The Fair Work Agency, a labor market enforcement agency created in April under the Employment Rights Act, responded to 2,741 inquiries about worker abuse in the first quarter of this year, up 87 percent from the same period last year, according to its chief executive, Lisa Pinney.
National minimum wage inquiries rose 19 percent to 2,933 over the same period. Pinney says the increase is “due to greater awareness” of workers' rights and the agency itself.
The center asks itself two questions every day, Pinney said. The first: “How do we get the money we owe each person?” Second, in serious cases: “How do we make sure we take legal action so it doesn't happen again?”
Its remit is set to expand. The government has not decided on a date when the agency will take over responsibility for police holiday and sick pay. The Department for Business, Innovation, Science and Trade's consultation on holiday pay compliance and enforcement closes on 22 September.
The Resolution Foundation, a think tank, estimates that 900,000 workers a year are held back on some holiday pay, with the total amount owed worth £2.1 billion. The Low Pay Commission estimates that there will be 371,000 people earning less than the national minimum wage by 2024.
The agency replaced the Employment Agency Standards Inspectorate and the Gangmasters and Labor Abuse Authority, which had a combined annual budget of £47 million. The combined body has a budget of £60 million, a staff of 650, and works with the National Minimum Wage compliance team.
Last week, agency staff visited a fruit farm in Scotland and other government agencies following reports of poor working and living conditions, including rat and mouse infestations in staff caravans, inconsistencies related to pay and hours worked, and excessive working hours. Some of those affected were foreign nationals working under the UK's seasonal worker visa scheme. The owner of the farm has made improvements since his visit.
At the same time, minimum wage enforcement officers wrote to employers in Yorkshire and the Humber, Dorset and Hampshire to check payrolls ahead of planned investigations in those areas.
Businesses that identify underpayment of wages, sick pay or vacation pay can avoid enforcement action by disclosing and paying the debt. Employers who are caught may be fined and may be called names and shamed. Last October, nearly 500 employers were fined more than £10 million for failing to pay the minimum wage, while £6 million was awarded to 42,000 workers. Companies included Centrica, Cineworld and Holland & Barrett.
Pinney says he's open to expanding naming and shaming in other areas, such as vacation and sick pay. “It changes,” he said.
Industry groups have raised questions about how the new rights will be implemented in practice. The Recruitment and Employment Confederation supports the creation of the agency and its promise to help employers, but calls for risk-based enforcement.
“It can be easy to find places with unintentional mistakes or minor violations, but it's really important to find those criminals who may not be visible,” said Lorraine Laryea, the organization's chief standards officer.
Pinney says the organization will set its course before the new power begins. “As different powers are opened, there will be communication before that so that businesses can clarify what will happen and how,” he said. “There will not be any situation where we will say 'the power is on tomorrow, we will be standing at your door'.
The agency will take covert action when it has intelligence of serious violations, working with agencies including the National Crime Agency. The stated preference is to give notice. “We'd like to support and allow businesses to do their own review, do what's right, make any changes,” Pinney said. “We realize that many businesses want to do the right thing. We also realize that people make mistakes.”
Its powers include civil penalties, legally binding obligations, requests for director recusals and recommendations for prosecution. It can fine employers who do not pay employment tribunal awards or Acas payments, bring court applications on behalf of individuals, and provide legal aid in court proceedings.
Community care and construction are the two main areas of this organization. The cash-in-hand “gray economy”, including hand and nail car washing, is also under scrutiny. Pinney has opened discussions with Companies House, HMRC and the Insolvency Service about directors putting companies into administration, leaving unpaid wages and tax, and restarting the same business, a practice known as phoenixing.
The agency also has the power to prosecute exploitation under the Fraud Act, which requires a lower standard of proof than modern slavery law. The Gangmasters and Labor Abuse Authority was reported to have withdrawn more than 100 cases involving the exploitation of migrant workers because they did not reach the legal limits.
“Bad things happen and we want to take action, but we haven't been able to meet that level of modern slavery before,” Pinney said. “We think this new power will help.”
Pinney joined in April from the Mining Remediation Authority, previously an executive at the Environment Agency. He is organizing a Fair Work Assembly in the fall, bringing together academics, unions, government agencies and businesses. The agency is also working with Acas on a digital “shop front” for employers. “Businesses want to get information in one place,” he said.
