04 August 2017

The Director of Labour Market Enforcement, Sir David Metcalf, has opened a consultation on strengthening the enforcement of labour law.

His call for evidence accompanied his introductory report last week, in which he vowed to encourage stronger use of current powers to imprison the worst offenders for up to two years. The law currently provides for criminal penalties to be issued for breaches such as the repeated and deliberate underpayment of NMW/NLW or Modern Slavery Offences.

However, prosecutions are rare. Between 2011/12 and January 2017, there were only nine cases brought in the Magistrates' Courts and out of these, only seven convictions were made.

Sir Metcalf outlined in his consultation document three challenges to enforcement of the law brought about by changes to the labour market in recent years. These included the "fissuring" of employment relationships, in which work is increasingly contracted out via third parties, leading to confusion over who the employer is; the decline in union membership and collective bargaining coverage (which is now only around one third of what it was in the late 1970s); and a rise in the proportion of workers in casualised work - such as roles classified by employers as "self employment", part-time jobs, agency work, and zero-hours contracts – which has led to a blurring of the distinction between employment statuses and thus the rights to which workers are eligible.

He pointed out that there are currently two routes to enforcing workers' rights: through legal challenges by workers and their unions at employment tribunal; and direct enforcement by the HMRC, Employment Agency Standards Inspectorate (EAS); and the Gangmasters' and Labour Abuse Authority (GLAA). The latter of these is the focus of Sir Metcalf's role and he is calling for evidence on how these bodies can more effectively enforce the law.

The Institute of Employment Rights argues that for the policing of labour law to be effective, the framework through which labour standards are established and enforced must change. In our Manifesto for Labour Law – 25 recommendations for reform, drafted by 15 leading academics and lawyers – we propose a paradigm shift from a reliance on statutory minimums set by the government, to fair wages and conditions set through a process of sectoral collective bargaining and underpinned by statutory rights.

In today's system, most workers' rights are policed by individual workers, who must take their employer to tribunal to be compensated for breaches to the law. Even now that tribunal fees have been found unlawful, this system relies upon workers having an understanding of employment law and the legal assistance required to take a case to court.

We argue that the onus to enforce employment law should not be on individual workers and that an independent Labour Inspectorate should be established, with the power to bring legal proceedings on behalf of workers, cancel dismissal notices, order reinstatements, require employers to cease and desist, and impose criminal sanctions on serious offenders.

We believe many cases that currently go through the courts could be better dealt with in-house through dispute resolution procedures that are agreed through collective bargaining. Where an external court system is required, we recommend that tribunals return to a tripartite model and, along with the CAC and Certification Officer, form the first tier of a new autonomous Labour Court System.

Read about our enforcement proposals here

Read more about the Manifesto for Labour Law and purchase your copy here