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CORONAVIRUS AND THE AFTERMARKET

CORONAVIRUS AND THE AFTERMARKET

Note: This article was written in mid February 2020, when the world was a very different place… – Editor

 

You will have heard all about it: the virus that migrated from species to species in China before spreading around the world. Thousands of column inches have been written, mostly about the human cost and how it has affected the way that people meet and travel, but how will it affect the parts supply chain, and more specifically the aftermarket?

Here’s what we know for sure: factories in China closed as usual for the Chinese New Year celebrations, but didn’t reopen for weeks afterwards. When they eventually did start up again, there were reports of many of them having a fraction of the usual number of staff, due in no small part to many being in isolation, be it voluntarily or at the behest of the state.

Then of course the virus spread, with huge tracts of Asia, including South Korea and Japan, implementing an array of preventative measures to control the outbreak. Closer to home, Italy was accused of under-reporting known cases and parts-producing towns in the country’s ‘motor valley’ have been belatedly shut down.

READ: BREMBO SHUTS ITALIAN SITES AMID CORONAVIRUS CRISIS

SHY RESPONSE

Yet when we asked companies who must surely be exposed to supplier shortages, the answers we got were surprisingly coy. Halfords, for example, wouldn’t answer our list of questions, but did respond with the statement: “We are monitoring the Coronavirus situation carefully. To date, the virus has not had a material impact on stock availability but we are continuing to work closely with our partners across the Far East.”

Similarly, Euro Car Parts answered our request with the simple sentence: “To date, we’ve not experienced any issues with stock availability because of the Coronavirus outbreak. We’re aware of the risk of disruption it still poses, and our supply chain team is working on contingency plans and is in regular dialogue with our suppliers to ensure we’re prepared to mitigate against any potential impact.”

Some other companies simply declined to discuss the issue at all. However, the fact that parts and accessory supply chains have, at the very least, been interrupted is not in dispute.

READ: IAAF BOSS: GOVT. MUST HELP THE AFTERMARKET

TYRE SHORTAGE

Tyres are known to be in short supply at the moment, especially budget products which are typically produced in China or Malaysia. The problem has become such a concern that TyreSafe, a body set up by wholesale distributors and tyre dealers, has issued a release advising motorists to fork out a bit of extra cash for mid-range or premium tyres, and not to buy part-worns, of which the organisation has a low opinion, as it has repeatedly voiced.

Stuart Jackson, Chair of TyreSafe, said: “The vast majority of [budget tyres] are imported into the country from China and across South East Asia where the outbreak of Coronavirus has led to governments closing facilities such as schools and factories to limit the spread. As a consequence, the level of supply the UK has become accustomed to for many products has been reduced.

PHOTOGRAPH BY Feature China / Barcroft Media

“Our advice is to seek a good deal on a mid-priced tyre and carry out regular checks to get the best out of that tyre over its full potential lifespan.”

National Tyre Dealer Association Chair Stefan Hay said that most members had a good stock of mid-range tyres, but added: “There can be no doubt that we could see a potential shortage of budget tyres if quarantine and export restrictions are maintained.

“This will affect all manufacturers with an interest in China and other South East Asian countries. For example, I’m aware that production at two of Pirelli’s three factories in China remains suspended in response to the spread of coronavirus. Pirelli has also reported that its entire expat workforce has left the country along with their families. Goodyear Tire and Rubber Co. ‘temporarily’ closed its headquarters and factory in China and the beginning of February and it is uncertain as to how temporary that is.”

Hay added that restrictions in supply can soon bounce back, citing a shortage of tyres a few years ago due to a trade dispute between the EU and China, which was swiftly resolved.

SHUTDOWN

It isn’t just tyres that are affected. The widest range of factory closures is in southern China, which is the heartland for manufacturing electronics, as well as the site of numerous foundries for making hard parts. Murray Silverman, Director of Streetwize Accessories in Manchester, is candid about the impact that factory shutdowns will have on UK business. “ALL businesses will be affected,” he emphasised. “Some might not realise it yet.”

“All suppliers that we have spoken to have advised at least a three week delay as it stands today,” Silverman told us when we spoke in mid February, adding that the date was ‘moveable daily’ and that at the time of speaking, his company could not even contact many of the factories that had not yet returned to work.

A big question mark hanging over the whole situation concerned just how long these delays might become. “Nobody knows how long these delays could go on for,” said Silverman. “We contacted all our customers to advise them that there will be shortages that will escalate during the summer months or earlier and advise them to order whilst we have stocks available. Some customers have reacted but unfortunately there will be those who will realise too late despite warnings.”

One company reacting to the situation is battery charger manufacturer Ctek. “Our suppliers have restarted their production and supply following Chinese New Year,” company spokesperson Stig Mathisen told us. “We are mindful however, that there is a risk that the outbreak could worsen and will continue to monitor the situation closely, introducing contingency plans if there is a requirement to do so.”

Sourcing products from elsewhere is not an option for many, particularly given that northern Italy, a major European production centre of parts, is arguably in a worse state than China at the time of writing. In any case, for the majority of companies it isn’t simply a case of switching production – new suppliers need to be tested, pricing and quantities have to be agreed and then go through any relevant type approval. “Sourcing product elsewhere is not an option, even if we could find the resource and the pricing was acceptable, it takes time to go through our QC and graphics teams,” explained Murray Silverman, adding that in any case a lot of UK and European-made products would also be in short supply, due to the amount of raw material and components that come from the Far East.

A situation that no-one two months ago could have foreseen is the possibility that UK companies might have to let employees work from home if the number of infections in the UK continues to rise. Quite how this could work for a parts distributor or a service and repair garage is anyone’s guess, but if the outbreak spreads further and there are more fatalities, who knows what might happen in the future?

Inevitably, the world will return to normal, and when this happens a new set of challenges may arise. “Even when factories do return, there are likely to be transport issues from the factory to the port and a lack of vessels to cope,” commented Silverman, adding that: “Another eventuality that may occur is that shipping companies and freight forwarders raise their rates to try to pull back the enormous amount of business they have lost.

“There will be further impact in the future,” he concluded.

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A BUDGET FOR OUR TIME?

A BUDGET FOR OUR TIME?

Politics aside, it takes a brave man to become Chancellor of the Exchequer and then, within 27 days, write and present a budget at a time of global crisis brought on by the smallest of enemies, a virus.

But present Rishi Sunak did and with gusto too. Only time will tell whether or not his speech goes down in history as one that ‘got things done’ – to reuse the phrase that he repeated some 26 times – or is just another where brave claims made rot in the cupboard.

Call for national unity

Sunak rose to the dispatch box and went straight for the topic that’s on everyone’s mind at present – coronavirus and how the government plans to tackle it. Touching on what everyone is hoping, that the outbreak is a serious, but temporary, disruption to the economy.

The Chancellor commented, “for a period it’s going to be tough” and announced a series of “temporary, timely and targeted” responses to support those who cannot work while helping businesses that are struggling through no fault of their own. The measures announced follow on from the Bank of England’s ‘surprise’ action in the morning – namely an immediate 0.5% cut in interest rates from 0.75% to 0.25% and billions of pounds of extra lending with ‘additional incentives’ to help banks support otherwise healthy SMEs.

Back to the budget, Sunak announced a three-point plan at a cost of £7bn. The first granted the NHS whatever resources it needs to cope with the virus, irrespective of cost.

Next, aside from those absent from work who will receive Statutory Sick Pay (SSP) from day one, those who self-isolate regardless of showing any symptoms are to get the same. The self-employed eligible to claim Contributory Employment and Support Allowance will be able to claim from day one too.

The last element involves enhanced support for businesses through the full refund to SMEs with fewer than 250 workers of SSP for 14 days; HMRC scaling up its Time to Pay scheme for firms in trouble following the outbreak; and a new, temporary, Coronavirus Business Interruption Loan Scheme with £1bn in funding which can offer loans of up to  £1.2m to SMEs facing difficulties.

SMEs in the retail, leisure or hospitality sectors that have premises with rateable values below £51,000 will welcome the suspension of business rates for one year. And any business currently eligible for small business rates relief will be provided with a £3,000 cash grant.

The state of the economy

With the headline material announced, the Chancellor turned to the state of the UK economy and other measures.

It’s entirely clear that even before the outbreak of coronavirus that the world has been slowing down. The Chancellor’s figures don’t include the effects of coronavirus, but GDP growth is predicted to stand at 1.1% in 2020 and 1.8% in 2021, then 1.5%, 1.3%, and 1.4% in 2024. Sunak announced an extra £175bn of capital investment over the next five years, which the Office for Budget Responsibility expects to mean that another 500,000 will be in work. Inflation is predicted to rise to 1.4% in 2020 and 1.8% next year.

Of course, it’s natural to ask with all of the announced spending where the money is coming from to pay for it? The answer is that part will come from tax changes, but a sizeable amount will follow from increased borrowing – which had been previously highlighted. In summary, borrowing is likely (OBR figures) to rise to 2.1% of GDP in 2019-20, 2.4% in 2020-21, 2.8% in 2021-22 and 2.5% by 2022-23.

In terms of the now annual rise in the National Living Wage (NLW), that will increase by 6.2% from 6 April. However, the Chancellor went further and announced that the Low Pay Commission has been given a revised remit to ensure that NLW reaches 66% of median earnings – more than £10.50 an hour by 2024. It’s worth pointing out that, according to Incomes Data Research, when the NLW was launched in 2016 it was designed to pay a rate that matched 60% of median earnings. While this increase will help the low paid it will increase employer costs; the Low Incomes Tax Reform Group is worried that this could lead to ‘false self-employment’ or fewer workers being hired.

Another allied change relates to the National Insurance threshold which will rise from 6 April to £9500 from £8632. The Chancellor expects this rise to give workers an extra £100 a year. However, the Low Incomes Tax Reform Group, is concerned that this doesn’t help those below the new threshold and that further, Universal Credit recipients will lose £63 of the £100.

For the self-employed who work as contractors there was little cheer because, despite numerous calls from campaigners, Sunak refused to delay the tightening up of IR35 legislation. And so, the self-employed who work for a company as if they are an employee could potentially end up paying the same level of tax that permanent staff members pay, but without the benefits.

Numerous changes

Sunak offered a number of ‘populist’ tax changes, chief of which was the removal of the so-called “tampon tax” – from January 2021 the UK will no longer charge 5% VAT on women’s sanitary products.

The planned rises in spirits, beer, wine and cider have all been postponed as has the much-vaunted increase in fuel duty. Tobacco taxes, however, will continue to rise by 2% above the rate of retail price inflation. And to help pubs stay afloat, the proposed business rates discount of £1000 per year has – for one year only – been increased to £5000. At the same time, the government is to give £1m to support the Scottish food and drink sector to promote itself worldwide.

For business, the Chancellor commented that the country needs “a thriving private sector” and to this end he announced £130m of funding to provide start-up business loans, £200m for the “British business bank to invest in scale-ups”, £200m for life sciences and £5bn in new export loans. And with a nod to the government’s newly found favour in the regions, dedicated trade envoys to represent the North, the Midlands, Wales and the West of England will be placed in UK embassies.

Following on from the government’s manifesto pledge to review the efficacy of Entrepreneurs’ relief, Sunak announced that it’s to be restricted so that it offers a lifetime allowance of just £1m compared to £10m previously. As he explained, the relief apparently does little to incentivise the creation of businesses, mostly ends up going to a comparatively small number of individuals and costs the government some £2bn a year. The predicted savings will be redirected to business via an increase in the Research and Development Expenditure credit (RDEC) from 12 to 13%, a rise in the Structures and Buildings Allowance (which relieves the construction costs for new structures and buildings) from 2 to 3%, and an increase in the Employers Allowance (which reduces an employers’ secondary Class 1 National Insurance costs) to £4000.

On top of that is an increase in investment in R&D from the planned £18bn to £22bn as more of the funding – £400m – is spread around the regions.

It should be noted that RDEC change only helps larger firms; SMEs use a different scheme which only saw a delay of one year to April 2021 on a cap on tax credits payable; there was no rise in its allowance.

Other areas

On environmental issues, the Chancellor announced changes to how the issue of pollution is tackled, notably, from April 2022 the levy on electricity will be frozen while that placed on gas will rise; a new Plastic Packaging Tax of £200 per tonne will be applied to plastic packaging where less than 30% recycled plastic content is used; and the use of red diesel will be restricted to agriculture, rail and domestic heating and fishing. Those in construction, civil engineering and related trades, plant and equipment hire, transport, quarrying and mining and leisure will lose out.

There’s to be money for greener and cleaner transport options to make it less expensive to buy lower emission vans and cars as well as pay for more rapid charging hubs. And there’s to be £120m for defences damaged in recent floods, £200m to local communities to help areas flooded repeatedly and £5.2bn for new flood defences.

These green changes will be partly paid for by the increase in Air Passenger Duty that will, from 1 April, see long-haul economy tickets rise by £2 to £80, and premium cabin fares rise by £4 to £176.

The regional governments are to be offered more funding – £640m extra for Scotland, £360m for Wales, and Northern Ireland will see £310m.

Other changes to infrastructure will involve gigabit broadband being rolled out nationwide at a cost of £5bn, and £510m being spent on creating a shared 4G network so that 95% of UK will be covered. Roads and rail will see spending too; Sunak noted that there would be “over £27bn of tarmac” through a strategic fund for roads and motorways providing “over 20 connections to ports and airports, over 100 junctions, 4,000 miles of road” alongside £2.5bn over five years to fix potholes. Some might question how this fits in with the government’s green credentials.

Housing saw a 1% cut in interest rates that apply to lending for social housing and there’s to be £1.1bn from the Housing Infrastructure Fund to build 70,000 new homes, £650m to help rough sleepers with 6000 new places, and a new stamp duty surcharge of 2% on non UK residents from 2021. And for those in buildings covered in unsafe combustible cladding, there’s £1bn for its removal from structures over 18m in height, whether publicly or privately owned.

To ease the pressure on NHS funding the planned cut to Corporation Tax has been shelved – it remains at 19% which, Sunak reiterated is the “lowest rate in the G20.” There’s also extra funding for HMRC to reel in an expected £4.4bn in additional revenue. And to get consultants and GPs working more, the pensions taper threshold has been increased by £90,000 to £200,000 to take the majority out of a tax trap; workers in other sectors will benefit if they earn under £200,000.

Businesses caught by the Making Tax Digital (MTD) regime for VAT will welcome the Chancellor’s plans to evaluate MTD’s introduction before (if) it’s rolled out further. According to the Chartered Institute of Taxation, MTD hasn’t reduced errors, reduced costs or greatly improved productivity.

For importers, the introduction of ‘postponed accounting’ means that those who are registered for VAT will account for import VAT as an entry in the VAT return, rather than paying it at the time of import or by using a monthly deferral account; this will aid their cashflow significantly.

And finally, publishers will be pleased that the government is to remove VAT on digital books, magazines and manuals from 1 December. However, it should be pointed out that the EU changed the rules regarding this back in October 2018.

Summary

So, the Chancellor has combined election pledges with pragmatism in helping the country fight coronavirus. The question is – is the government be storing up economic problems for the future or is it hedging on the basis of interest rates will be low for some time? One thing is certain, the plan to place treasury offices around the country is noble, but will 22,000 civil servants all want to move out of London?

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A HOT BED OF MODERN SLAVERY

A HOT BED OF MODERN SLAVERY

The very fact that, in June 2019, there were more than 1400 active investigations into alleged instances of forced labour across the UK, compared with just 188 in November 2016, is indicative of just how rampant the problem has become recently.

The government’s Annual Modern Slavery Report, published in October, highlights the advanced nature of people trafficking gangs, and the heavy response it’s planning as a means of tackling the ‘hidden crime’. The four Ps – pursue, prevent, protect and prepare – lay at the foundation of Home Secretary Priti Patel’s anti-exploitation masterplan, which is designed to bring an end to the ruthless mistreatment of the up-to-13,000 estimated victims across the UK.

It’s not all taking place backstage, either. Hand car wash users across the country are urged to keep an eye out for timid workers, signs of on-site habitation and improper safety equipment in the search for human trafficking gangs. A lack of regulation in the sector makes it all too easy for victims to go under the radar, and the nature of the work means they’re often subjected to freezing temperatures and rain on a day-to-day basis.

WAKE-UP CALL

The phenomenon was brought to public attention by the tragic death, in 2015, of East London car wash worker Sandy Laurentiu-Sava. The Romanian national was living in squalid conditions above the cheerily named Bubbles car wash in Bethnal Green, and was fatally electrocuted when the flat’s crudely mounted power shower short-circuited. His employer and landlord, Shaip Nimani, was jailed for four years. In the wake of the incident, Sava’s brother said: “It appears to me that the employment laws and rules and regulations in the UK are not strong enough, and that more needs to be done to protect the welfare and wellbeing of foreign nationals, to stop incidents like this happening again.” Some will argue, however, that the recent tragic deaths of 39 Vietnamese migrants in the back of a lorry in Essex, suggests that not enough is being done.

Charity group Unseen UK aims to put a stop to such incidents, with Head of Communications Tabitha Ross calling it ‘literally a matter of life and death’, in light of the organisation’s Q2 2019 report recording a nine percent increase in labour exploitation compared to the previous three-month period. Its publicly accessible Modern Slavery Helpine has helped to identify 15,000 victims of modern slavery since it was launched in 2016, becoming one of the country’s most vital weapons in the war against labour exploitation, but now faces imminent closure.

Ross says the charity is working to save the threatened resource, and is halfway to its £800,000 fundraising target, with resources in place to ensure continued operation into 2020. She notes, however, that now is ‘a difficult time for helplines’ in general, and that many ‘up and down the country are at risk of closure’. The helpline’s closure would significantly hinder the consumer’s ability to report suspicious activity at car washes, and could open the door for traffickers to set up new car washes, and import more labourers to work at them.

KNOCK-ON EFFECT

Unfortunately, says Brian Madderson, Chairman of the Petrol Retailers Association (PRA), ‘none of our enforcers seem interested in stopping it,’ and that illicit activity of this nature has found its way into ‘almost every corner of the British Isles’. The PRA represents 70 percent of UK forecourts, and notes a significant downturn in automated car wash trade over the past ten years – a result, so it claims, of the activities of illicit traders. Other countries, Madderson says, ‘are astonished to find that we have up to 20,000 hand car washes across the UK’, where they have none. Aggravating the issue, he says, is the fact that all the equipment and chemicals necessary to running a hand car wash are available from most builders merchants with no need to show any licence or certification.

In 2018, compelled by the government’s inactivity, the Church of England’s anti-slavery arm, the Clewer Initiative, launched a free-to-use ‘Safe Car Wash’ smartphone app, which supplies data from user reports to the National Crime Agency and Gangmasters and Labour Abuse Authority. Any car wash user concerned about employees’ working conditions can answer a series of questions before contacting the Modern Slavery Helpline. The organisation sees employment at a hand car wash as a ‘gateway’ to exploitation for the vulnerable, noting that it’s often an early port of call for people brought from overseas to the UK for work.

Madderson agrees, remarking that, though the hours are long and the conditions far from ideal, car washing ‘requires zero skill’ and brings in at least ‘some money’. For the desperate – and quite often undocumented – worker, it’s the most efficient way of securing a bed and clothing. But, warns The Clewer Initiative, ‘car washes pop up and down without much warning, and may also be cutting corners in other areas’.

ACTION PLAN

The organisation has received more than 2000 reports of suspicious activity since its app launched, helping to identify sites where workers were at risk of abuse. The app’s website, however, notes: “The findings show 126 calls to the Modern Slavery Helpline were made through the app. This is disappointing, as it is only 18% of those who were asked to call.” Madderson, having worked with the app development team, hopes that ‘significant upgrades’ being made to the app will encourage more users to take action. One function being rolled out will offer the location of a nearby, vetted hand car wash, which has been designed to drive business away from trafficking gangs.

Lack of official regulation has put the problem into the hands of consumers and struggling charities, and is taking money away from the regulated car wash sector. It remains to be seen if Anti-Slavery Commissioner Sara Thornton’s bold two-year strategy will have an effect, so for now it’s a case of being on the lookout for wrongdoing, and reporting it where possible.

WHAT TO LOOK OUT FOR

– Cash: If a car wash won’t accept a card or issue a receipt, it could indicate financial misconduct, and suggest staff are not being paid properly.

– Lodging: Look out for signs that workers are living on site, or arriving at the same time every morning, as insufficient accommodation is often provided by trafficking gangs.

– Equipment: As the nights draw in and temperatures drop, look for workers with bare hands, soggy trainers and short-sleeved tops.

– Aggression: Car wash bosses could intimidate customers to prevent closer inspection into their practices. Watch for vicious dogs and potential weapons.

– Nervousness: A victim of labour abuse will probably be unwilling to look customers in the eye or handle money, and might have very poor English.

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THE ALLIANCE IS SET TO GROW

THE ALLIANCE IS SET TO GROW

You wouldn’t guess that Neil Croxson, the new(ish) CEO of the Parts Alliance had spent his earlier career in finance, because whenever we asked about money, he steered the conversation onto the subject of people.

“The job isn’t just about selling parts, I sit on the IAAF committee and I love working with suppliers and customers. There are just so many great characters,” he said, referring to GSF founder Stan West and Andrew Page, son of the founder of the once-mighty factor chain, itself a founder member of the original Parts Alliance buying group, before it left to follow its own path.

“When I agreed to follow on from Peter [Sephton, the previous CEO of the Parts Alliance] probably 90 percent of the decision was about people and the kind of people that I want to work with,” he added. “I have so much respect for these men and women. So it’s an industry about people and very fine detail.”

The ‘fine detail’ he refers to is the delicate balance of running a motor factor chain that is capable of making a profit, but can also deliver the range and service levels demanded by garages. Keeping stock levels right and then being able to get the parts to garages as fast as possible is essential to make sure the opposition don’t get the order, but the biggest cost that factors face is actually getting the part to the technician.

READ: CROXSON REPLACES SEPHTON AT THE PARTS ALLIANCE

It’s for this reason that we met Croxon in ‘Midpoint’, a newly acquired central warehouse that acts as a hub across the Parts Alliance’s various sub-brands. The place is large, though not off-the-scale huge. Rather, the building has been set up to make the most of its internal dimensions in order to house 120,000 different stock references. During our visit, the place was a hive of activity, with staff picking stock by barcode at great speed. The racks were full of all the brands stocked by the business, of course, but we were struck by the number of braking products under the Drivetec house brand there were in stock, and most of them sporting the re-imaged packaging.

“It’s a major investment we’ve made in our logistics,” said Croxson, noting that it would be hard to serve the customers without having warehouses filled with products. “GSF has always had a distribution centre of course, so we are just down the road from where it is set up. Central distribution isn’t entirely new to us”.

Perhaps it’s surprising that the Parts Alliance didn’t already have a central distribution hub, as such. After all, it was over six years ago that private equity firm Hg Capital bought the group out and began acquiring the independent chains that were once its members.

The hub is only a part of getting the maximum efficiency into every parts order. “We’re looking constantly at ways in which we can improve our processes, because if we can be more efficient, in the end it is of benefit to the garage,” said Croxson. “Keeping the garage at the forefront of our thinking is absolutely critical.”

READ: PARTS ALLIANCE OPENS NEW BRANCHES

This efficiency involves a mixture of local conditions and telemetry: “Are we routing the vans as cleverly as we can given the local traffic conditions?” wonders Croxson. “It isn’t just a case of sitting down with a map and looking at driving from one place to another. For example, many towns have a river running through them, which means there will be a bridge in the town centre where the traffic doesn’t move. It’s understanding nuances like that which will make the difference.”

“We will use telemetry to map what’s happening with the vehicles and where they are,” he added. “Technology is a huge part of our future as an industry and we’re using that technology to improve what we do. People have got used to things like the Uber app, where they can see where their taxi is, so there is no reason why we can’t do the same to see where our vans are. That technology exists to help us work more efficiently. I think the technology will become a bigger player as we go forward.”

However, it isn’t technology that will be the biggest capital spend in 2020. At a time when other chains are consolidating, the Parts Alliance is plotting expansion. “The major investment in the business will be the continued expansion of our network,” explains Croxson, adding that the firm opened a ‘jaw-dropping’ 13 branches in 2018, and another five this year. “We’re a national player, we cover most of the corners of the UK now,” he said.

At the heart of this expansion drive is the scale needed to compete at a national level. “The objective is to be able to offer our services to every garage across the country. Croxson said: “Everywhere you look on the map, there are still opportunities where we can’t provide that service to customers.” Creating a network that is truly national will, he believes, gain customer loyalty through reduced lead times. This is particularly important in a consolidating marketplace.

“The fact that there’s continued consolidation in the market recognises that what we’ve been doing is the right approach,” he said. “The market is going to change. Tech is a bigger player, driving habits are changing and cars have extended service intervals. There are changing dynamics in the marketplace and there is a need for scale. There is also a need for our customers to have scale in order to manage that.”

To plug this gap, the company needs to look beyond the mixed spread of the original buying group to fill shelf space in areas where local garages may not even be aware of the Parts Alliance or its members. Asked whether this would be achieved through acquisition or new build, Croxson replied: “We’re open to whatever opportunities are available,” adding that mapping the country had allowed them to ‘pinpoint’ where branches are required, suggesting that opening on fresh sites will be the way ahead.

One significant acquisition in 2014 was a number of branches in the South West of England picked up from the receiver following the collapse of Unipart Automotive. These branches filled a wide gap in coverage and were a significant step in the firm’s ambitions to operate right across the nation. Reusing the Unipart name wasn’t an option, meaning they were simply branded ‘Parts Alliance Southwest’. Bringing these branches into the network also meant the group was able to rehire some of the highly experienced staff from Unipart, including Paul Dineen who became Regional Business Director following the takeover.

The Unipart acquisitions were possible as at that time the Parts Alliance was owned by private equity firm Hg Capital, a decision with which Croxson, then Finance Director, was heavily involved. Given what happened to Andrew Page and others, it would be reasonable to say that the aftermarket has had mixed experiences with PE firms, but Croxson remains positive about the group’s time under Hg’s ownership. “I think private equity can have a bad name from its propensity to dip in and out” he said. “Hg Capital came in and stuck to their plan and they put their money behind it. I mean, 2014 was a difficult year for the industry.”

Croxson explained that ‘private equity’ is a catch-all term for any private money, and the strings attached will be controlled by different people with differing agendas depending on who you work with. “Any PE house is representing a set of investors. You really want to know what a PE is up to when they buy into a company. You really want to look into their funds and what they’re investing for,” he explained. “If a PE house is investing pension fund monies, then they might be more interested in turning an income stream than in turning a company and making a fast buck. Hg came in with an idea that there were a lot of independent motor factors out there. They saw that there were all these members of the Parts Alliance that were all independent, and they thought that there could be strength in bringing them together and there could be value in doing so, and they made their money out of doing so. It was good private equity”.

Hg sold the business to Canada-based parts distributor Uni Select in 2018, which displays a similar appetite for expansion, and according to Croxson has been very supportive of projects such as modernising central distribution.

However, it’s worth pointing out that the Parts Alliance, though a buying group in itself, is itself a member of larger buying group (or ‘global trading platform’ as they prefer to be called), Nexus International. Uni Select isn’t a member of any buying group so has a different sourcing strategy. This hasn’t been a problem though. “There’s a difference between the UK and the North American market. There are different vehicles on the road and different suppliers in those markets,” said Croxson.

Whoever the ultimate owner is, it seems the Parts Alliance and its people have a clear vision of the company’s future.

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INSURANCE FOR YOUNG DRIVERS

INSURANCE FOR YOUNG DRIVERS

Looking to get your young workers out on the road? Here’s how to make it affordable.

The aftermarket supports youth employment. It’s great for the industry and even better for the people being given their opportunity in a thriving work environment. If you run a business that employs young people, and require them to drive for business, you will need to consider what ramifications that has for your insurance programme.

In times of financial uncertainty, sourcing competitive rates from your suppliers is paramount. Unfortunately, adding young drivers to your motor trade or fleet insurance policy makes you less attractive to insurers. After all, it’s no secret the insurance industry doesn’t have a favourable view of covering young drivers, which can lead to eye-watering premiums for you, and even a refusal to cover those drivers at all.

However, this doesn’t have to be the case. In fact, with a bit of planning and tweaking to the way you manage your vehicles and drivers, it’s possible to manage your premiums and still give your young employees the opportunity to build their careers in a driving role.

Restrict vehicle usage

Allowing your drivers to take vehicles home can help mitigate the risks involved with having all your vehicles stored in one place and act as a significant employee benefit. But it also increases the risk of incident in the eyes of insurance companies, especially if social use is permitted. Consider restricting this access to older and more experienced drivers only and exclude social use if you can.

With night driving considered another risk factor you could restrict your younger drivers from using your vehicles during the hours of darkness.

Consider your excess

Most insurers will insist on a higher excess if a driver has held their license for less than 12 months, though some specialist policies will negate this. Increased excesses can also apply to drivers under 25.

However, you can also voluntarily increase your policy’s standard excess, which may lower your premiums. This works particularly well if you generally don’t claim for minor damage. Some companies also make employees liable for any excess charges that might occur, to offset the potentially increased costs of repairs.

Monitor with telemetry

Driver training courses can give younger, less experienced drivers a better understanding of safe and responsible motoring, and can count in your favour when it comes to calculating premiums.

Fitting cameras and telematics can also help reduce insurance costs. In fact, the simple presence of a camera has been proven to improve people’s driving style. Telematic data can even be used to form a league table for your drivers, and create a bonus structure that rewards good driving.

Disciplinary process

Do you have a robust disciplinary process for your drivers? One where they can be taken off the road whilst a situation or concern is resolved? If not, we’d recommend one is implemented. Being able to demonstrate you have policies like this in place demonstrates to insurers you are taking the necessary steps to mitigate risk, a key factor when looking to reduce premiums.

Article by Joe Howard, Associate Director at Norwich-based insurance firm Hugh J Boswell

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BUYING IN TO A FRANCHISE

Business can be tough for small and local, independent firms. Despite the freedoms associated with running a business that is at liberty to do whatever it likes in terms of appearance, business model, etc., there isn’t the financial assistance or technical information that a bigger brand, franchiser or buying group can provide.

One business owner who has had a thorough experience with an automotive garage franchise is Kamran Saleem, now owner of the independent MotorServ UK service centre business. Prior to running his current venture, Saleem operated a branch of the iAuto garage network. Describing the initial set-up of the branch, Saleem said: “The actual delivery and installs and everything of equipment and fixtures for the garage, that actually ran very smoothly and we were very happy with what was going on at the start of the franchise, it was brilliant. They provided a lot of support.”

Saleem and a technician in the workshop

Through the iAuto network, Saleem, whose background was in automotive sales and ‘knew as much about car servicing as the man in the street’, was able to learn the ins and outs of the industry. “It gave me the insight, all the trade secrets, background etc. So that’s probably a year’s worth of experience in a week,” he said. At the time, Saleem was paying five percent of turnover as a franchise fee, as well as some fees for software licences.

Marketing

Initially, Saleem recalled that things like supplies, kit, trade contacts, branding and more were ‘spot on’, but issues started to arise after the set-up. “When we actually opened, day one, it was like: ‘okay, how do we get the cars in now?’,” he said. Sales did not pick up substantially, and Saleem noted that a lack of marketing by the franchise did not help. “What they needed to do is focus on marketing, focus on sales, focus on this or that, but they were too busy selling franchises that they were over run.” Plus, Saleem claims that his own efforts to market the business were not heeded quickly as all the initiatives needed approval which too long to obtain.

Eventually, Saleem decided to leave the franchise, which was a negative experience in itself, requiring the need for a BFA lawyer. “The franchise agreement, they’re heavily weighted towards the franchisor,” said Saleem. “There aren’t a lot of lawyers around that will actually take on a franchise agreement that’s written properly.” iAuto agreed to terminate the contract, but Saleem claims it took ‘about nine months in total to get out’, and ‘ended up costing me probably £70k in costs and loss in income and sales growth during the period all this was going on’.

Programmes

However, Wendy Williamson, Chief Executive of the IAAF, makes a distinction between franchises and garage programmes and believes that the latter are beneficial for the industry. “To me, the definition of a ‘franchise’ is a business that is absolutely run to a very tight set of rules and regulations,” she said. “And I think it’s not what we see in the aftermarket. We see garage programmes where the independent garage still has their independence, they are still Joe Bloggs independent garage…”

Williamson was once involved in the Unipart Car Care Centre scheme, which provided a ‘much more professional image for the garage,’ she explained. “These days, many of our key distributors offer similar programmes with UAN, Groupauto, UK Parts Alliance, ECP, all having very similar programmes which I’m a big fan of and still think they are absolutely key to giving garages as much support as they possibly can,” she said.

Ultimately, when it comes to pros versus cons, Williamson notes that: “I wouldn’t necessarily really see that many cons with these programmes”, and thinks challenges facing the independent aftermarket such as connected vehicles and data access mean that: “the more that the independent sector can support each other right the way through the supply chain, the better it is for the whole sector.”

There are benefits to being being in a group or franchise, but talking to fellow businesses within the industry might help.

“Don’t necessarily rely upon the data that you’re given by the franchisor. Look at the other franchisees, if they exist; you’re going to be in their shoes after all,” said Saleem.

“So make sure you’ve got access to them. And if you are blocked access to the other franchisees or you’re not given the opportunity to discuss things … then there might be something up”  he concluded.Buis

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COMPANIES HOUSE – THE CASE FOR REFORM…

COMPANIES HOUSE – THE CASE FOR REFORM…

By Peter Windat – accountant and insolvency practitioner at BRI Business Recovery and Insolvency 

The work and practices of Companies House, the repository for all information on the majority of the UK’s companies and similar registered entities, is currently under review. In May, the Department for Business Energy and Industrial Strategy issued a consultation about options to reform the body and change is coming.

In recent years concerns have grown that the UK’s framework is open to misuse. Concerns arise mainly from four interrelated issues – misuse of UK companies by international criminals and corrupt elites; the accuracy of information held at Companies House; the abuse of personal information on the register; and the limited nature of cross checks between Companies House and other public and private sector bodies.

Given a span of 80 pages much is covered, and the view is clearly that much work needs to be done to help keep the UK in the leading pack of countries in which it is desirable to start and grow a business.

Know who’s managing

The government is proposing that individuals who have a key role in companies should have their identity verified. This would apply to company officers (directors), People with Significant Control (PSCs), and those filing information.

It should be possible to introduce such identity checks simply but there are also important data protection issues.

The consultation sets out why greater certainty over the identity of those shown as owning, running or controlling companies is needed, it shows how new technology offers the opportunity to obtain greater assurance over identities, and sets out far-reaching proposals to introduce identity checks for those who file information on the register, directors, PSCs and, on a voluntary basis, shareholders.

This document proposes a series of reforms that would deliver better quality information on the register – including extending the powers of Companies House to query and seek corroboration on information before it is entered on the register and making it easier to remove inaccurate information. In addition, the government is proposing improvements to the process and delivery of annual accounts to Companies House. The government intends to maintain the current approach to retaining records of dissolved companies on the register for 20 years from dissolution.

Personal information

The government has outlined how Companies House will store information if its proposals are adopted. Under identity verification proposals, access to the register will be carefully managed, allowing only identified or authorised persons to file information. New processes are proposed for sensitive information to be protected. Proposals to allow directors some additional rights to suppress their information from public view have also been set out.

Information on the register should be of real, practical use to those who wish to find out information about those taking advantage of the privilege and protection of limited liability. However, information on the register should not become a tool for abuse and so information of a sensitive personal nature will not be made publicly available.

Ensuring compliance

Companies House data on UK corporate bodies could be improved through cross checks against data held by other government and private sector bodies. The government wants to see the exchange of intelligence made easier in order to enable greater sophistication in identifying possible criminal behaviour. This will lead to faster identification of anomalies between data at Companies House and elsewhere.

Also sought were views on several related measures that might deter abuse of UK legal entities, including ending the business activities of limited partnerships which are being misused, imposing limits on the number of directorships any one individual can hold, disclosure of banking information and action to deter misuse of company names and addresses.

The routine cross-checking of information on the companies register against external data sets and powers to obtain feedback on discrepancies identified is proposed alongside adopting a risk-based approach to the sharing of intelligence with police and requiring firms to provide bank details.

Implementation

The proposals in the consultation, if implemented in full, would amount to the most significant reform of the UK’s company registration framework since a register was first introduced in 1844 and go to the core of the Companies Act. There will be an impact on the fees levied by Companies House, though the government fully expects them to remain very low compared to international standards.

The transformation will touch every aspect of Companies House’s work, covering both customer-facing and internal digital systems.

Although responses to the proposals were required by August 5, there will be a little leeway for late submissions.

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IS THE AFTERMARKET EMISSIONS COMPLIANT?

IS THE AFTERMARKET EMISSIONS COMPLIANT?

By Greg Whitaker

At this year’s What Car? Awards the coveted ‘Car of the Year’ gong was picked up by Kia for its e-Niro EV. This marked the first time that a car maker from the Pacific Rim had picked up such an accolade, but crucially it was the first time that an electric car could be considered practical enough for the magazine to recommend one to its readers as being better than, rather than just a compromised alternative to, a conventional petrol or diesel-powered car.

Electrification is one of three major areas (or to use industry jargon ‘megatrends’) where the motor industry is changing and fast, with the other two being ‘connected car’ and autonomy. This is good news for the health of all concerned, but does it mean that car manufacturers are done with conventional power trains?

The answer is no, at least if you read some of the press releases about emissions-reducing technology that is being developed in reaction to emissions. Delphi Technologies for example produces a GDI (gasoline direct injection) system that runs at 350 bar – tech that the manufacturer itself immodestly describes as ‘state of the art’. However even this has now been supplanted by a new system that runs at an intense 500+ bar, or around 7,500 psi.

Under pressure

Such pressure means the fuel vapour mix is so fine it will explode at an atomic level, meaning even very small particulates are reduced by half. However, running engines so hard is not without problems.

“The industry has long recognized that increasing injection pressure to 500+ bar could substantially cut engine-out particulates while improving CO2 emissions and fuel economy,” explained Walter Piock, Chief Engineer, Gasoline Systems, Delphi Technologies.

The challenge has been to achieve such pressures without increasing the drive loads from the pump. As most engines power the GDI pump through the camshaft drive, a conventional approach would usually require a costly redesign and strengthening of the camshaft mechanism.

“By designing an innovative new internal sealing system for our GFP3 500+ bar pump, in some applications, we have designed a downsized plunger diameter which prevents increasing the loads in the drive mechanism,” said Piock.

Descriptions of the Multec 16 injectors and ‘forged rail’ make no reference to the parts being serviceable, and it is likely that components under that significant amount of pressure will be sealed for life.

Time will tell how reliable a pump that operates under such a load will be, but there can be no denying that the increase in combustion efficiency will allow the petrol engine to be a viable proposition to both the buying public and to politicians for a while yet.

Of course, the aftermarket has to follow OE so there is little in the way of innovation in this field, although products such as ‘universal’ lambda sensors could well make the emissions from a vehicle worse as they are not calibrated to the specific values needed for the application. Fortunately there a plenty of OE-spec parts available, such as the recently launched wide band (also known as five-wire) sensor range under NGK’s NTK sensors brand.

“We have had a very positive response from our customers to the launch of our new NTK five-wire sensors. NTK has more than 40 years’ experience in the sensor business and this is a fantastic addition to our portfolio” said Mark Hallam, Marketing Manager at NGK UK.

Slippery issue

It is also no secret that lubricants are getting thinner in a bid to increase engine efficiency. “Car and lubricants manufacturers try to improve the fuel economy of cars by reducing the viscosity of engine and transmission oils. A thinner oil flows more easily and requires less energy for it to be pumped into the engine,” said Bob Wood, a Technical Engineer at Total Lubricants. “To be compliant with ACEA specifications, synthetic oils or severely hydrocracked base oils are used in combination with the dedicated additives, to not only meet the minimum requirements, but to exceed them”. Wood added that the pace of development of thin synthetic oils for modern and hybrid engines is fast, and that innovations in the additive pack, such as the firm’s patented ‘age resistant’ technology would continue.

Standards question

Buying aftermarket products that directly relate to the emissions that a vehicle produces can be complex. Equipment such as DPFs and catalysts vary wildly in price and this is due in part to different methods of producing them. One of the main areas of debate over the last few years is how effective these components are. David Carpenter of Cats and Pipes explained to us the last time we spoke that: “When buying a product of this technical complexity, in order to guarantee the product complies, it is important to purchase a product that meets Euro classification and comes with all the relevant and up to date test data and quality approval marks”.

Crucially, and in reference to a row that the aftermarket had seen in recent years, he added: “It is also important to question the data and information received to ensure it applies to the actual product you are purchasing. Also, very simply, if the aftermarket version you are buying is totally different in appearance and size to the manufacturer fitted version, there has to be a difference in performance”.

“This is particularly relevant with DPFs and CATs that are supposed to meet the Euro classification to be retailed in the UK. If they are physically only half the size of the original factory fitted part, they cannot possibly meet the standards to which they are supposed to comply. This is a challenge for the aftermarket and small companies which often do not have the time or resources to check all this information and are often buying purely on price and good faith however visual checks are a good place to start,” he furthered, concluding that apart from the environmental issue, products that don’t meet the spec result in returns and unhappy customers.

It seems that the battle of price vs quality is not over yet.

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HOW TO BE A LEADER IN UNCERTAIN TIMES

HOW TO BE A LEADER IN UNCERTAIN TIMES

 

ARTICLE WRITTEN BY FORMER ENGLND CRICKETER, JEREMY SNAPE

 

It is a difficult time to be a business leader in the motor trade, and as Brexit uncertainty amplifies, businesses that rely on the EU for supplies and trade, are being tested like never before.

Already we are witnessing suppliers stockpiling parts to avoid the mayhem that chronic uncertainty has caused this vital sector.

Jeremy Snape urges firm leadership in an uncertain age

Imagine you are the boss of an independent garage that sources obscure but vital components for a certain make of van. Your biggest customer has a 50-strong fleet of these vans, and they need to be assured that your garage will keep supplying those vital parts without disruption that Brexit could bring – what do you do?

The UK’s future trading relationship with the EU is just one of the many ongoing concerns facing independent garages and distributors. The sale of diesel cars in freefall following the 2016 emissions scandal, while automated cars are the way of the future with petrol being phased out by 2040.

Even after the Brexit dust settles, they will be no end in sight for the huge environmental issues affecting the motor trade. London, for instance, has introduced a new charging zone for older polluting vehicles that enter the city, something that could be rolled out across the UK.

These fundamental challenges call for leaders who are capable of withstanding intense pressure.

Now is not the time to dither, but instead focus on showing courage, clarity, action and most importantly, leadership.

For lessons in leadership you could do no better than look to the military or elite sport, which operate in environments of intense pressure, constant uncertainty and, in the case of the military, life or death decisions. You might argue that in professional sport, international football and rugby teams operate in environments where some people think the outcome is even more important.

The pressure powerful enough to unnerve even the most experienced players as I have learned from personal experience. Mental preparation is key to success.

Back in 2002, when I was privileged enough to be included in the England Cricket squad tour of India, my game collapsed in front of 120,000 people while I was up against batting legend Sachin Tendulkar.

The crowd roared as the pressure built up inside me that day, I couldn’t hear a thing and I ran Freddie Flintoff out. Right there and then I felt I wasn’t good enough to be there. It was only later when I started exploring psychology that I understood it wasn’t India that beat me that day, but my own mindset.

This started my research quest to find out what neuroscientists, military leaders, and Olympians could teach us all about performing under pressure.

In the last decade I’ve interviewed some of the world’s most impressive and prolific leaders, from Sir Alex Ferguson to military generals and even the Performance Director at the Cirque du Soleil to understand what tactics and strategies they use to mentally prepare for uncertainty.

In doing so I have distilled the secrets of their success into a digital library which helps my clients to maintain a winning mindset when they need it most.

Here are some essential tactics to help you cope with chronic uncertainty.

  1. Stop blaming others; own the situation.

With our current Brexit situation there are plenty of people you might feel like blaming– the electorate; former Prime Minister David Cameron; the EU; MPs in Westminster; our Prime Minister.  But when Brexit is done there will be another fundamental problem in its place. You can’t continue to blame others for everything that is wrong in the world, you need to get over it.

In the world of sport, we see elite coaches stepping up when things have gone wrong, not making excuses.

Ireland Rugby coach Joe Schmidt didn’t hide after his team was beat by Wales in the final Six Nations match in February. It later turned out some of the squad had been hit by a stomach bug in the run up to match, but that wasn’t an excuse for poor play, said Schmidt, they were simply beaten by a better team and would need to work out a strategy for the World Cup in Japan.

As Schmidt shows, great leaders don’t waste time blaming others: it may win you sympathy, but it won’t help you solve the problems.

Uncertainty creates opportunity so start by owning the situation and making a plan that turns the uncertainty into an advantage.  After all, other businesses have the same problems so those that actively tackle the situation will be the ones that succeed.

  1. Pressure is a privilege.

 

Having played in and worked with some of the world’s highest profile sporting teams, I’ve seen how they use pressure as privilege and use this mindset to tackle potential issues head on. Worrying about what might or could happen leads to paralysis, so an effective leader must embrace the challenges ahead.

In the military, the best leaders prepare their teams for Plan A, but they also throw scenarios into the training that get the teams thinking on their feet. I’ve supported several senior leadership sessions at Sandhurst military academy and heard how they create challenging and chaotic scenarios to test the soldiers’ ability to think clearly and adapt under pressure.

In a business context, this could mean equipping teams with the skills to make decisions under extreme pressure and rehearsing with scenarios. By pressure testing various challenges, you will be more familiar with the decision-making sequence that follows when chaos ensues. What if vital parts for your biggest customer was stopped at the border?

  1. Don’t micromanage – enable.

 

An effective leader needs to have confidence that their team so that they are empowered to make crucial decisions when needed.

This may sound good on paper, but, I hear you ask, what does that mean in practice?

Making sure that vital employees are given the right training is essential for building confidence in them. Equipped with the right skills and level of autonomy, team members will feel empowered to make decisions – and this could be the difference between you and your competitors, who are dally without making business choices.

  1. Be fluid not fixed.

 

Rapidly changing situations calls for leaders who can bring together diverse people to fix problems and exploit opportunities, fast.

Leaders must understand that they can’t predict and prevent all problems from arising, they must prepare teams so they can assess and respond quickly.

Understanding your biggest business threats, whether that is Brexit or environmental issues, and how your business will respond if they become reality is important to be able to withstand the pressure that comes from uncertainty.

Confidence comes from preparation, so plan for the unexpected and turn disruption to a commercial advantage.

Very few will have the perfect strategy to deal with the political uncertainty in coming weeks but those who maximise their mindset and culture will have the best chance of winning whatever the position.

 

  • Former England Cricketer Jeremy Snape founded Sporting Edge,  a consultancy that ‘unlocks the Winning Mindset in business’. Stated in 2005, the firm’s approach to corporate learning helps businesses to stay ahead of the game.

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EMPLOYMENT LAWS ARE CHANGING – ARE YOU?

EMPLOYMENT LAWS ARE CHANGING – ARE YOU?

By Tina Chander – partner and head of the Employment team at leading Midlands law firm, Wright Hassall

Tina Chander

Since 2010, the UK has experienced lower unemployment rates across every region, underpinned by a strong and innovative labour market that has seized on the opportunities offered by new technologies, emerging business models and changing ways of working. 

Existing employment law and policy framework has found a balance between flexibility and worker protections, placing Britain in a strong position to benefit from the new industrial revolution and the opportunities it will bring.

Out with the old, in with the new

The government unveiled its Good Work Plan in December 2018 as a direct and carefully detailed strategy to strengthen worker’s rights and change employment laws.

Labelled as ‘the biggest package of workplace reforms for over 20 years’, the plan builds on the Taylor Review recommendations of February 2018 and outlines an intention to improve conditions for agency, zero-hour and other atypical workers.

Within this plan, the government commits to a wide range of policy and legislative changes, clarifying the relationship between employers and workers, while ensuring the enforcement system is fair and fit for purpose.

As working becomes more flexible and varied, it is imperative that the key protections relied on by workers are not negatively impacted, and this Good Work Plan is designed to reinforce existing rights.

Requesting stable contracts

One of the main issues addressed is ‘one-sided flexibility’, which recognises some businesses have transferred too much business risk to the individual, affecting their financial security and personal well-being.

New legislation will give workers the right to request a more stable contract, allowing them to benefit from flexible working, without the financial uncertainty.

Those happy to work varied hours each week can do so, but others will be allowed to request a fixed working pattern after 26 weeks of service, giving workers greater control over their own lives.

For those working zero-hour contracts, this change will allow them to request a contract that guarantees a minimum number of weekly hours, which is crucial when looking to secure a mortgage.

Repealing Swedish derogation

The Good Work Plan also addresses Swedish derogation, which currently allows agency workers to exchange their right to be paid equally to permanent counterparts in return for a contract guaranteeing pay between assignments.

Although the original intentions of Swedish derogation were to offer reassurance that individuals would still earn during quieter periods, some employers have been using this opt-out to reduce the size of their pay bill.

Nowadays it is very unusual for agency workers to have gaps between their assignments, and in some cases, employers have devised schemes to keep their exposure to a minimum contrary to the requirements originally outlined.

The government aims to repeal Swedish derogation with new legislation, banning the use of this type of contract to withhold equal pay rights. Instead, long-term agency workers will receive equal wages to those of permanent employees.

Tougher enforcement measures

In order to create a level playing field between businesses, there needs to be effective enforcement.

The government plans to extend state enforcement for vulnerable workers, introducing tough financial penalties and an approach that already applies to underpayment of the National Minimum Wage.

This involves increasing enforcement protections for agency workers where they have pay withheld or unclear deductions made, while new legislation will increase the maximum penalty imposed during employment tribunals on the grounds of aggravated breach.

Ongoing employment developments

While the Good Work Plan looks set to bring about some wholesale changes to employment law and workers’ rights, there are other broader developments on the horizon.

On April 6, 2019, new legislation under the Employment Rights Act 1996 is due to come into force, introducing a right for all workers to be provided with an itemised pay statement and the ability to enforce this right at an employment tribunal.

On the same day, other legislation will require itemised payslips to contain the number of hours paid for where a worker is payed hourly.

Preparing for the future

With the arrival of the Good Work Plan and ongoing consultation regarding employment laws and legislation, 2019 will be a crucial year for businesses and workers alike.

It’s important that organisations take the time to review the changes and understand the requirements outlined in the new legislation, as non-compliance could cost organisations financially and damage their reputation.

If you’re unsure about the Good Work Plan and wider developments, it is important to consult a legal team with significant experience of employment law and the imminent changes.

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