The Government has set out numerous planned changes to employment law in its recently published Good Work Plan. The Plan is split into 3 sections and in the third (and last) of a series of three articles, we look at some of the plans relating to “Fairer Enforcement”. (If you missed the first and second instalments, you can find them here and here.)
Naming and Shaming
Employers who do not pay the compensation that has been awarded to an individual by an Employment Tribunal following a successful claim will now not only face potential enforcement proceedings (where an additional penalty notice can be issued of up to 50% of the unpaid award) but also the prospect of being named and shamed. This change has already been implemented.
The Employment Tribunal currently has the power to award a financial penalty of up to £5,000 where an employer is found to have breached worker rights and that breach has “aggravating features”, such as the employer is a repeat offender or the breach was deliberate or committed with malice. However, in reality, it is rarely used by Tribunals. In the first few years of it being introduced, only around £17,000 had been collected in financial penalties.
Plans are to be put into place to encourage Employment Tribunals to consider this type of sanction more and the maximum limit will be increased to £20,000.
Umbrella Companies and Agency Workers
The Employment Agency Standards Inspectorate exists to enforce agency worker rights. Its remit will be expanded to cover umbrella companies too as it is recognised that agency workers can lose out where umbrella companies are involved in the relationship, as it often creates uncertainty as to who the employer is and who is responsible for payment of wages.
State Enforcement of Holiday Pay (and possibly Sick Pay)
Currently, when an employer does not pay holiday pay, the individual has to bring Employment Tribunal proceedings. However, in the future, there will instead be a state-led enforcement regime to assist vulnerable workers (although it is not yet known who will be categorised as being “vulnerable”). Much like the national minimum wage enforcement process whereby HMRC investigators can enforce payment of arrears, we expect a similar mechanism in relation to holiday pay to be introduced. There is talk of also extending this new enforcement regime to statutory sick pay as well.
Fairer enforcement We recognise the vital role effective enforcement plays in ensuring confidence to challenge when the law is broken and in creating a level playing field between businesses. Matthew Taylor called on the government to improve access to justice. We have already committed to extending state enforcement, on behalf of vulnerable workers, to underpayment of holiday pay. ... We will bring forward proposals in early 2019 for a new, single labour market enforcement agency to better ensure that vulnerable workers are more aware of their rights and have easier access to them and that businesses are supported to comply. This will provide a single point of contact for individuals and employers and will benefit from the additional powers and resources mentioned above.