Fair Work Agency: How to make the new workplace watchdog bite

In April this year, the Government launched its new Fair Work Agency (FWA), a workplace watchdog which, in its own words, will “transform labour market enforcement”.

The Agency replaces three existing regulators: the National Minimum Wage Unit within HM Revenue & Customs, the Gangmasters and Labour Abuse Authority, and the Employment Agency Standards Inspectorate, alongside the Director of Labour Market Enforcement, which was created in 2016 to coordinate them.

The FWA will be expected to do everything those agencies did, and more. The Government has already confirmed, for example, that it will be responsible for enforcing rights to statutory sick pay and paid holidays.

Employment and industrial relations are reserved matters, and the FWA, like its predecessor agencies, is a UK-wide body with broadly similar responsibilities across the four nations. There are, however, some differences. For example, mirroring the previous situation with the Gangmasters and Labour Abuse Authority, the FWA has more limited powers in Scotland than in England and Wales in respect of modern slavery offences.

It will also need to adapt its strategy and practices to differing labour market conditions and institutional arrangements across the UK. In Scotland, for instance, the Scottish Agricultural Wages Board continues to operate, while the equivalent board in England was abolished in 2013 during the Conservative-Liberal Democrat Coalition Government’s so-called “bonfire of the quangos”.

While hopes may be high that the FWA will improve enforcement of workers’ rights and compliance among British businesses, there are good reasons to question whether this watchdog will have much bark or bite.

The Labour Party’s New Deal for Working People stated clearly that workers’ rights “are only worth the paper they are written on if they are enforced”. Yet Britain has faced a workplace law enforcement crisis for many years, with employers often facing little realistic prospect of detection or punishment for failing to meet their legal obligations or for exposing workers to unsafe conditions.

Since the austerity period of 2010–2020 in particular, workplace regulation has suffered from serious underfunding. Funding for regulators such as the Health and Safety Executive (HSE) has been cut dramatically, leading to a steep decline in inspections and enforcement activity.

HSE inspections have reportedly fallen by between 70% and 80%, meaning the average workplace can now expect an inspection far less than once every 50 years. Even when the inspectors employed by the FWA are added to existing health and safety inspectors, the UK is likely to have one of the lowest inspector-to-worker ratios among OECD countries.

This remains far below the International Labour Organisation’s recommended benchmark of one inspector per 10,000 workers.

The Labour Government has acknowledged this enforcement crisis in a range of policy documents, including the New Deal for Working People. Yet when the FWA’s five strategic aims were announced, the top priority was not tackling breaches of employment law or improving compliance, but “reducing regulatory burdens”.

Given the collapse in workplace enforcement capacity, it is difficult to see how such burdens could realistically be reduced much further.

If the Government is serious about delivering both new workers’ rights and meaningful enforcement, it must provide the resources required to do so. That should begin with restoring pre-austerity funding levels and moving towards the International Labour Organisation’s recommended minimum level of workplace inspectors.

Beyond increased funding, there are several immediate steps that could strengthen the credibility and effectiveness of the new Agency.

Experience internationally shows that state enforcement works best when agencies collaborate closely with trade unions. Even well-resourced regulators cannot inspect every workplace regularly, but trade unions can perform inspectorate-like functions through workplace representatives and shop stewards.

Trade unions can help workers understand their rights, support the reporting of breaches, and provide intelligence that helps regulators use limited resources more effectively.

At present, the Employment Rights Act contains no significant new rights or powers for trade unions or workers in relation to employment law enforcement. However, the Secretary of State has extensive powers to shape the future development of the FWA, including expanding its remit and strengthening its resources. These powers could be used to ensure a more central role for workers and unions.

Trade unions should be fully involved in setting enforcement priorities, and representatives should have greater access to workplaces in order to strengthen scrutiny, encourage compliance, and document breaches of the law.

One particularly effective model exists in Australia, where elected trade union representatives can issue “Provisional Improvement Notices”. Similar mechanisms in the UK could help trigger investigations by the FWA into specific workplaces and practices.

Workers who contact the Agency must also be guaranteed anonymity. Under current practice, regulators often pursue complaints only when workers allow their names to be used, exposing them to possible retaliation from employers.

The FWA should also be fully administratively separate from immigration and border enforcement bodies, ensuring migrant workers can seek protection without fear.

Only through the active involvement of workers and trade unions will the Fair Work Agency be able to make a meaningful difference. Without this, there is a real risk that it becomes the latest in a long line of ineffective regulatory watchdogs.

Professor David Whyte and Professor Ruth Dukes are the authors of a new report for the Institute of Employment Rights examining the future role of the Fair Work Agency.

This commentary was first published on the University of Glasgow website and is republished here with permission.