A new one stop shop employment watchdog is on the horizon what does this mean for employers

Why is the enforcement body being established?

The government envisages that the enforcement body will provide:

• a strong recognisable brand which will make it easier for both employers and workers to know where they can get help;
• better co-ordinated enforcement action, pooling of intelligence and use of resources; and
• a close working relationship with other enforcement bodies such as on health and safety and the Pensions Regulator.

How will the enforcement body protect vulnerable workers?

The enforcement body will significantly improve the government's ability to protect vulnerable workers.  It will have an extensive remit and cover areas where there is not a current enforcement body such as in respect of umbrella companies employing and handling payments for agency workers but do not currently fall within the remit of the Employment Agency Standards Inspectorate and holiday pay.

A more robust approach will be taken towards the enforcement of Statutory Sick Pay and employers who do not meet their obligations.

Will the enforcement body's remit extend to modern slavery?

Legislation will be introduced (as soon as parliamentary time allows) requiring organisations to publish their modern slavery statements on a new government-run registry.  Financial penalties will also be introduced where organisations do not meet their obligations under section 54 of the Modern Slavery Act 2015.  This requires certain organisations to publish an annual statement setting out the steps they have taken during the last financial year to ensure that slavery and human trafficking is not taking place in their own business and in their supply chains.  These penalties will be enforced by the enforcement body.

What approach will be taken to enforcement?

There will be a focus on increasing compliance rates.  In order to support employers, the enforcement body will provide detailed technical guidance on tricky areas of employment legislation to complement guidance provided by Acas. It is envisaged that the existing approach will be enhanced as the broader intelligence gained by the enforcement body will enable it to better spot areas where non-compliance is common.

A compliance notice system will be developed in respect of less serious breaches. The government will look to provide a transparent policy on the use of this system.

To make the enforcement body more effective at identifying employers who are deliberately avoiding their responsibilities, measures will be introduced including:

• establishing an information sharing gateway, so that the enforcement body retains access to HMRC data which supports National Minimum Wage enforcement;
• encouraging better flows of information and intelligence.  Tackling the reasons why workers may not come forward to identify non-compliant employers such as the fear of repercussions will be a priority in designing the enforcement body and its approach; and
• publishing clear guidelines on encouraging the better flow of information from, for example, worker and industry groups. Providing greater transparency and clearer routes to pass on information will be actioned.

What powers and sanctions will there be?

New civil penalties will be introduced for breaches under the gangmasters licensing and employment agency standards regimes that result in wage arrears.  Civil penalties will be used where a compliance notice is not appropriate or where employers do not comply with a compliance notice in time.  

The penalties will be set at the same level as the National Minimum Wage penalties, with a maximum of £20,000 per worker.

The naming and shaming scheme will be extended for the enforcement areas covered by the newly extended civil penalties.

What happens now?

The single enforcement body will be established by primary legislation. 

What is the impact on employers?

By introducing compliance notices and extending civil penalties and the naming and shaming scheme, the aim is to establish a consistent compliance approach across all enforcement areas covered by the enforcement body. The benefits to employers of having an enforcement body implementing a clear and consistent approach must be welcomed.  However, the proposals relating to the new powers and sanctions clearly reinforce the need for employers to be cognizant of and ensure compliance with their relevant obligations.

Further Information

If you have any questions or would like any further information or advice in relation to this briefing, please contact the individuals mentioned below or your usual Ashurst contact.