Enforcement

Most tribunal claims must be brought within three months of the alleged offence whether that be dismissal, discrimination or deduction of wages etc.

The Government announced as an amendment to the ERB in November 2024, that it will extend those time limits to six months for all tribunal claims.

We are unsure when those changes will take effect; the Government has given no indication of when this change is likely provided the amendment is accepted and after ERB has received Royal Assent.

We are unsure when those changes will take effect as the Government has given no indication of when this change is likely.

The state itself has very limited power to enforce employment rights, it is the individual employee/worker who must enforce their rights under the various pieces of legislation.

The ERB introduces a new state enforcement agency – likely to be called the Fair Work Agency. The intention behind this is to provide a single place where workers and employers go for help.

This agency will cover the following specific areas:
– rules on employment agencies and employment businesses;
– National Minimum Wage rights – including entitlement to the Minimum Wage and record keeping requirements;
– modern slavery offences;
– Statutory Sick Pay;
– holiday pay – including the right to payment for holiday and rolled up holiday pay for part year and irregular hours workers;
– gangmasters licensing; and
– failure to pay sums ordered by a tribunal in a COT3 agreement.

Many of these are already covered by existing enforcement agencies e.g. HMRC enforce the National Minimum Wage. However, this will combine the Employment Agency Standards Inspectorate, HMRC’s National Minimum Wage enforcement team and the Gangmasters and Labour Abuse Authority (addresses modern slavery). The notable inclusion is the enforcement of rights to holiday pay – currently only employees and worker can bring such claims.

The ERB also gives the power to add to the list of rights that can be enforced by the new Fair Work Agency. One of these areas could be discrimination but at this stage it’s difficult to see how state enforcement of those rights would fit with the existing role of the EHRC.

The Government are keen that this new agency has sufficient powers to make a difference. An advisory board, consisting of equal numbers of representatives from trade unions, employers and independent experts, will be established to advise the Government regards the enforcement of legislation.

The Secretary of State will be required to publish a labour market enforcement strategy at the start of each three-year period and lay this before Parliament. This must set out the scale and nature of non-compliance with the relevant labour market legislation over the previous three years. This will be accompanied by a proposal as to how the enforcement functions are to be exercised going forward.

The powers of the Fair Work Agency will be serious and will mean that the need for employers to keep careful records will be heightened. The agency will be able to require individuals to attend meetings and answer questions and provide documentation where the agency reasonably believes that it would assist the enforcement of labour market legislation. Enforcement officers will have the power to enter any business premises to inspect any documents – this includes non-business premises (but only with a warrant) and includes the power to require that any document stored electronically be provided in a form that can be taken away.

The agency may issue Labour Market Enforcement Undertakings. Where it is believed that a person is committing a labour market offence e.g. breaching any requirement under the relevant legislation, the agency may issue a notice identifying the offence and inviting the relevant person to give an undertaking to comply with the relevant legislation going forward. These undertakings can last for no longer than two years but could be discharged earlier.

The March amendments by the Government have extended the remit of the Fair Work Agency in the following ways and clearly trying to give it “the teeth” that were promised when the idea of the Agency was first announced;
-Enforce failure to pay certain statutory payments to workers – these include holiday pay and statutory sick pay. The Agency can issue a notice of underpayment to employers, which specifies the amount payable within 28 days and this is combined with a penalty of 200% of the sum due. This is subject to a maximum of £20,000 for each individual or a minimum of £100 and regulations may amend these amounts. This penalty is payable to the Secretary of State. The notice may only relate to sums falling due in the six-year period before the date of the notice which is known as the claim period.
-Bring employment tribunal proceedings on behalf of a worker if it appears that there is a claim, but the worker is not bringing it. In addition, the Agency will also be able to provide legal assistance in some employment proceedings.
-Power to recover costs of enforcement to require an individual to comply with any legislation concerning the payment of a charge.

It is unlikely that the agency will be set up and active before the end of 2026.

An employer is required under Reg 9 of the Working Time Regulations 1998 to keep records which are adequate to show compliance with the requirements of the following; Reg 4(1) 48 hour average weekly limit; Reg 5A(1) 40 hour weekly limit and 8 hour daily limit for young workers; Reg 6(1) 8 hour average limit for night workers; Reg 6(7) 8 hour actual limit for night workers whose work involves special hazards or heavy physical or mental strain; Reg 6(A) prohibition on young workers working at night during the “restricted period”; Reg 7 the provisions regarding regular free health checks carried out or offered to night workers. Failure to abide by the regulations in the WTR, which includes Reg 9 can result in a potentially unlimited fine or an improvement or prohibition notice service by the Health and Safety Executive or a Local Authority.

On 1 January 2024, Reg 9 was amended by the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 to clarify that the records ‘may be created, maintained and kept in such manner and format as the employer reasonably thinks fit’. It confirmed that ‘an employer need not record each worker’s daily working hours in order to comply with [the regulation 9 duty] if the employer is able to demonstrate compliance without doing so.’

The ERB will seek to amend the WTR 1998 to require employers to keep records to demonstrate that it has complied with the relevant regulations regards annual leave. These records must be kept for six years. The records will need to be ‘created, maintained and kept in such a manner and format as the employer thinks reasonably fit’. Failure to keep such records will be an offence and an employer will be liable to a potentially unlimited fine.

We are unsure when those changes will take effect as the Government has given no indication of when this change is likely.

Umbrella companies fall outside of the regulations which ensure employment agencies and business remain tax and employment law compliant. An umbrella company is an intermediary which employs temporary workers often on behalf of agencies. The umbrella companies pay workers under PAYE but will not find the temporary work. The agency/employment business will do that. Previous governments have wanted to regulate these companies as they are often used to avoid compliance with both employment rights and tax leaving low-paid temporary workers with no protection.

The Government has introduced amendments so that these types of companies will now be regulated as they will be bought under the definition of ’employment business’ in the Employment Agencies 1973. The new definition has two limbs:
– first the entity must be in the business of employing a person with a view to them being supplied to a hirer;
– second, the entity must be in the business of paying for or receiving or forwarding payment for the services of a person with a view to them being supplied to a hirer.

The Employment Agency Standards Inspectorate will be responsible for enforcing the Conduct of Employment Agencies and Employment Businesses Regulations 2003 on umbrella companies although in due course this responsibility will be passed to the Fair Work Agency (see above). It is also worth noting that other companies, such as introductory agencies that may have previously avoided regulation will most likely come under the new definition being introduced by the Bill.

There is a statutory duty to consult before making any amendment to the Conduct Regulations and so that will need to be rolled out once the Bill has received Royal Assent.