UK creates workers’ watchdog to protect and enforce rights

The watchdog brings responsibilities currently shared by the Gangmasters and Labour Abuse Authority, the Employment Agency Standards Inspectorate and HM Revenue & Customs’ (HMRC) National Minimum Wage Enforcement together.

It will have enforcement powers covering regulations governing the minimum wage and agency workers’ pay, and will produce guidance on best practice to help employers understand the rules.

The watchdog will gain new powers, giving it the ability to ensure vulnerable workers get the holiday pay and statutory sick pay they are entitled to, without having to go to an employment tribunal.

The announcement forms part of the government’s response to a 2019 consultation (24 page / 288KB PDF) on the proposal to establish a single enforcement body for employment rights. It set out a stated aim to deliver a significant advance in the UK’s ability to protect vulnerable workers.

Regulatory law expert Sean Elson of Pinsent Masons, the law firm behind Out-Law, said the aim was to be applauded but its detail would require careful consideration to avoid unintended consequences.

“While a level playing field for all businesses is one of its goals, the government will have to ensure that legitimate business is not stymied, particularly as the economy seeks to recover from the effects of the pandemic,” Elson said.

“This is particularly so where the remit of the new single enforcement body coincides with that of existing regulators such as the Health and Safety Executive, whose remit already includes protecting workers and supporting and guiding businesses on their compliance obligations. Care will have to be taken to ensure that there is clear guidance on the role and responsibilities of the two to prevent duplication and unnecessary cost,” Elson said.

Elson said the new body would need sufficient resourcing to enable it to stop those intent on abuse. He added it could be some time before the watchdog was operational, given that primary legislation would be required and there was limited Parliamentary time.

Last year the government announced changes to the 2015 Modern Slavery Act, including a requirement for organisations to produce a modern slavery statement and publish it on a new government-run registry for modern slavery statements. The government is also considering appropriate enforcement options for those who fail to meet their transparency in supply chain obligations, and the announcement of the watchdog confirmed that it will have powers to impose financial penalties against non-compliant organisations.

“With increasing calls for international harmonisation of laws to prevent and address modern slavery, the prospect of a new body with enforcement powers should prompt organisations to take action now to ensure that their supply chains are regularly assessed and risks mitigated. Red flags cannot be ignored. Change is coming,” Elson said.

The watchdog will retain HMRC’s powers to name and shame employers who breach minimum wage rules. The government said it would use distinct naming rounds by types of breach, and that this approach would be extended to enforce holiday pay for vulnerable workers and statutory sick pay.

Employment law expert Jon Fisher of Pinsent Masons said: “Many employers have been unhappy with HMRC’s approach to National Minimum Wage enforcement, and particularly their approach to what employers regard as inadvertent, technical breaches. However, there is no sign at this stage that the new body will take a different approach to enforcement. If anything, the lack of an existing relationship such as that employers have with HMRC may lead to the new body taking an even stricter approach.”

The government did not give an expected timeline for the establishment of the watchdog.