The Conservative government has ditched a manifesto pledge to create a new workers’ rights super watchdog with extra powers to enforce holiday and sick pay.
Business secretary Grant Shapps has revealed that plans for a “single enforcement body” for labour laws had been put on the backburner.
It would have brought together three current regulators under one roof and had a remit to impose large fines on rogue employers.
The body was a key element of Boris Johnson’s flagship employment bill, which has now been officially killed off after a long period of being left off the legislation programme. The scrapped bill, announced in December 2019, was a response to Matthew Taylor’s Good Work Plan. Taylor himself had warned as early as February 2021 that the government had “lost interest” in the reforms.
Ministers recommitted to its creation as recently as June last year, saying there needed to be reforms following the Leicester sweatshop scandal.
Following a consultation, the government said the current system “makes it difficult for both workers and employers to know where to go for help”. It said the new watchdog would have “a significantly expanded remit” including statutory powers to enforce payment of holiday and sick leave. The authority would also have been able to level civil fines of up to £20,000 per worker on companies that racked up huge wage arrears.
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In addition, it would have taken over responsibility for enforcing rules on the national minimum wage, as well as anti-slavery standards.
Shapps told MPs this week that had been shelved because of the two years spent fighting Covid. He told the Commons business committee: “It may well be with two years left to go that we’re still able to address some of that.”
He claimed the government’s attention would now turn to ensuring that the bodies already in existence were operating effectively.
Shapps confirmed the employment bill was no longer “on the cards” after it was left out of every Queen’s Speech since the last election. He insisted the government would achieve many of its aims more quickly by supporting half a dozen backbench amendments in parliament.
They include guaranteeing one week’s unpaid leave per year for carers and giving employees a right to request flexible working (now passed).
Other measures set to pass will see extra redundancy protections for women and the much trumpeted but much delayed guarantee that hospitality staff get their tips in full.
The single enforcement body would have included a strategy to regulate the umbrella industry. The news of its demise was seen by some as a “kick in the teeth” for workers, said Julia Kermode, founder of IWORK – a body that champions temporary workers.
She said: “This is a bitter blow for workers, who time and time again find themselves exposed to the risks of the unregulated umbrella sector – whether that’s being lured into working through tax avoidance schemes or being forced to use certain companies against their wishes due to restrictive preferred supplier lists.”
Kermode added: “It’s also another kick in the teeth for workers whose holiday pay is often withheld by unscrupulous umbrella companies and employment agencies. By shelving plans to introduce the single enforcement body and in turn, regulate the umbrella industry, the government is showing an astonishing disregard for the millions of workers losing millions of pounds collectively to this questionable practice.”
Fred Dures, founder of specialist payroll auditor PayePass, said the news was “yet another broken promise from the government, that continually fails to deliver on the promise to regulate the umbrella industry”.
“This short-sighted move from the government effectively rules out regulation any time soon. With this in mind, the onus falls on umbrella companies to self-regulate – something that isn’t being prioritised enough.
“Abandoning the single enforcement body also increases the onus on recruiters and end clients that engage umbrella companies to carry out their own due diligence.”
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