Could a Fair Work Agency help enforce worker rights in the UK?

In the UK today, many low wage workers, particularly migrant workers or those employed via agencies find themselves subject to exploitation and abuse.

The organisations and government bodies responsible for enforcement of labour rights in the UK are fragmented - as they are in many countries around the world. Could proposals to create a single labour enforcement body - a Fair Work Agency - help improve business compliance with labour laws? 

Head of IHRB’s Migrant Workers Programme Neill Wilkins delves into UK labour regulation with Joanne Young, CEO of the Association of Labour Providers (ALP). Joanne shares challenges faced by workers and businesses under the current system and explains the thinking behind the ALP's recommendations for a unified enforcement body. 

Neill and Joanne also consider the causes of rising workforce costs in sectors such as agriculture, as well as the implications of the Employer Pays Principle. 

 The ALP’s report on the need to establish a Fair Work Agency is available for download on the ALP website.

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Host: Deborah Sagoe, IHRB's Communications Coordinator
Producer & Editor: Helen Brown
Additional Contributors: Sam Simmons, IHRB's Head of Communications

Transcript

Joanne Young: I'd like to see the Fair Work Agency take responsibility for state enforcement of workers' rights generally. That would be a massive increase in the size and scope of the organisation, but I think it can be done.

Deborah Sagoe: Hi there and welcome to Voices from the Institute for Human Rights and Business, also known as IHRB. I am Deborah Sagoe, and in this podcast you'll hear from people working to make respect for human rights part of everyday business. You just said from Joanne Young from the ALP, the Association of Labour Providers. It's a trade organisation that promotes responsible recruitment. ALP's work helps protect workers from unethical practises like recruitment fees, which are a major cause of forced labour in today's global supply chains. The ALP has released a report looking into the UK government's proposed creation of a Fair Work Agency. The agency would've powers to fine and prosecute employers who bridge employment rights. My colleague Neill Wilkins is the heads of IHRB's American workers programme. He spoke to Joanne about the report, but first she gave us an overview of the current situation facing businesses and workers in the United Kingdom.

Joanne Young: So in the UK, labour regulation is quite fragmented. There's different enforcement bodies that focus on different areas and that can often lead to inconsistencies and gaps in application. To run through it as quickly as I can, we've got the Gangmaster and Labour Abuse Authority, so that's the GLAA. They're responsible for enforcing the Modern Slavery Act across all industries. But they also run a licencing scheme for labour providers just in the food and agriculture sector. So that's known as the regulated sector. The licencing standards for that scheme cover most UK employment laws. So when it comes to labour providers within the regulated sector, then the GLAA can enforce most employment rights. So that would include pay, benefits, including holiday pay, health and safety, the whole raft of employment rights.

When it comes to enforcing the Modern Slavery Act, which it does for all businesses, the bar that counts for modern slavery is very high. That means that sometimes the GLAA isn't able to deal with worker exploitation that doesn't meet that strict threshold. Even if it's clear that something's very wrong, it has to meet the bar for modern slavery in order for the GLAA to deal with it. Then you've got labour providers that supply workers outside the GLAA regulator, et cetera, and they fall under Employment Agency Standards Inspectorate, EAS, and they enforce the conduct regs and that focuses on things like fair treatment, transparency and contracts. But they don't deal with basic things like pay and benefits and so on. They can only enforce what's in the conduct regs.

Then you've got HMRC's minimum wage enforcement team. So they enforce, as you would imagine, payment of the national minimum wage across all businesses. So in summary, really there's only labour providers in the regulated sector that have state enforcement of pretty much all employment rights. Outside the regulated sector, EAS enforces a smaller range of rights related to transparency and labour provider behaviour. Then outside of labour providers, all businesses are subject to national minimum wage enforcement and enforcement of the Modern Slavery Act through HMRC and GLAA.

So where you've got businesses and workers that are outside the regulated sector, so could be garment manufacturing, could be care, for example, if worker rights are violated, they've got to pursue remedy through the court system, through the tribunal system. That of course is notoriously slow and backed up. So we end up with lots of workers that are vulnerable to exploitation, patchy enforcement system where some workers are better able to enforce their rights than others.

Neill Wilkins: Thank you, Joanne. Perhaps you should just remind us of which sectors fall under the regulated areas who falls under the GLAA regulation?

Joanne Young: So that's labour providers that supply workers into the food, agriculture, horticulture industry. That includes fisheries and forestry, and that includes all food production as well. So anything that's specifically related to growing or producing foods. It is quite a wide sector falls under the GLAA regulated sector. Otherwise, it falls under EAS enforcement.

Neill Wilkins: I think you've hinted at it, but what do you see as the main failings of this really convoluted system or set of systems for enforcing labour regulation in the UK?

Joanne Young: Well, it's a real problem, I think. There's, in a lot of cases, little to no deterrent for bad practise. Workers very rarely take cases to tribunal because the process is long, it's complicated. They might not get an outcome for years. By the time decisions are made, workers have moved on and enforcement just kind of feels a little bit out of reach there. Of course from the business perspective, their experience varies according to their sector as well. So we've just talked about the regulated sector for labour providers and of course they've got quite stricter oversight there. Whereas if you manufacture widgets or supply labour somewhere else, you might never see an enforcement visit, let alone face any consequences for non-compliance.

So again, rights just aren't evenly applied. I think on top of that, we've got really complex employment law in the UK, very, very complex, very difficult to interpret, and that brings inconsistencies potentially as well in terms of how the rules are followed or not as the case may be. Essentially we can have businesses exploiting workers or dodging taxes pretty much without fear of being caught.

Neill Wilkins: I think that we also all know that workers are always very reluctant to try and bring prosecutions, particularly if they're temporary, if they're migrant workers, and if they're employed in low-wage sectors. What they want is a rapid resolution of their dispute, which usually, not always, but usually would involve pay. Sitting out waiting for a prosecution to be made is obviously not very easy for workers in this situation.

Joanne Young: No, that's it. They will generally just move on to the next job.

Neill Wilkins: Now, of course, we're a human rights organisation and the UN guiding principles on business and human rights place a responsibility on business to respect rights, but also on governments to protect rights. So can you tell me a little bit more about the ALP's recommendation for a single body for a Fair Work Agency? You've just produced this report about this, so could you perhaps explain why the report was necessary and what a Fair Work Agency might look like?

Joanne Young: We can't claim responsibility for coming up with the idea, it's been around for years. We can go back to the Taylor Review of modern working practises 2017, I think, where it was recommended and the previous government committed to introducing it but didn't it then appeared in the Labour Party Manifesto, and it's now actually included in the Employment Rights Bill that's making its way through Parliament. So looks like it's going to happen. The proposal is to merge the GLAA, the Employment Agency Standards Inspectorate and HMRC's national minimum Wage enforcement team. So the enforcement bodies we've already talked about into one organisation. That new body would take on the combined powers and responsibility of all three of those organisations and add in the enforcement of holiday pay and sick pay across all industry, which isn't currently state enforced.

The reason we came up with our paper is we fully support this. We support the creation of a Fair Work Agency, but only if it's adequately funded to make sure that it operates effectively. All of those enforcement bodies are chronically underfunded at the moment, and that's part of the reason why they can't be effective because they can't do as much as I'm sure they would like to. If we don't properly resource this body, then it risks being another underperforming body that can't deliver on what it's supposed to do.

I wanted to say, just for a bit of context, most ALP members are GLAA licence holders. Every two years we run a member survey about GLAA performance and about 95% of members consistently support GLAA licencing. So there is a clear demand for compliant businesses for fair and effective enforcement that ensures a level playing field and protects workers from exploitation. So we wrote this paper to say to government, look, this is how we think you should do it. These are the things that we think you need to bear in mind to make sure that this agency is effective and can undertake it's mandate to make a level playing field for both workers and businesses.

Neill Wilkins: I think that important point often gets forgotten in these debates that we think that these things are only about protecting workers and workforces, but actually it's also about making sure that there's a fair and level playing field for law-abiding businesses who are trying to compete fairly but within the law. We unfortunately very often hear about red tape strangling business and all the rest of it. Yet that survey that the ALP produce every two years shows to be quite the opposite, that actually it's this level playing field that will enable business to operate fairly and effectively.

Joanne Young: Yeah, we're not a fan of red tape. The less of it the better. But what we do believe is that if we're going to have laws, then let's enforce those laws. We are very good at making new ones. We're not very good at enforcing the ones we've already got and we know we've got all of this new employment law coming along, but it's not going to be effective if it's not enforced. The businesses that are already not compliant will continue to be not compliant. Those businesses that are compliant and are doing the right thing are going to get a whole load more cost and complexity that they're going to have to build into their model. Whereas, as I say, those other businesses are just not going to bother. That just widens the gap even further between compliant and non-compliant businesses and therefore of course their competitiveness.

Neill Wilkins: Also we see this halo effect, don't we? That because the law exists on paper, everyone assumes that everything is okay and actually the opposite is true for law-abiding businesses. You believe that this one body would be a much more effective system joined up thinking, joined up action.

Joanne Young: Well, it could be, obviously if we can get it right in the first place. It's about improving what we've got, I think. So we're bringing together three very different bodies and there's going to be a lot of work there to bring them together to mesh them into one organisation and to make sure that that organisation is bigger than the sum of its parts. Yes, it needs to protect vulnerable workers, but as I say, it also needs to create that level playing field and have people believe that that's the case. I'd like to see it do more. I'd like to see the Fair Work Agency take responsibility for state enforcement of workers' rights generally, and that would be a massive increase in the size and scope of the organisation. But I think it can be done. I think even with chronic underfunding, there's ways and means of funding these types of organisations so that they become self-funding.

We think the government ought to think a little bit creatively about that. So there could be civil penalties, non-compliant businesses could be responsible for paying the cost of investigations. For example, businesses that are exploiting workers are often also exploiting the Exchequer. So dealing with that brings in more tax revenue, which is also something that can be countered in terms of the value of such an organisation. Lots of these ideas are in the paper, but we really want this properly funded effective agency rather than something which is continuing to try and save money.

Neill Wilkins: One of the things that I thought was particularly useful within the report actually was the recommendations that you made about how this might be effectively funded, but also the scale that an agency would need to be operating at to be effective. But of course that's what's needed and as you show in the report, potentially that could be self-funded. Although of course we always need to remember that this is a public good, it's not something that is left to business to decide whether they comply with labour law.

Joanne Young: Well, absolutely. Yet that's the reality, isn't it? I mean, why do we pass legislation if we're not going to make sure that it's enforced properly?

Neill Wilkins: Yeah. Obviously most of what you work with is that to do with food processing, horticulture, agriculture and the like, but are there other sectors where you feel that this is really needed? What are the other risk sectors in your opinion, Joanne?

Joanne Young: Well, I guess although the food sector is the one that is subject to most enforcement, effectively what it is the sector that's characterised of course by the need for temporary labour because seasonality and promotions and so on and so forth. Also, it's characterised by people that are paid at or near to minimum wage. So any sector that has the same character as the food sector in terms of lower paid workers, seasonality and flexibility is going to have some of the same issues. So we're going to look at things like the care sector is the one that's been in the news most recently, we hear a lot about warehousing and distribution, massive operations, massive seasonal operations around Christmas and that kind of thing. Of course, we hear a lot about the gig economy and the status of workers in there. Then there are the other kind of harder ones like nail bars and car washes, which are apparently rife with exploitation, but very difficult to figure out how to deal with.

Neill Wilkins: Finally, I wanted to ask you about something else that's proven to be a key dilemma for many farmers and growers at the moment, which is rising workforce costs. This fits into this long-running debate between supermarkets and their suppliers about who should pay these increased costs. What do you think has led to this situation at the moment? Maybe there's some obvious answers to that question, but from your experience, what do you believe has led to this situation?

Joanne Young: Well, it's a perfect storm, isn't it? Over the past few years we've had Brexit, so that put an end to freedom of movement and that required the return of the seasonal worker visa scheme so that farmers and growers could get the workers they need. We had coronavirus, which massively impacted the workforce in so many ways and led to this huge rise in economic inactivity. We have war in Europe where that impacted the availability of workers from Ukraine because they made up the vast majority of migrant workers in agriculture. Of course they are fighting. Now we've got this returning debate over the employer pays principle, which says that workers should not pay for their cost of recruitment.

The problem is that in the UK, recruitment fees from a legal perspective are very different from those defined by the ILO, which underpins the employer pays principle. So it's normal for workers in the UK coming from overseas to pay for their own visa and travel costs. It's always been the case. But of course now recruitment is taking place further afield because we're not recruiting in Ukraine, the costs of getting workers to the UK are higher. All of that feeds into the same issue. The money to pay those costs just isn't in the supply chain at the moment. Labour providers and growers just don't make that much money. So if we're going to pay the travel and visa costs of workers that come to the UK, then we're going to have to find some new money to do that. That means putting up the retail cost of goods. I think I've mentioned this before with you, Neill, as one of our members said recently, perhaps we need to change the employer pays principle to the consumer pays principle. The money needs to be found to do this.

Neill Wilkins: Because otherwise, effectively though, if we don't, there's effectively a slavery tax. If people aren't paying the increased cost of a good, then they're getting that good cheaper because there's some exploitation somewhere in the system. But it's very clear that if we are now bringing workers from countries like Nepal, Tajikistan, Kyrgyzstan, and elsewhere, it costs far more to do that than when we were previously bringing them from Romania, Bulgaria, and places like that. I think that this is an ongoing situation and I think that it's very easy to view this as a price increase. But perhaps a better way of describing it is a price that this needs to be addressed in the full cost of producing goods or delivering services such as aged care in the UK now.

Joanne Young: Well, I think it is part of the cost of producing those goods. The problem is at the moment, it's the workers that's paying it.

Neill Wilkins: Absolutely. Thank you very much for joining us today. Of course, for us, it's very easy when buying groceries at the supermarket to forget about the long and sometimes complex supply chains and the workers employed within them that provide us with the many choices we see on supermarket shelves. That conversation has perhaps given us some insight into that world and the need to respect the rights of those employed within the industry and others. Thank you for joining us today.

Joanne Young: Thank you for asking me.

Deborah Sagoe: Many thanks to Neill and Joanne for those insights. The Association of Labour Providers report on the need to establish a Fair Work Agency is available for download on both the ALP and IHRB websites. Thank you for listening to this episode of Voices, which is brought to you from the Institute for Human Rights and Business. Until next time, be sure to share and follow the podcast. That way you will never miss an episode. If you would like to find out more about the work that we do at IHRB, then head to IHRB.org.