UK Government Proposes New Single Body for Employment Rights Enforcement

The UK government has launched its latest Good Work Plan consultation which proposes a new single body for employment rights enforcement.

Under the proposals, the new body would:

• deliver extended state enforcement of holiday pay for vulnerable workers and regulate umbrella companies;
• provide a strong recognisable single brand source for help to vulnerable individuals and the coordination of complaints;
• supply better support for businesses on employment rights and produce a more easily navigable and proportionate approach to enforcement;
• pool intelligence and better target proactive enforcement activity to tackle serious breaches;
• ensure more effective use of resources and coordinated enforcement action;
• give new powers and sanctions appropriate to the seriousness of the breach; and
• achieve closer working with other enforcement partners.

The intention is to benefit both vulnerable workers and good employers.

The consultation proposes that:

• the DWP enforcement of statutory sick pay should move to the single enforcement body
• where there are gaps in the existing enforcement tools and approach to discrimination and sexual harassment in the workplace available to the EHRC, the single enforcement body may be a better route to address them.
• to move enforcement of employment tribunal awards from the existing BEIS penalty scheme to the new single enforcement body.
• with the health and safety executive maintaining overall responsibility for the Working Time Regulations enforcement, allow the single enforcement body to enforce specific elements relating to annual leave for vulnerable workers.

Commenting on the new proposals, Carolyn Brown, RSM employment law partner and head of RSM Legal LLP said: “This is the first proactive step announced since December 18 in the government implementing The Good Work Plan.  It should certainly tighten regulation, but its impact may not be seen for some while. 

“It has also had the effect that there has been a pause of the current BEIS naming and shaming regime for NMW breaches. Despite ministerial statements that defaulters during the pause will eventually be named, it must be assumed that pause will be maintained at least until the results of the consultation are known.

“It is also significant that Matthew Taylor, whose “Good Work” Review recommendations the government proposes to deliver has been appointed from 1 August for twelve months as the new Director of Labour Market Enforcement strategy.  This will allow him the opportunity to implement some of the ideas that his report first proposed.”

The government has taken the view that the proposed new single enforcement body is better placed to develop a consistent approach to “lower harm breaches” by employers through inadvertence causing little damage to the worker where formal enforcement action may not be appropriate and where factors such as whether there was a detriment to the worker or whether the employer has committed other breaches would be taken into consideration.

The government says the proposed new single enforcement body should:

• make it easier to raise a complaint
• improve the ability to identify non-compliance
• publicise breaches more effectively through a consistent and more targeted approach rather than the current myriad complaint routes.

The consultation reflects the fact that the naming and shaming regimes apply differently across different enforcement areas with BEIS naming all employers who have been issued with a notice of underpayment of National Minimum Wage unless employers meet one of the exceptional criteria or have arrears of £100 or less but different application under other enforcement bodies.

The view is taken that naming everyone subject to enforcement action could dilute the impact of naming. Instead focussing on more serious breaches such as where a business has failed to respond to enforcement action would be more consistent and supportive, with the tougher enforcement action reserved for more deliberate and persistent breaches.  Therefore, it is proposed the new body should focus on publishing enforcement action involving more serious breaches such as prosecutions, larger underpayments, individuals who failed to pay a civil penalty and persistent offenders.

It is proposed that the civil penalties regime under the National Minimum Wage Regulations is extended to other enforcement areas where arrears of wages are involved.  The new penalties are proposed to be set at the same level as the National Minimum Wage penalties of 200 per cent of arrears with a minimum penalty of £100 and a maximum penalty of £20,000 per worker and, as with National Minimum Wage, a reduction of 50 per cent where the arrears and penalties are paid within 14 days.

It is also proposed to introduce civil penalties where arrears have arisen due to a breach of regulations 12 or 25 of The Conduct of Employment Agencies and Employment Business Regulations 2003 particularly where they relate to pay, such as an employment business which has not received payment from the client withholding pay from the worker or if the worker cannot produce an authenticated timesheet and withholding payments in the entertainment or modelling industries where they are due to the worker and requiring then to be held for no more than 10 days and in separate client accounts.

The consultation ends on 6 October 2019 with funding for the new body already being secured.