The three agencies that would most likely be brought together under the new body are:
- Employment Agency Standards Inspectorate (EAS) – covering employment agencies
- Gangmasters and Labour Abuse Authority (GLAA) – covering licensing to supply temporary labour in high risk sectors and modern slavery
- HM Revenues & Custom (HMRC) – National Minimum Wage and National Living Wage
Millions of low-paid workers could as a result receive the 'largest upgrade to workers’ rights in a generation' according to the Department for Business, Energy and Industrial Strategy. But will they?
The CIPD is working with IES on a project to research the current state of enforcement in the UK. The work so far highlights that a much more complex set of issues need to be addressed if employment law is to be enforced more effectively.
The consultation poses a number of questions to which the CIPD has responded, including the crucial question as to whether or not the current system is effective in enforcing the rights of vulnerable workers. For a start, evidence shows it’s difficult for both workers and employers to seek help, and the work of the enforcement bodies is not visible.
Our research so far also highlights concerns at the level of non-compliance occurring in all three enforcement bodies areas of responsibility. This is partly due to the limited resources provided for enforcement includ8ing comparatively low staffing, highlighted by the previous Director of Labour Market Enforcement.
Two-tier approach needs rebalancing
We also believe that reform is needed to achieve a better balance between individual and state enforcement, which is currently too heavily weighted on individuals having to seek redress.
Stronger state enforcement could help to overcome the barriers that vulnerable workers experience in enforcing their rights via an employment tribunal: an unacceptably high proportion of individuals who pursue their rights via an Employment Tribunal do not even receive the award to which they are entitled.
There are wider factors contributing to the lack of effective enforcement that need to be addressed, including:
- a lack of knowledge about employment rights on the part of many line managers. In March/April 2019 the CIPD surveyed 2,104 senior UK HR professionals and decision-makers and asked them ‘how would you rate managers' knowledge of people's employment rights?’ and nearly three respondents in 10 (29%) said it was ‘poor’ or ‘fair’ while 23% said ‘very good’ or ‘excellent’ and 32% said ‘good’
- the complexity and inadequacy of employment legislation in a modern, fast-moving economy
- the UK’s increasingly flexible and dispersed labour market and emphasis on lower-skilled, lower-paid work in some sectors
- the absence of an effective HR function in many organisations, together with the decline in unionisation and collective bargaining in the private sector
Would a single enforcement body be more effective than the current system?
In principle, we are in favour of the formation of a new single enforcement body. However, this is a challenging question to answer in terms of a simple ‘yes or no’ response; a single enforcement body could be more effective than the current system, but this is not an automatic outcome. Our research considers the enforcement frameworks of several overseas countries including Ireland, where the creation of a single body (the Workforce Relations Commission) in 2015 appears to have met with some success.
In theory, a single enforcement body would seem to offer greater opportunities for a more holistic enforcement approach. In practice, however, there are a number of critical factors to take into account. As the Director of Labour Market Enforcement says in his Labour Market Enforcement Strategy 2019 to 2020: ‘While the option of a single enforcement body may be attractive at a theoretical level …this is a substantial step change from the current UK system…the practicalities, time and resources required to bring together the three organisations would be significant.’
The increased effectiveness of enforcement arising from the creation of a single enforcement body) would be dependent on a number of critical success factors, therefore, such as:
- strong political emphasis and leadership on enforcement to ensure that the potential benefits of the new body are realised in practice, and to counter the possible reduced emphasis on employment rights and enforcement post-Brexit
- a clear purpose and strategy for the new body which should determine its structure
- adequate funding for the new body for the long-term
- high-quality leadership and staff resourcing for the new body.
Should a single enforcement body cover equalities enforcement?
In theory, if Government was establishing a new employment rights framework from scratch, in tandem with a robust and holistic framework to enforce those rights, it would make sense to house all areas of enforcement under one regulatory roof. However, we are not starting with a blank slate. For example, we have thought long and hard about whether or not a single enforcement body should have a role in relation to discrimination and harassment in the workplace. On balance, we believe that the potential advantages of having all areas of enforcement overseen by one body are outweighed by the risks at this stage.
We agree with much of the rationale set out in the letter from Professor Sir David Metcalf CBE to the Women and Equalities Committee on this issue in May 2019. In his view, discrimination and labour exploitation are not necessarily aligned in terms of:
- the employers who are the target for enforcement
- the workers who are most likely to be victims
- the mechanism for enforcement
We agree that current enforcement mechanisms, including the powers and penalties used, are very different in this area compared with enforcement of minimum standards.
There is also a concern about the potential dilution of specialist expertise and focus needed for the enforcement of equalities and discrimination law, if included at this stage in a single enforcement body. This argument also applies to implementing health and safety legislation. Internationally, these areas are often managed and enforced separately from the main labour inspectorate, even in countries like France where this activity is significantly better resourced and staffed than in the UK.
High-quality advice and guidance can boost compliance
The consultation also asks if there is enough guidance and support available for workers and employers, and whether a new body should have a role in providing advice. On these questions we are clear. A lack of information, knowledge and advice about employment rights, and where to go for information and support in the event of breaches to them, is a major issue for employees, workers and contractors, particularly for non-unionised workers. Many employers, and smaller employers in particular, also need better access to information, advice and guidance (IAG) about their employment rights obligations.
There are many other important issues raised in the consultation paper, and you can read the full CIPD response here. The CIPD research project on enforcement carried out by Institute for Employment Studies will be published early 2020. Our stakeholders in this research summarised the need for, but also the challenge of, the proposals contained in the government consultation. As one said, ‘Enforcement is too fragmented and piecemeal at the moment…a less confusing, single port-of-call has to be a good thing’, a sentiment we very much share.
