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A new single enforcement agency for employment rights - KPMG’s consultation response

A new single enforcement agency for employment rights

KPMG has responded to BEIS’s consultation on establishing a new single enforcement agency for enforcing employment rights.

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The Good Work plan promises to bring employment law into the 21st century. In addition to modernising employment rights, effective enforcement of those rights has been identified as an area in need of reform to protect the most vulnerable workers.

The consultation

Currently, a range of different agencies are responsible for enforcing employment rights, such as HMRC, the Equality and Human Rights Commission, the Health and Safety Executive and the Gangmasters & Labour Abuse Authority. The concern is that this fragmented approach to enforcement means vulnerable workers do not know who to turn to for advice on, and enforcement of, those rights. The Department for Business, Energy & Industrial Strategy (BEIS) sought opinions on its proposal to establish one enforcement agency and, in particular, what rights should fall within the remit of this new agency.

Our view

KPMG agreed that a new single enforcement agency should be established. Whilst some rights are effectively enforced, such as the National Minimum Wage (NMW), we consider that the current array of enforcement agencies and guidance makes it difficult for vulnerable workers to seek protection. We also consider that one agency could lead to more consistent enforcement of employment rights.

However, for such an agency to be a success, we recommended that:

  • Not all employment rights should fall within the new agency’s scope. BEIS proposes that the enforcement of NMW, employment agencies regulations, umbrella companies, licences for temporary labour in high risk sectors in agriculture and fresh food supply chains, modern slavery and holiday pay fall with the new agency’s core remit, as well as the enforcement of statutory sick pay and employment tribunal awards as areas of additional scope. We broadly agreed with BEIS’s proposal, save in respect of employment tribunal awards and we consider ‘family friendly’ rights (such as statutory maternity pay) and pensions auto-enrolment, should also be enforced by the new agency. Some employment rights are too complex to be enforced by a single enforcement agency or are effectively enforced by the current enforcement body, therefore should remain with that body;
  • Steps are taken to ensure employers are not alienated by the enforcement agency. This could be achieved by taking a harm based approach to non-compliance. Currently, even technical breaches of complex legislation (such as the NMW legislation) can lead to substantial penalties, even where there is no loss to the employees. KPMG has recommended that the penalties for non-compliance are assessed in a similar manner to the current tax regime where ’lower harm‘ breaches are addressed with warnings and education rather than financial penalties and ’naming and shaming’;
  • Whilst the new agency should have a role in publishing guidance, it must be prepared to allow employers to rely on this guidance;
  • The new agency ensures expertise currently harboured in the existing enforcement agencies is not lost; and
  • Adequate resources are made available to the new agency.

Whilst the consultation has only recently closed, KPMG considers it is likely various employment rights will be brought within the remit of a single agency. We wait to see exactly which employment rights will fall within this agency and how it approaches enforcement.

How can KPMG help?

KPMG has extensive experience in pay compliance, employment rights, employment tax and modern slavery.

If you have any queries, please get in touch with your normal contact or e-mail employersclub@kpmg.co.uk.

© 2021 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.

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