Who is the Fair Work Agency?

The Government is set to establish the new ‘Fair Work Agency’ – a strong, recognisable, single brand that will oversee the enforcement of employment rights. The full scope of the Fair Work Agency is still to be outlined. However, progress for the Employment Rights Bill is the first phase of implementing the new agency.

Employers should prepare compliance with the new authoritative body. Any evidence of underpayments, exploitation, or breach could potentially lead to both civil and criminal prosecution. For more information, speak to one of our expert HR advisors today. 

In this guide, we’ll look at who the Fair Work Agency is, what their powers will be, and how the introduction of the enforcement body is set to impact the business realm.

Who is the Fair Work Agency?

The Fair Work Agency (FWA) is a single, centralised body that will be tasked with enforcing certain employment rights currently overseen by various existing agencies.

The main reason behind the FWA is to combine existing enforcement functions under one unified strategy. They’ll adopt a balanced approach between upholding workers’ rights and supporting businesses with their legal compliance.

Through legislative regulations, the new Fair Work Agency continues to grow. Once it’s fully in play, they’ll be recognised as a singular, strong, authoritative body who both workers and employers can turn to for statutory guidance.

What will the Fair Work Agency cover?

Under the Employment Rights Bill, the Fair Work Agency will cover numerous statutory jurisdictions. For example:

• Employment agencies and regulations.
• National Minimum Wage rights.
• Modern slavery offences.
• Statutory Sick Pay.
• Statutory holiday pay.
• Record keeping showing compliance with statutory holiday leave.
• Gangmaster licensing.
• Financial penalties for unpaid Employment Tribunal awards.

What powers will the Fair Work Agency have?

The Fair Work Agency is set to gain all kinds of additional powers – increasing the Government’s role in enforcing statutory rights. The FWA won’t stand as its own identity. Rather, the Secretary of State (and enforcement officers) could potentially work through them. Let’s take a look at what powers the Fair Work Agency could gain:

Enforce penalties for unpaid statutory payments

The FWA could have the power to enforce penalties if workers are denied certain statutory payments, like holiday entitlements and sick pay. These could be based on (and replace) existing powers to enforce National Minimum Wage regulations.

The FWA may issue notice of underpayments where employers will have to pay within 28 days. The notice will impose a 200% penalty of the sum – which is capped at £20,000 per individual. As with current NMW penalties, this can be reduced to 100% if the sums and penalties are paid within 14 days.

Issue notices to provide information

The FWA could have the power to issue a notice requiring a person to provide information. This can be done either by attending a specified time or place to answer questions. Or by providing specified information or documents.

Enter business premises to examine documents

Enforcement officers may be able to enter a business premises to examine documents; and require anyone on the premises to produce them. They could also seize electronic devices used to store information.

Request labour market enforcement (LME) undertakings

The FWA could have the power to request a labour market enforcement (LME) undertaking. If the Secretary of State believes a person has committed a labour market offence, they can be asked to follow an LME undertaking. Refusal or failure to comply can class is a criminal offence.

Pass new penalties for employment rights breach

New criminal offences could apply to all employment rights breaches covered by the FWA. Under the Bill, it could become an offence to:

• Knowingly or recklessly produce false documents and information.
• Intentionally obstruct enforcement action.
• Fail compliance with an enforcement requirement without reasonable excuse.

The penalty could involve fines, imprisonment for up to 51 weeks (in England and Wales) – or both. Government officers could also be found guilty if they’re involved in the offence.

How will the Fair Work Agency use its enforcement powers?

The Employment Rights Bill is set to give the Fair Work Agency new ways to enforce its powers. But questions on funding or resources for the body have already been raised. Let’s take a look at how the Fair Work Agency could use its potential enforcement powers:

Recover enforcement costs

The FWA may have the ability to recover enforcement costs from employers who don’t comply with the law. The rules on financial charges and relative provisions could be added to the Bill – allowing the FWA to fund its own work.

Bring Employment Tribunal claims on workers behalf

Most employment rights are only enforceable if an individual submits a claim to an Employment Tribunal. The FWA could bring ET proceedings on their behalf of someone who is unable or unwilling to do so themselves.

Provide legal aid during civil proceedings

The FWA could provide claimants and respondents with legal support, aid, and representation during civil proceedings. This would usually cover cases involving employment law, trade union law, or labour relations law.

If a party that the FWA supports wins a case, they could claim expenditure costs from the award amount. This could potentially become a huge change in the process, as costs are normally awarded to successful parties once they reach the Court of Appeal or the Supreme Court.

How to prepare your business for the Fair Work Agency

The Fair Work Agency is set out to investigate and act against employers who breach the law – aiming to level out the field for compliant businesses. Before the FWA’s arrival, employers should understand how their presence could affect their business. Let’s take a look at how employers should prepare for the Fair Work Agency:

Holiday pay

The right to holiday pay applies to all workers. But the process is complicated and isn’t currently subject to state enforcement. With the extension of underpayment notices and associated penalties, combined with new investigational powers, employers should be aware of the imminent change.

Statutory Sick Pay

Currently, the HMRC decides whether Statutory Sick Pay should be paid during a dispute. Under the FWA, the same rules on holiday pay could apply to SSP. However, this area is less complex as SSP rights are easier to run correctly compared to holiday pay entitlements.

Employment agencies

There are already existing enforcement agencies the Government proposes to abolish or reestablish under the Fair Work Agency. These include:

• Employment Agency Standards Inspectorate.
• HMRC’s National Minimum Wage Enforcement Team.
• Gangmasters and Labour Abuse Authority.
• Director of Labour Market Enforcement’.

National Minimum Wage

Again, HMRC already has significant enforcement powers over employers to pay missing National Minimum Wage amounts. The introduction of the FWA could be seen as a transitional move rather than the reshaping of the system itself.

Modern slavery

There doesn’t seem to be much change to powers already held by the Gangmasters and Labour Abuse Authority. The GLAA already has the power to conduct criminal investigations where an offence is suspected. The existing modern slavery regime includes criminal sanctions with a maximum penalty of 10 years’ imprisonment.

Immigration

Immigration rules on a whole aren’t fully covered by the FWA. The main change to the current system relates to immigration LME undertakings and orders being replaced by the provisions in the Bill. These new provisions are similar and may not make significant changes in practice.

Get expert advice on the Fair Work Agency with Peninsula

It’s possible that the Fair Work Agency proposal won’t pass under the Employment Rights Bill until 2026. It could take even longer for existing agencies to close and transfer their duties.

Employers should already be compliant with statutory rights, especially those backed by civil and criminal penalties. That’s why it’s important to understand the criteria of the new enforcement body.

Peninsula offers expert advice on the Fair Work Agency. Our 24/7 HR advice is available 365 days a year. Want to find out more? Book a free chat with one of our HR consultants. For further information, call 0800 051 3685.

Sources

Employment Agency Standards Inspectorate | GOV

National minimum wage law: enforcement | GOV

What we do | Gangmasters and Labour Abuse Authority 

Labour market enforcement | GOV