As part of our series of updates exploring the implications of the Employment Rights Bill (the Bill), we take a look at the proposals for a Fair Work Agency, which the government plans to establish in order to create a recognisable single body where individuals can seek help with employment rights and to make the enforcement process simpler.
Overview of the Fair Work Agency
The Bill seeks to establish the Fair Work Agency, a single centralised body tasked with enforcing certain employment rights currently overseen by various other agencies, together with the additional responsibility of enforcing holiday pay rights. The Bill would also provide the government with the authority to expand the agency’s reach to other employment rights over time.
Scope of the Fair Work Agency
The Bill outlines several areas which will be under the agency’s jurisdiction:
- employment agency regulations;
- national minimum wage requirements – covering minimum wage rights and record-keeping;
- modern slavery laws;
- statutory sick pay;
- holiday pay;
- licensing for labour in high-risk industries (gangmasters licensing); and
- financial penalties for unpaid Employment Tribunal awards – a provision introduced in 2016 but rarely used.
What powers will the Fair Work Agency have?
Extensive and robust enforcement powers are planned for the Fair Work Agency, including the ability to request information from individuals, access business premises to collect documents and, in some cases, require employers to make specific commitments, with non-compliance potentially leading to criminal charges. This approach would represent a significant increase in the state’s role in enforcing employment rights, though questions remain around the speed and effectiveness of these changes, especially given potential funding and resourcing challenges.
Notably, the factsheet recently published by the government states that additional enforcement powers will be added to the Bill during its passage through Parliament.
What might this mean for employers?
The new oversight of holiday pay and statutory sick pay could bring significant changes, especially since holiday pay has not previously been state-enforced. Holiday pay rules are complex, having developed further over recent years by case law, and some employers have adopted something of a wait-and-see approach to changing holiday practices. With the potential for civil and criminal penalties, most employers will want to take a more proactive approach to ensure that their holiday pay arrangements are legally complaint.
While minimal changes are expected for employment agencies, minimum wage and modern slavery, the main shift will be consolidating these enforcement responsibilities under one agency. Ultimately, the agency’s impact will depend heavily on sufficient funding and resources being made available, as recent reports suggest that, without these, enforcement actions could remain limited.
We know that the Bill is not likely to take effect until late 2026, and it is likely to take even longer for the Fair Work Agency to be set up and for the transfer of powers from the various existing agencies to be completed. The Bill could also be subject to change as it makes its way through the Parliamentary process. Employers should therefore have a reasonable lead-in period to ensure that they are legally compliant. The areas which will fall under the remit of the Fair Work Agency are key employment rights, often disproportionately affecting lower paid workers, and employers should expect much closer scrutiny of these rights once the agency is established.
You can read our overview of all the key measures in the Bill here.
