As part of the UK Governments employment rights bill the Fair Work Agency (FWA) has been created as an Executive Agency of the Department for Business and Trade. The agency will take on enforcement for employment rights and be a single place where workers and employers can turn for help. The FWA will support employers to ensure that they comply with the law, however they will also have strong powers to investigate and take actions against businesses that flout the law.
The Act will bring together existing enforcement and have new powers including;
· Power to inspect workplaces and require employers to produce relevant documents and evidence to demonstrate compliance with employment law.
· The ability to issue Notices of Underpayment if they find that employers have underpaid their employees and issue a penalty notice.
· The power to bring proceedings in an employment tribunal on behalf of employees and offer legal advice.
· Enforcement to ensure employers correct their behaviour by issuing a Breach of a Labour Market Enforcement Order which if breached can result in imprisonment.
· Recover costs from employers where action has been taken for non-compliance.
The act will bring all employment legislation together in one place to ensure greater compliance and where, currently breaches of employment law go unchallenged the agency will have the power to deal with them. Causes of concern are predominantly around underpayment of holiday pay, the minimum wage and SSP. Statistics suggest that;
· 900,000 workers have their holiday pay withheld, valued at around £2.1bn
· It is thought around 1-10 of the lowest paid workers receive no paid holiday
· Around 19.4% of workers were underpaid the minimum wage in 2024.
The Government wants to crack down on these practices and the FWA will have the power to both recoup monies owed for employees, enforce payment of monies and issue criminal notices and take tribunal action on behalf of employees.
In addition, the FWA will be tackling exploitation taking over responsibility for overseeing cracking down on modern slavery and human trafficking.
The aim of the FWA is to make enforcement of employment legislation more efficient and stop bad practices going under the radar. Ending a fragmented system to put a stop to exploitative businesses and enforce compliance. Making sure workers are properly paid whether that is wages, SSP and holiday pay.
The FWA will have significant powers and will be able to enter businesses without notice. Make sure you review your payroll and employee salaries to ensure that they are being paid minimum wage, remembering the hourly rate increases in April to £12.71 per hour for over 21’s. SSP will be paid from day in April and there will be no lower earning limit. All employees are entitled to 28 days or 5.6 weeks holiday per year, review your holiday calculations and make sure they are correct. Take action now so that you are compliant.
