Government launches new workers’ rights watchdog and warns it may ban garments made by underpaid workers

Fashion retailers Leicester

The Government has pledged to clamp down on workplace abuse, such as modern slavery, enforcing the minimum wage and protecting agency workers, with a powerful new workers’ watchdog created by the Department for Business, Energy and Industrial Strategy (BEIS).

It has also warned that it may introduce bans on the sale of goods – including those in the garment sector – where workers have been found to have been underpaid.

The BEIS has brought the three main issues of modern slavery, enforcing the minimum wage and protecting agency workers under the remit of one new authority, which will “ensure businesses that break the rules have nowhere to hide”. 

This new “one-stop shop” approach will help improve enforcement through better co-ordination and pooling intelligence, the BEIS has said.

The new watchdog will also enhance workers’ rights by providing a “single, recognisable port of call for workers” so they know their rights and can blow the whistle on bad behaviour.

It will support businesses on compliance by providing guidance on their obligations to staff. Meanwhile, increased enforcement would make sure good businesses aren’t undercut by rival employers who are not paying or treating their workers correctly, it has said.

As well as enforcing all existing powers belonging to the three agencies, the new body will have a new ability to ensure vulnerable workers get the holiday pay and statutory sick pay they are entitled to – without having to go through a lengthy employment tribunal process.

Business Minister Paul Scully said: “This government has been absolutely clear that we will do whatever we can to protect and enhance workers’ rights.

“The vast majority of businesses want to do right by their staff, but there are a minority who seem to think the law doesn’t apply to them. Exploitative practices like modern slavery have no place in society.

“This new workers’ watchdog will help us crack down on any abuses of workers’ rights and take action against companies that turn a blind eye to abuses in their supply chains, while providing a one-stop shop for employees and businesses wanting to understand their rights and obligations.”

The government’s plans will see the Gangmasters and Labour Abuse Authority, the Employment Agency Standards Inspectorate and HMRC’s National Minimum Wage Enforcement combined to create a single enforcement body.

The new body will continue the “Naming and Shaming” scheme, which calls out companies who fail to pay workers what they are owed and can hit rogue employers with fines of up to £20,000 per worker. This enforcement activity will be extended to cover other regulations protecting the pay of workers employed through agencies or by gangmasters in the agricultural sector.

The government will also explore further measures to target abuses in the garment sector specifically, following reports last year of serious problems in the industry relating to the underpayment of staff in factories in Leicester that supply fast fashion giant Boohoo.

Boohoo has since carried out a root and branch review of its supply chain as a result, deselecting hundreds of suppliers, and has appointed Sir Brian Leveson to hold it to account on achieving its Environmental, Social and Governance goals. Its senior directors also now have ESG goals embedded into their bonus schemes.

Options for the garment trade being examined include creating a Garment Trade Adjudicator to investigate companies’ supply chains, or extending the licensing scheme that currently covers employers in the agricultural sector. Under the scheme, businesses who provide workers for agriculture and the fresh produce supply chain must apply for a license to operate in the sectors, and are subject to inspections to ensure they meet employment standards required by law.

If brands’ behaviour doesn’t improve, the government warned it could introduce harsher measures, including bans on goods made in factories where workers have been underpaid.

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