Carolyn Brown

Written by: Carolyn Brown & Susan Ball

Carolyn Brown

Partner, Head of Client Legal Services

Will the enforcement body for employment rights be a paper tiger for years to come?

  • June 2021
  • 3 minutes

Fairer enforcement of the legal rights of employees and workers remains the Cinderella of the three-pronged Good Work Plan’s aims. While progress has been made, enhancing NMW (national minimum wage) and NLW (national living wage) rates and bringing greater clarity to employment contract terms, responsibility for enforcement of workers’ rights remains firmly with individuals through under-resourced employment tribunals in a long, drawn out process. 

The planned single enforcement body (SEB) will coalesce existing enforcement agencies, including HMRC’s NMW enforcement which currently has its own £27m budget. It will extend unpaid NMW enforcement penalties to holiday pay arrears for vulnerable workers (with estimated unpaid holiday pay at over £1bn) and to statutory sick pay. 

The aim is not only to support workers’ rights but also level the playing field for employers who are meeting their obligations and bearing the inevitable pay, PAYE, NIC and auto-enrolment pensions costs of doing so. The body will also deal with rogue umbrella companies. In light of the increased use of umbrella companies, employers are well advised to make sure they have reviewed their supply chain since IR35 rules changed. The new single body will also be responsible for Modern Slavery Act statement enforcement, meaning supply chain labour practices will also be scrutinised. 

Responsible employers who are concerned about their reputation should now double-check their employment legal rights compliance and act swiftly to correct any shortcomings. This will be enhanced by the planned extension to the regulation of accountants and tax advisers through the government proposed wider definition of what is tax advice. Such actions alone will enhance HMRC’s tax receipts, producing an easy and low-cost tax win for the Treasury.

By contrast, it will be some time before the new single enforcement body achieves a similar level of effectiveness. Primary legislation is required to make the change from multiple agencies to a single enforcement body. The natural assumption would be that this will come in the Employment Bill but that wasn’t even mentioned in the Queen’s Speech in April 2021. As a result, its potential publication date is unclear, despite periodic Government commitments to enhance workers’ rights following Brexit. 

In his letter to the Government in November 2019 Matthew Taylor, the former interim Director of Labour Market Enforcement, wrote that he had no illusions that bringing together all these enforcement agencies, each with a separate remit, was a multi-year organisational undertaking. The pandemic may now speed the process up. However, the most telling point is that Mr Taylor, a powerful and effective advocate of the Good Work Plan, has now left the Labour Market Enforcement post and has not been replaced.

As a result, the single enforcement body, with its sensible aims to inform businesses about their employment rights obligations, support vulnerable workers through civil penalties enforcement, and name and shame employers who breach the rules, currently has neither a leader nor a visible route map to implementation. 

Its success or otherwise will depend on the impact now of a promise of future enforcement, measured both by increased tax receipts and the enhancement of workers’ rights.

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