A new Fair Work Agency is to be established to enforce rights such as holiday pay and support employers looking for guidance on how to comply with the law.
The agency will bring together existing enforcement bodies the Gangmasters and Labour Abuse Authority, the unit that polices the National Minimum Wage and the Employment Agency Standards Inspectorate.
The creation of a single agency builds on a recommendation made by Matthew Taylor in his Review of Modern Working Practices in 2017.
Officers at the new agency will have inspection powers and will be able to enforce new penalties for those who breach employee rights – such as failure to pay holiday remuneration from day one of sickness and failure to pay a minimum wage. It will also have a role as a listening post for whistleblowers.
Its powers will not be limited to the measures set out in the Employment Rights Bill but will also enforce current rights including the national minimum wage and certain aspects of the Modern Slavery Act.
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Labour set out plans for the agency in the run-up to the July General Election. The government said that in addition to enforcing holiday pay “for the first time” and strengthening statutory sick pay. “It will create a stronger, recognisable single organisation that people know where to go for help – with better support for employers who want to comply with the law and tough action on the minority who deliberately flout it.”
The implementation of the new body will be subject to consultation. The earliest timeframe for the new Employment Rights Bill to take effect is autumn 2026 so the agency would need to be staffed and in place by then.
Daniel Pollard, employment partner at Charles Russell Speechlys, warned that the agency must work efficiently and not entangle businesses in red tape. He said: “Effective enforcement rather than additional bureaucracy is what is required here”.
Pollard added that the most significant change under the Bill was the end to the unfair dismissal qualifying service limit. He said: “Currently a third of the workforce do not have two years’ service and have no dismissal protection. The change gives the third of the workforce dismissal protection overnight. This is possibly the most radical change to unfair dismissal law since it was first instructed in 1971.”
Consultation will follow on the level of protection employees have during probation and the duration of the probationary period.
The Bill will apply in England, Wales and Scotland. Northern Ireland has had its own employment laws since they were devolved after a law passed in 1998 by the Northern Ireland Assembly.
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