Employment Partner Jo Mackie comments on the Employment Rights Bill and whether the new Fair Work Agency will be able to curb labour abuses in supply chains.
Jo’s comments were published in Compliance Week, 14 February 2025.
“The Employment Rights Bill promised many changes which are expected to be significantly watered down (a day one right to unfair dismissal for example) and the FWA ‘real teeth’ looks likely to face the same dilution.
“There are proposals to create a new offence of ‘wage theft’ (intentionally not paying an employee on time) which will carry up to 10 years in prison and a fine, providing false information either recklessly or intentionally and obstructing enforcement – both of which carry up to 51 weeks in prison and fines. The government also plans that the FWA will have extensive powers to demand documents or information by either requiring a person to answer questions at a specified time or place, or by providing specified documents or information; enter business premises to examine, and request that ‘Labour Market Enforcement Undertakings’ are provided, in circumstances where the state believes that a person has committed a labour market offence, for example an offence under the NMW legislation.
“There is however no new criminal sanction for NMW or slavery breaches, as there is with the Modern Slavery Act 2015 which consolidated existing criminal offences and increased sentences for these offences of slavery from 14 years to life imprisonment.
“The FWA will combine the current enforcement roles of three separate areas and bodies to create a ‘super enforcer’. These are, for National Minimum Wage, HMRC’s national minimum wage (NMW) enforcement team; for modern slavery, the Gangmasters and Labour Abuse Authority, and for agency workers the Employment Agency Standards Inspectorate.
“Deputy PM Angela Rayner has said that she intends the FWA to have ‘real teeth’ but with little new enforcement provision on the table, it is more a merger of existing powers and inspectorates.
“Perhaps the biggest change, and significance for the FWA is its proposed new power to enforce rights to holiday pay. Holiday pay can be a complicated issue for employers to successfully navigate, especially for term time workers where the law has been a mess for years. Under the FWA process in the future, any failure to comply with holiday pay legislation is likely to lead to a financial penalty being imposed on the employer by the FWA and a potential sanction, either criminal or civil.
“Employers and HR departments will be wise to seek clarification on how they calculate and allocate annual leave given that an error will likely bring hefty sanctions in the near future.”
