Back in May last year, members of the Taylor Vinters employment team provided a written response to the Business, Energy and Industrial Strategy Committee’s consultation on enforcement of employment rights. Read their thoughts below on the Government’s proposals below.
Enforcement of holiday pay and SSP
In recognition of the fact that the rules relating to calculation of holiday pay are complex, and that some employers are failing to pay their workers properly in respect of annual leave, the Government has committed to extending state enforcement to the underpayment of holiday pay. This means that workers will now be able to enforce their rights to holiday pay by either contacting HM Revenue and Customs or bringing an Employment Tribunal claim. This reflects the enforcement approach that already applies to underpayment of the National Minimum Wage, as well as the financial penalties that are issued in the event of successful complaints. We are hopeful that the extension of state enforcement will ease some of the pressure on Employment Tribunals and will encourage employees to pursue their rights to holiday pay.
One of the biggest issues regarding the payment of holiday pay is a lack of education regarding basic entitlements, which the Government has promised to address.
To this effect, the Government commenced an awareness campaign in late February 2019 (including real life examples) to support the interpretation and understanding of the holiday pay rules, targeted at both individuals and employers. The aim of this campaign is to help to ensure that all workers are benefiting from their entitlement to paid annual leave and employers will be held to account. The Government has accordingly released new guidelines and an updated online holiday entitlement calculator.
There are also (non-committal) indications that the Government is looking to reform Statutory Sick Pay, and as part of this will consider whether changes are required to enforcement measures.
In our response, we provided a number of further suggestions, such as a requirement for businesses to put in place a whistleblowing policy to further encourage workers to report poor working conditions. We also explained that the establishment of an ombudsman-like authority (as exists in Australia in the form of the Fair Work Ombudsman) might also encourage workers to bring complaints to light, as it may seem less threatening to the worker than going through court proceedings. These have not found their way into the Government’s Good Work Plan.
However, the Government has promised to publish its proposals for a new single labour market enforcement agency shortly. It certainly seems that the establishment of such an agency would create efficiencies and would better ensure that vulnerable workers are more aware of (and have easier access to) their rights and that businesses are supported to comply. This will provide a single point of contact for individuals and employers (and will benefit from additional powers and resources).
Enforcement of Employment Tribunal awards
Matthew Taylor identified that the system for enforcement of Employment Tribunal awards is in need of reform, as the current two-stage process is unnecessarily cumbersome and the variety of enforcement methods could create confusion for a lay-employee.
In response, the Government has announced two projects: the Employment Tribunal Project and the Civil Enforcement Project, both of which aim to simplify the process for enforcing unpaid awards. The Government’s “vision is to build these reform projects into a seamless, end to end system which guides users through each stage of the process, and signposts at the relevant time all of the enforcement options available so that more people are paid what they are entitled to quickly and with the minimum of effort”. There is no information yet regarding how and when this system will be implemented.
As part of its new plans, the Government has introduced the naming (and shaming) of employers who are failing to pay Employment Tribunal awards, for any Tribunal awards that were registered with the Department for Business, Energy and Industrial Strategy on or after 18 December 2018 and are over £200 in value. The names will be published in quarterly press releases on the Government website. We consider that the Government could have gone one step further, however, by introducing additional compensation for the successful claimant in the event that the employer fails to pay the award on time.
The Government has also taken a firm stance on “repeat offenders” who fail to comply with Tribunal awards. The Government sought to raise the maximum aggravated breach penalty from £5,000 to £20,000 from 6 April 2019 and put an obligation on judges to consider the use of this sanction.
Whilst we support the Government’s plans, we believe that more clarity should be given regarding what constitutes “repeat offending”, and how judges are able to exercise their discretion around the use of this sanction. It is also unclear as to how the Tribunal will keep track of whether the particular employer is a repeat offender. We look forward to receiving greater clarity in due course.