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The Employment Rights Bill (ERB) will create a new enforcement agency, the Fair Work Agency (FWA), which will bring together existing state enforcement functions (such as the National Minimum Wage enforcement team) and take on enforcement of a wider range of employment rights. In its recent amendments to the ERB, the Government proposes to extend the FWAs powers to include:
- Allowing the FWA to bring Employment Tribunal proceedings on behalf of workers who do not pursue a claim themselves.
- Providing workers with legal assistance in employment proceedings, with the legal costs potentially recoverable from employers in the event of a costs award.
- Issuing a notice of underpayment to employers who fail to pay certain payments to workers (regarding things like statutory sick pay and holiday pay), with the employer required to pay the amount due plus a financial penalty.
- The ability to recover enforcement costs incurred by the FWA by employers who are not complying with the law.
These sweeping powers will represent a huge shift in the enforcement of employment rights, which currently mostly relies on an individual enforcing their rights through the Employment Tribunal system, often with little external support. Given the stress, legal costs and not to mention, delays, involved in bringing a claim, it’s no surprise that it is not always an attractive avenue for workers. The introduction of the FWA will mean employers will no longer be able to rely on employee unwillingness to bring a claim as the FWA may step in and commence litigation even if the worker doesn’t. We may also see employers move away from a risk-based approach, whereby many take a view on complex holiday pay calculations, knowing that they can rectify and back-pay later down the line if a complaint is raised. A more proactive approach to compliance is likely to be needed in order to avoid enforcement action and fines. This is particularly the case for holiday pay: employers who do not get the calculation right first time could face not only a bill for the underpayments, but also an additional financial penalty. Across an entire workforce, the financial ramifications could be huge. Employers will need to be prepared for a more proactive approach to enforcement, though ultimately, the effectiveness of the FWA will depend on its resources.
To discuss any of the issues raised in this article, or for further information on the other practical implications for employers as a result of the ERB, please contact Robert Forsyth.
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