business owners’ about the availability of migrant labour. The proposals contemplate significant disincentives for low-skilled EU workers coming to the UK.
In the first instance, in a transition period of two to three years after Brexit, the Home Office’s proposal is that EU workers would need to register. After the transition period, only highly-skilled EU workers would be able to apply for residence permits valid for three to five years. Low-skilled EU nationals could only apply for residence permits valid for up to two years. Unlike under the current rules, low-skilled workers arriving post-Brexit would have no automatic right to settlement after five years.
The proposals mirror the current rules for non-EEA nationals under Tiers 2 and 5 of the Immigration Rules.
Right to work checks
Employers should be careful about right to work checks before, during and after the transition period. The strict liability scheme may catch out those employers who do not monitor their employee’s status throughout the changes and take steps to ensure that their workers register. Eventually the only acceptable documents for EU workers would be a passport or a Biometric Residence Permit.
Avoiding the bottleneck
Around three million EU citizens would have to lodge their applications or register under the proposed mandatory procedure after the transition stage. A proposed voluntary registration procedure would be opened pre-Brexit. Employers and agencies should be on standby for the voluntary scheme to support existing valued migrant workers who wish to obtain settled status before the UK’s departure.
“Modern slavery is a heinous crime that affects communities and individuals across the globe. That is why the transparency in supply chains provision in the Modern Slavery Act 2015 is so vital in our fight against this evil.”
Rt Hon Theresa May MP Home Secretary, Guidance issued under section 54(9) of the Modern Slavery Act 2015
Tackling the phenomenon of human trafficking and the concept of “modern slavery” appear to be firmly on the UK government’s agenda, more so in the last decade than ever before.
The Modern Slavery Act 2015 includes a provision which requires businesses of certain turnover (Regulations have set the total turnover threshold at £36m) to produce a statement, setting out the steps they have taken to ensure there is no modern slavery in their own business and their supply chains. Even if no action has been taken, the statements should specifically say so.
This is intended to target those businesses whose turnover is over a certain threshold, encouraging them to change their policies and practices to ensure transparency within their employment process as well as their supply chains. The Act specifically requires the statement to include ‘the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains, and in any part of its own business’.
While this is all positive in nature, what about the smaller business owner who, for example, owns a small farm, employs two workers and falls outside of the above threshold?
In a recent case, Regina v David Zielinskib (2017), a landlord has been sentenced to eight years’ imprisonment at Nottingham Crown Court following his guilty pleas to two counts of forced labour, a count of trafficking and one of fraud. The defendant was also made the subject of a Slavery and Trafficking Prevention Order aimed at preventing him from committing similar offences in the future. The crime was brought to the attention of the authorities after a co-worker reported concerns about the wellbeing of one of the victims to the Gangmasters and Labour Abuse Authority. The employees were forced to work long hours for very little pay having been trafficked into the UK on promises of well paid jobs. Investigations were carried out by Nottinghamshire Police, assisted by the Gangmasters and Labour Abuse Authority, the National Crime Agency and Nottingham City Council.
This is just one example of such cases and many are not reported and are therefore missed. Without the report from the concerned co-worker in this case, the trafficker could have carried on without ever being caught and, with no actual need for there to be a formal statement submitted to any authority, the trafficker may have carried on, further exploiting the two men and other victims in a similar way.
It is therefore important for suspicious behaviour, indicating forced labour or other exploitation to be reported to authorities by individuals and organisations. In addition, landlords must have full knowledge of who their tenants are, and if the tenants are employed to work on the holding as part of their tenancy, to ensure that the employees are adequate paid and their basic human rights are addressed.
Businesses falling within the above threshold must ensure that their statements are true reflections of who is actually employed by the company and full training must be provided to employees, training them on how to recognise different types of slavery and how to report these, and to whom.
Paying the National Minimum Wage (NMW) is a strict legal requirement and employers that fail to do so can be hit with punitive penalties. In A recent case, an employment agency that laid on thousands of underpaid workers at a warehouse received a six-figure fine.
Following an investigation by HM Revenue and Customs (HMRC), it emerged that workers who clocked on one minute late to work were docked a full quarter of an hour. After clocking off at the end of their shifts, they were also required to queue for an average of 11 minutes for security checks.
The agency accepted that, as a result of those unpaid periods, workers had not received the NMW. To make up the difference, it paid almost £470,000 to affected workers. It was also required to pay a total of £263,628 in respect of 13 penalty notices raised by HMRC. It was, however, permitted to pay half the penalties – £131,814 – because it remitted the sum promptly, within 14 days.
After the agency appealed against the penalties to an Employment Tribunal (ET), HMRC acknowledged that the notices were defective in that they did not include certain information, particularly the names of individual workers concerned and the amounts by which they had been underpaid.
In dismissing the agency’s appeal, however, the ET found that the notices were nevertheless valid. The agency knew precisely the figures on which the notices were based, did not dispute that workers had been underpaid and had agreed how much was owed to them. The penalties were designed to have a deterrent effect on others and HMRC had been entitled to issue multiple notices.
All employers will want to establish payment of the NMW, which can be undertaken by:
- Identifying the pay reference period.
- Calculating the total remuneration received in the pay reference period:
- identifying the total gross pay; and
- deducting any payments or deductions that reduce NMW pay.
- Determining the hours that should be counted during the pay reference period:
- establishing what type (or types) of work the worker does; and
- identifying the hours that will count for each relevant type of work.
- Calculating the worker’s hourly rate of pay: divide the total pay received in the pay reference period by the hours that should be counted during the pay reference period.
- Decide the NMW (if any) to which the worker is entitled.
Please let us know should you have any queries about establishing compliance with the NMW or related matters.
This year the Environment Agency has brought a number of high profile prosecutions relating to pollution of controlled waters, resulting in high fines.
Some of the most notable prosecutions include Thames Water Utilities Limited (March 2017), Tesco Stores Limited (June 2017) and Yorkshire Water (July 2017). Each company was prosecuted under the Environmental Permitting Regulations, with each receiving high fines and orders for costs. Each case is summarised below.
Whilst each pollution incident occurred with different causes and effects, they all share common ground, in that the damage caused was avoidable.
We can learn important practical lessons from each of these cases:
Thames Water Utilities Limited – March 2017
Untreated sewage was discharged to the River Thames. The discharge caused the death of wildlife including fish, birds and invertebrates. In addition, distress and disruption was caused to the public including riverside residents, farmers, local business, anglers and recreational river users.
The Court found that the pollution events were widespread, repeated, sustained and avoidable. It was heard that Thames Water had disregarded risks identified by staff and failed to react adequately to thousands of high priority alarms. This resulted in pollutant discharges occurring for weeks at a time, despite incoming sewage flow being well within the designed capacity of the treatment works.
Thames Water received record breaking fines totalling £20,000,000.
Thames Water has been criticised for their “disgraceful conduct” for incidents that were “entirely foreseeable and preventable”.
Tesco Stores Limited – June 2017
Petrol escaped into the sewer network, causing the death of fish and aquatic life. Distress, disruption and illness was also caused to residents.
It was heard that the incident was caused by a known issue with the fuel delivery system. Tesco had inadequate alarm systems and poor emergency procedures which resulted in the polluting incident lasting over 24 hours. Tesco were fined £3,000,000 for the environmental offence and £5,000,000 for associated health and safety offences.
Yorkshire Water – July 2017
Sewage sludge escaped from Yorkshire Water, causing the death of over 100 fish. Distress and disruption was caused to the public due to the discharge causing the closure of bathing waters for 17 days in peak season, in addition to issues regarding odours and water discolouration. Yorkshire Water aggravated matters by initially failing to acknowledge responsibility for the incident and, thereafter, taking as long as 3 months to clean up the damage.
The Court heard that Yorkshire Water has replaced the corroding tank that caused the sludge to escape, has installed a gully guard and installed an alarm system, in order to prevent any future escapes.
Yorkshire Water were fined £600,000.
Analysis of these cases
In each of the above cases there are a number of clear aggravating factors including knowledge of existing issues, failure to respond appropriately, significant harm to the environment and the public and a disregard of the obligations to prevent such harm.
Each company could have prevented a pollution incident if they had been more proactive. In the case of Thames Water and Tesco, they were both aware of the risk and had systems in place to prevent an incident. However, the systems and procedures were either ignored or inadequate to prevent the discharge of the harmful substances. In the case of Yorkshire Water, it acted after the event to rectify the issue. It had been able implement measures to first, stop a further escape of harmful substances and secondly, to alert the company of a problem, at the earliest opportunity.
The Environment Agency’s published statics show that it is keen to bring polluters to justice. Both the number of prosecutions brought and the level of fines ordered are rising and attracting publicity.
The Environment Agency’s message is clear that companies need to take more proactive steps towards their responsibility to protect the environment.
Benefits of a proactive approach
Addressing issues early can have a multitude of benefits for a company including:
- Preventing the commission of an offence in the first place;
- This is not only good for the environment but also protects the company against any negative impact on the company’s reputation; and
- Whilst prevention measures are likely to come at a cost to the business, prevention is undoubtedly cheaper than the clean-up costs of an incident, not including the extra costs of a prosecution and a potentially hefty fine.
- Avoiding a prosecution in the event of an offence:
- Where incidents do occur the Environment Agency will conduct an investigation. That investigation will shape how the Environment Agency chooses to deal with an incident. The Environment Agency has a number of enforcement options to consider including a warning, a formal caution and an enforcement undertaking.
- The Environment agency must consider, in addition to the legal test, the public interest test, when deciding on enforcement action. Where a company has been proactive in its operations to avoid an incident and proactive in responding to an incident, including cooperating with the Environment Agency, the Environment Agency may be satisfied that it is not in the public interest to prosecute the Company.
- The Environment Agency can consider which of the other enforcement options may be more appropriate than prosecution.
- Helping keep sentences down in the event of a prosecution:
- The Court will consider all the circumstances including elements that make the case more serious (known as aggravating factors) and elements that make the case less serious (known as mitigating factors).
- As can be seen from the case examples, aggravating factors in these types of cases included the scale of damage caused, the quality of the safety measures in place and the inadequacy of the response by each company to the incident.
- The only case example that reports mitigating factors is Yorkshire Water. Yorkshire Water was able to demonstrate to the Court, that whilst the incident had occurred, it had established the cause and put in places a series of measure to ensure that a similar incident would be less likely to occur. Furthermore, if another incident were to occur, the Company would be adequately alerted and equipped to prevent or minimise damage. It is likely that the company’s actions and resources invested in implementing prevention measures had an impact on the fine the company received, being notably lower than the other companies.
- The Court will also consider the Definitive Guideline for Environmental Offences. The Court will consider the culpability of the Defendant, the level of harm caused to the environment and the size (turnover) of the organisation. The combination of the Court’s determination of culpability, harm and size corresponds to a sentencing range within the guidelines. Whilst a company cannot alter its size for the determination of sentencing, a company can seek to limit the level of culpability and harm caused by an incident, by being proactive in both preventing and managing incidents. For example, if a company is aware of an issue, but ignores it, the culpability category for any resulting offence is likely to be either ‘deliberate’ or ‘reckless’ (being the two highest categories of culpability). This would place the starting point for sentencing much higher than the lower culpability categories of ‘negligent’ or ‘low/no culpability’. A company that has taken all steps to avoid an incident but, where one had occurred, had responded appropriately, would be more likely to be placed in the lower culpability brackets. This would attract a lower starting point for sentencing. The same is true for the harm category, the lower the level of harm to the environment, the lower the determination of the level of harm and, therefore, the lower the starting point for sentencing. A company should ensure that it responds to an incident as quickly as possible to a pollution incident, in order to either prevent damage to the environment or to limit the damage caused.
The three cases serve as a warning for any company to look at their operations to identify where the risks to pollution incidents lie and to review the practical measures that can be taken to prevent an incident. Any company would also be well advised to review their alarm systems and emergency procedures to ensure that they would adequately stand up to an incident trigger.
If you have any concerns or would like advice on how to approach the Environment Agency regarding an issue, please contact a member of our Environmental team.
The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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