Firms which exploit staff could face higher financial penalties and increased risk of prosecution under recommendations to the government.
A report by a government-backed body has made 37 recommendations including that big companies should put more pressure on their suppliers.
The report is by Labour Market Enforcement (LME), set up last year to oversee a crackdown on exploitation.
It also recommends a pilot scheme to licence hand car washes and nail bars.
Sir David Metcalf, head of LME, also called for action to enforce holiday pay, and said leading companies should be named and shamed if they fail to correct any non-compliance in their supply chains.
He said: “This strategy sets out how we can toughen up enforcement activity to protect vulnerable workers and ensure that good, compliant firms are not undercut by unscrupulous competitors.
“It’s important the government has the necessary powers to crack down on bad bosses who exploit and steal from their workers – that includes bigger penalties to put employers off breaking the law.”
The main recommendations include:
- Bigger financial penalties for employers and pursuit of more prosecutions
- Making it the law that employers provide a statement of rights for employees and a payslip for all workers
- Make leading brands jointly responsible for non-compliance in their supply chains
- More resources to the Employment Agency Standards Inspectorate to enforce current regulations
- Piloting licencing of hand car washes and nail bars, which have been identified as sectors at risk of exploitation
- Tackle “phoenixing” – the practice of directors dissolving their companies to avoid paying workers tribunal awards
The government will respond officially to the report later in the year.
However, business minister Andrew Griffiths said: “We will not accept illegal behaviour from bosses who exploit their workers and cheat the competition which is why we are already cracking down on irresponsible company directors and boosting protections for workers.
“We will enforce holiday pay and give new rights for every worker to get a payslip and a list of their rights when they start a job.”
Unions also called on the government to crack down hard on exploitation.
Unite assistant general secretary Steve Turner said: “The government needs to put its money where its mouth is with enough resources to make its threats a reality for bad bosses.
“Ministers could also show they are serious about standing up for workers by calling time on the insecurity currently endured by around one million working people and ban the use of exploitative zero-hours contracts.”