The 2017 Taylor Review of Modern Working Practices will seem like a distant HR memory, particularly considering the employee relations landscape over the last 18 months. However, far from dropping off the radar, the Government announced earlier this summer that it is taking steps to implement one of the key recommendations from the final Taylor Review: to enhance state enforcement of basic employment rights to protect the most vulnerable workers in the UK. Accordingly, the Government intends to create a one-stop shop workers’ enforcement body (the “Workers’ Watchdog”) at the earliest legislative opportunity.
We look below at the origins of the Watchdog proposal, the sanctions which will be at the body’s disposal, and the extent to which it is likely to achieve its stated aims.
Where did the Workers’ Watchdog idea come from?
As we highlighted in our discussion on Brexit and employment law article earlier this year, one of the conditions for agreeing a trade deal with the EU following Brexit was a commitment to ensuring a “level playing field” in policy areas such as employment law. As a result, it was agreed that both the UK and the EU would maintain their respective labour and social levels of protection (“the non-regression principle”), which includes an effective system of enforcement of employment laws by public bodies.
Critics of the UK labour and employment law regime may argue that there is no system for effective enforcement, with enforcement split as it is across a variety of separate bodies which operate independently of each other, such as HMRC, the Health & Safety Executive and the Employment Agency Standards Inspectorate. The Taylor Review specifically highlighted the need for vulnerable workers to be able to rely on the state to protect them, challenging unlawful practices and taking action to enforce rights. Where that occurs, employers will be more incentivised to refrain from using exploitative practices to gain a competitive advantage.
The subsequent Good Work Plan Government policy paper from 2018 first proposed the creation of a new single state enforcement agency. This latest Government announcement concludes a consultation process which was launched in 2019. The proposed Workers’ Watchdog appears to reflect the Government’s intention to honour the recommendations in the Taylor Review, the Government’s own Good Work Plan and the ethos of the non-regression principle agreed with our European neighbours in relation to employment law.
But will it be a token gesture, rather than a substantive addition to the UK’s employment law forums?
What will the Workers’ Watchdog do?
The remit of the new enforcement body will be relatively broad, providing a single point of enforcement in relation to:
tackling modern slavery (currently provided by the Gangmaster and Labour Abuse Authority (GLAA);
enforcing national minimum wage rates (currently enforced by HMRC); and
protecting agency workers (currently falling to the Employment Agency Standards Inspectorate (EASI)).
The anticipated “one-stop shop” approach aims to enhance current enforcement levels with better coordination and effective data and intelligence sharing, so that employers who are in breach of vulnerable workers’ legislation in one area (such as by underpaying national minimum wage for factory workers), will also be liable to further investigation into other potential breaches. A working example of the coordinated approach which is identified in the response is the GLAA’s multi-agency taskforce, set up to address serious non-compliance reports in the textile industry in Leicester.
In particular, the response document appeals to brands at the top of the supply chain to act responsibly and consider the impact of their behaviour on their suppliers, particularly in relation to pricing policies and late payments, which may have a knock-on effect on workers’ pay. The intention is to work with garment industry bodies and retailers to develop best practice guidance.
How robust are the sanctions for employers?
As a starter for ten, the new body will aim to build on the compliance activity of the existing bodies and provide detailed technical guidance to complement that currently provided by ACAS. There will also be a compliance notice system for employers who are on the hook for lower harm breaches, giving them an opportunity to take corrective action before a penalty notice is issued.
When it comes to more significant breaches, there will be:
civil penalties for wage arrears due to breaches of the gangmaster licensing and employment agency standards regimes. Penalties will be set at 200% of arrears, with a minimum of £100 and a maximum of £20,000 per worker
an extension of the current “Name and Shame” scheme to cover wage protection breaches
powers to enforce sick pay and holiday pay (as an alternative to vulnerable workers having to bring employment tribunal claims);
enforcement of the current BEIS penalty scheme for unpaid tribunal awards
transparency in supply chains/modern slavery statement reporting (under section 54 of the Modern Slavery Act 2015) and financial penalties for non-compliance
regulation of umbrella companies that are involved in the payment of agency workers.
Is it likely to be effective?
There is much to be said for collating the work of three public bodies into one and the consultation response reports that the majority of respondents were supportive. However, the success of the new Workers’ Watchdog will depend in part on an adequate workforce and the necessary funding to bring its stated aims to fruition. Similar concerns have been voiced in relation to other public bodies in the past, such as the Information Commissioner’s Office, which enforces the UK’s data protection regime.
For some, such as The Women and Equalities Select Committee, which responded to the consultation, the remit of the new Watchdog will not go far enough. Enforcement of discrimination breaches is notably absent from the proposals, with the Equality and Human Rights Commission to continue in its current role in this regard. In other areas, the Government has committed to stronger working relationships with existing bodies, such as The Insolvency Service, which can disqualify unfit directors who use a series of “phoenix” companies to avoid paying money owed to vulnerable workers. However, it remains to be seen the extent to which strategic enforcement expansion into other areas of employment protection will be on the Watchdog’s agenda for the future.
The transition period could also lead to practical difficulties, with the potential for enforcement cases to fall through the net as the new Watchdog finds its feet. However, provided such teething problems can be dealt with, compliant employers with lower paid workforces (such as in the construction, garment manufacturing, and food processing industries) may well see the benefit in a single point of contact which offers support and detailed technical guidance on their expansive obligations.
What happens now?
We await the primary legislation which will establish the new Workers’ Watchdog with interest. In the meantime, less scrupulous employers should be on notice that there will soon be a brighter spotlight shining on their conduct in relation to vulnerable workers. The Government’s consultation response is available here.
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