The Fair Work Agency, the labour market enforcement body created under Labour's Employment Rights Act, has been busy addressing labour abuse inquiries in the first quarter of this year.
The agency responded to 2,741 labour abuse inquiries, a significant increase of 87 per cent compared to the same period last year. National minimum wage inquiries also rose by 19 per cent to 2,933. The chief executive, Lisa Pinney, attributes the increase to greater awareness about workers' rights and the agency itself.
The agency's remit is set to widen, with the government yet to announce the date from which it will take responsibility for policing holiday and sick pay. The Department for Business, Innovation, Science and Trade has launched a consultation on holiday pay compliance and enforcement, which will close on 22 September.
The Resolution Foundation estimates that 900,000 workers a year have some holiday pay withheld, with the total owed worth about £2.1 billion. The Low Pay Commission estimates that about 371,000 people were underpaid the national minimum wage in 2024.
The Fair Work Agency has a budget of £60 million and a team of 650, working alongside the National Minimum Wage compliance team. Last week, agency staff visited a fruit farm in Scotland, alongside other government agencies, to address poor working and living conditions, including mouse and rat infestations in caravans housing workers.
The agency has the power to enforce compliance with employment laws, including the national minimum wage, holiday pay, and sick pay. Employers who are caught underpaying employees can expect fines and to be named and shamed. In fact, nearly 500 employers were fined over £10 million for failing to pay the minimum wage last October.
The agency's chief executive, Lisa Pinney, is open to extending naming and shaming to other areas, such as holiday and sick pay. "It does drive change," she says.
Industry groups have raised questions about how the new rights will be enforced in practice. The Recruitment and Employment Confederation supports the agency's creation but wants risk-based enforcement.
The agency will set out its approach before new powers commence, Pinney says. "As the various different powers are switched on there will be communications ahead of that so that businesses are clear what's going to happen and how," she says.
The agency will take covert action where it has intelligence of serious breaches, working with bodies including the National Crime Agency. Its stated preference is otherwise to give notice, supporting and enabling businesses to do their reviews and make any necessary changes.
The agency's powers include civil penalties, legally binding undertakings, applications for director disqualification, and recommendations to prosecute. It can also fine employers who do not pay employment tribunal awards or Acas settlements, bring tribunal claims on behalf of individuals, and offer legal assistance in civil proceedings.
Social care and construction are the agency's two priority sectors. The cash-in-hand "grey economy", including hand car washes and nail bars, is also under scrutiny. Pinney has begun discussions with Companies House, HMRC, and the Insolvency Service on directors who place companies into administration, leaving unpaid wages and tax.
The agency also has the power to prosecute exploitation under the Fraud Act, which requires a lower evidential bar than modern slavery legislation. This is a significant development, as the previous authority was unable to meet the legal threshold for many cases.
The agency's chief executive, Lisa Pinney, plans a Fair Work Assembly in the autumn, bringing together academics, unions, government agencies, and businesses. The agency is also working with Acas on a digital "shopfront" for employers, providing a one-stop-shop for information and guidance.
Pinney says, "Businesses want to get information from one place. We want to support and enable businesses to do their reviews, to do the right thing, to make any changes."
