The Employment Lawyers Association (ELA) welcomes recommendations to ensure workers’ rights are protected, contained in the Business, Energy & Industrial Strategy report on Post-pandemic economic growth: UK labour Markets. This recognised the need for improvements to tribunal award enforcement and increased funding for regulatory enforcement action to tackle employer non-compliance.

The 2017 Taylor Review’s Good Work Plan committed to three principles: fair and decent work; clarity for employers and workers; and fairer enforcement. The Queen’s speech of 2019 announced an Employment Bill to enact these recommendations. These included a Single Enforcement Body (SEB) bringing together HMRC’s national minimum wage (NMW) enforcement, the Gangmasters and Labour Abuse Authority and Employment Agency Standards Inspectorate. That legislation has not materialised. In 2021, a survey of ELA members demonstrated that the position in respect of enforcement is at ‘breaking point’.

Presently, workers seeking to redress failure to pay either a minimum basic wage or holiday pay must rely on individual enforcement through the Employment Tribunal system. Bringing a claim can be a costly and lengthy process. Also, while the tribunal system should always be there to deal with difficult cases, most non-compliance issues should be tackled through education and employers being incentivised to comply through the threat of regulatory action. This would reduce the volume of claims being brought in the tribunal, easing the strain on the system.

The ELA’s anecdotal evidence is that HMRC’s enforcement work does not operate at a sufficient scale to have a meaningful impact on NMW compliance.  

Enforcement of holiday pay rights is solely dealt with through the tribunal system, although compliance with other aspects of the Working Time Regulations can be enforced by the Health and Safety Executive.

The consequence is that the onus is often on individuals to identify non-compliance issues and either make complaints to the relevant regulators or pursue tribunal proceedings. These are people in low-paid work and the gig economy, considered ‘vulnerable workers’. They may be unaware of their rights or dissuaded from pursuing them by the costs. Free legal support is limited; the values of such claims are lower than, say, those involving discrimination, meaning it is not cost-effective to incur legal fees over a prolonged period even if legal fees can be supported. Additionally, as NMW and holiday pay issues often arise during a relationship (rather than on termination), individuals may be dissuaded from taking action to enforce their rights (if they are aware of them) due to a desire to maintain that relationship. If they are minded to pursue, it can be complex and arduous.

The effect is that only a small minority of low-paid individuals whose rights may be being infringed are likely to bring claims.

Even where claims are brought, there is a significant backlog in the tribunal, with cases often taking 18 months to reach a hearing according to the latest statistics. Additionally, if a claim for employee or worker status goes to the heart of a respondent’s business model, then the requirements for disclosure and witness evidence may be significant. That may slow the progress of cases and, while potentially costly, be to the advantage of well-resourced respondents. Cases being presided over months or years after the event lead to evidential issues and delays, which often adversely affect the health of the individuals involved. Low-paid workers with financial stress may be less resilient to the stress of delayed litigation. This underpins the accessibility of the employment tribunal as a justice mechanism, and the rationale behind the 2017 costs reforms in the civil courts.

The ELA feels that the suggested establishment of an SEB to address the many employment rights which are too expensive, complex or delayed for workers to enforce reliably is a good solution to non-compliance.

The threat of immediate and active enforcement will prompt swifter action by employers, who can idly allow a case to progress through a delayed system without needing to resolve anything. Such a streamlined system could be automated for the SEB to hear fewer complex claims relating to NMW and holiday payments in a set period of time.

Other potential advantages include:

  • Simplified rules which workers could navigate without incurring significant legal fees;
  • Systemic and institutional change, as employers adapt their business models, processes and decision-making to comply with employment standards set by government;
  • Employers changing their business practices sooner;
  • Reduced backlog at tribunal, given redress for some rights would be accessible at an earlier stage, meaning complex cases are also disposed of more quickly;
  • Fewer resignations/greater job retention thanks to better workplace cultures, generally;
  • Easier monitoring of employers’ conduct when new legislation passes.

However, the SEB would need to be sufficiently well publicised to ensure that individuals are aware as to where they should complain. For the SEB to be effective, workers should be informed of the existing statutory protections for whistleblowers. The SEB would need to be well-funded and well-managed, since it will only be effective if it is equipped to investigate and deal with non-compliance. If this were achieved, the SEB could eventually preside over other employment law issues, such as preliminary decisions under the Equality Act 2010 relating to disability and reasonable adjustments. The SEB could also deal with the enforcement of tribunal awards, relieving ACAS and the tribunal system of this burden.

Jennifer Sole is co-chair of the Employment Lawyers Association’s legislative and policy committee working party (which submitted evidence to the report)

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