Many gangmasters still don't have a licence - and some of the businesses using their workers know it, the Gangmasters Licensing Authority said ahead of new regulations due to come into effect next month.

The GLA believes there are companies in the food processing and packing sector knowingly using labour from providers who are flouting the law, said chief executive Mike Wilson. He warned they could soon be facing stiff sanctions.

Since 1 October, it has been illegal for a gangmaster to supply workers to farmers, packers and manufacturers in the food sector without a licence. Of an estimated 2,000 gangmasters operating, less than half are approved. Though it is not currently an offence to use an unlicensed gangmaster's services, it will be from 1 December. Those found guilty face a maximum penalty of a fine and 51 weeks in prison. "We are aware of a number of labour providers operating without licences, and we have clear indications that a number of labour users are complicit in this," said Wilson. The GLA had already started investigating these labour users, he warned. "If a labour user employs an unlicensed labour provider after 1 December, we will be able to investigate and prosecute them both at the same time, which will save money and resources."

Retailers risk prosecution if they own the packhouse or processing plant found employing the services of an unlicensed provider - or if they are proven to be aware of, or complicit in, a breach of the law.

Wilson said the GLA had received 1,070 applications so far. Of those processed, it had licensed 816 and refused 15, while another 100 operators had withdrawn an application.

At least one gangmaster was appealing against a rejection and others were set to have their licences revoked for breaching the Gangmasters Licensing Act, Wilson added.

The GLA is to launch a service on 1 December to enable companies to check the licensing status of labour providers.