Background
The consultation launched by the government on 16 July 2019 proposed bringing together the three existing labour market enforcement bodies: HMRC National Minimum Wage Enforcement; the Gangmasters and Labour Abuse Authority; and the Employment Agency Standards Inspectorate into a single body. The consultation closed on 6 October 2019. There were 111 responses from a range of sources including: individual workers, trade unions, employers and trade associations.
On 8 June 2021 the responses to the consultation was published in a report which confirms the government’s commitment to create such a body, as set out in the government’s manifesto. The new body will not just bring together three existing bodies into a single, recognisable organisation, it will deliver a significantly expanded remit. As a result, more vulnerable workers across the country will receive money that is owed to them
Key points to note:
Reforming the current system
The response makes it clear that the overriding objective behind the creation of the new body is to significantly improve the government’s ability to protect vulnerable workers and ensure they receive their employment rights. The response commits to effective enforcement action to tackle non-compliance and to create a level playing field for businesses across the UK.
Remit of the single enforcement body
The single enforcement body has a wide remit to protect vulnerable workers covering:
- National Minimum Wage (NMW) and National Living Wage (NLW)
- Domestic regulations relating to employment agencies
- Umbrella companies, which employ and handle payment for agency workers but do not currently fall within the remit of the Employment Agency Standards Inspectorate
- Licenses to supply temporary labour in high risk sectors in agriculture and the fresh food supply chain
- Labour exploitation and modern slavery related to worker exploitation
- Holiday pay for vulnerable workers
- Statutory Sick Pay
- Modern slavery statements
- Unpaid employment tribunal awards
The approach to enforcement
76% of respondents supported a balanced approach to enforcement focused on both compliance and deterrence. The report concludes that the best outcome for all would be a position where employers understand their obligations and comply with the law, so that workers receive their rights in the first place. This requires both support – so employers understand how to comply – as well as effective, visible enforcement action to deter irresponsible employers from believing they can get away with not meeting their obligations. Recognising the complexity of the law the response commits to providing detailed technical guidance for employers.
A compliance notice system will be developed for "lower harm" breaches across the single enforcement body's remit to allow rectification; however these notices will not be appropriate for more serious breaches and/or where the employer has been non-compliant multiple times.
The single enforcement body will retain access to HMRC data which supports NMW enforcement.
The single enforcement body will also seek to establish a culture that makes workers feel safe to come forward and report non-compliance. Recognising the importance of information and intelligence the government has committed to creating a high profile body, setting out clear, transparent information on what happens when an individual makes a complaint and what information is needed to support action. This commitment aligns with an increased focus on ensuring workers have a voice and can speak up about wrongdoing across the spectrum of worker rights.
Powers and sanctions
New civil penalties for breaches under the gangmasters licensing and employment agency standards regimes that result in wage arrears are to be introduced. Civil penalties will be used where a compliance notice is inappropriate, or if employers fail to comply with a compliance notice in time. The penalties will be set at the same level as the NMW penalties, 200% of arrears, with a minimum penalty of £100 and maximum of £20,000 per worker.
The government will consider the interaction between the introduction of compliance notices and the current 50% discount where arrears and penalties are paid within 14 days. The government is not currently proposing to increase the level of NMW penalties. The impact on compliance of the NMW penalty increase of 2016 is being monitored before any further changes will be considered.
The NMW naming scheme will be extended to the enforcement areas covered by the newly extended civil penalties.
The single enforcement body will support businesses with their responsibility and will work with industry and other stakeholders to help develop best practice guidance.
Comment
Business minister Paul Scully commented "This government has been absolutely clear that we will do whatever we can to protect and enhance workers' rights". As we await further detailed plans there is a window of opportunity for employers to audit working practices and ensure they are complaint in areas covered by the remit of the body. Protecting vulnerable workers is a consistent theme throughout the response and clearly a primary focus for the new body.
The single enforcement body will be set up through primary legislation "when parliamentary time allows".
For the full response please click here >
The law surrounding the remit of the single enforcement body is notoriously complex and remaining compliant is not always easy. If we can be of any assistance with regard to the issues raised in this update please do not hesitate to get in touch.
