Employment Rights Act 2025 (Investigatory Powers) (Consequential Amendments) Regulations 2026

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Employment Rights Act 2025 (Investigatory Powers) (Consequential Amendments) Regulations 2026.

My Lords, this instrument makes consequential amendments to the Investigatory Powers Act 2016 following Parliament’s decision in the Employment Rights Act 2025 to create the Fair Work Agency, and brings together the functions of the Gangmasters and Labour Abuse Authority, the Employment Agency Standards Inspectorate and HMRC’s national minimum wage enforcement teams. It ensures that officers performing the same GLAA-derived criminal enforcement functions will continue to have access to the same investigatory tools under the same statutory thresholds and safeguards once they sit within the new agency.

Where the GLAA is currently named in the Investigatory Powers Act, these regulations update that reference so that the Department for Business and Trade, in so far as it relates to the Fair Work Agency, is listed instead. All of the underlying safeguards in the IPA, including the statutory requiring purpose, the minimum 12-month sentence threshold and the requirement for necessity and proportionality, remain exactly as Parliament originally set them.

I fully appreciate that the powers to acquire communications data are intrusive and must be used only when necessary and proportionate. These powers concern the who, when and where of a communication—that is, subscriber details, timings and location data—but not the content of any call, message or email. They do not reveal what a person said or wrote. They remain significantly less intrusive than interception, yet they are vital tools in tackling the most serious forms of labour exploitation, where victims are often too frightened, too isolated or too controlled to come forward with evidence.

It may help the Committee if I explain the scope of these powers. Under the Investigatory Powers Act, communications data authorisations will be able to be given to the FWA only for the purpose of preventing or detecting serious crime. This is defined in primary legislation, and one of the key elements is that the offence must carry a sentence of at least 12 months’ imprisonment; that statutory threshold remains unchanged. We need to ensure that the Fair Work Agency can continue to investigate the same serious exploitation offences, including unlicensed gangmastering and modern slavery, that the GLAA handles today. Those offences already meet the existing statutory definition of serious crime, and therefore fall within the same communications data authorisation framework, applying the same necessity and proportionality tests and the same independent scrutiny as before. The threshold, authorisation process and full oversight of the Investigatory Powers Commissioner remain exactly the same.

In transferring these functions to the Fair Work Agency, we have ensured that the safeguards that apply under the Investigatory Powers Act will continue in full. Communications data applications will remain subject to independent scrutiny by the Investigatory Powers Commissioner’s Office, including routine inspections and case sampling. The established single-point-of-contact system will continue to play its gatekeeping role, with an accredited specialist assessing every request to ensure that it meets the statutory crime purpose and satisfies the stringent tests of necessity and proportionality. Requests will still require authorisation by a designated senior officer at the appropriate grade and will continue to be submitted for approval by the Investigatory Powers Commissioner’s Office, with only limited provision for urgent internal authorisation.

My Lords, the instrument before us is, on the face of it, a technical one. As the Minister explained, it ensures that enforcement officers of the new Fair Work Agency inherit the same communications data powers, under the Investigatory Powers Act 2016, that officers of the Gangmasters and Labour Abuse Authority held before them. However, the creation of the Fair Work Agency is the moment at which this Committee confers covert investigatory powers on a body whose structure, resourcing and operating principles remain, to a troubling degree, undefined.

I turn first to what I regard as the most fundamental concern: the departure from the settled policy of targeted, sector-specific enforcement. The GLAA was created for a reason. It was designed to address the specific and acute vulnerabilities of workers in agriculture, food processing, shellfish gathering and related sectors—industries where the risk of exploitation and labour abuse was demonstrably high and where ordinary enforcement mechanisms were plainly insufficient.

The Fair Work Agency sweeps that away. It appears that it will have a broad mandate to inspect any business in any sector at any time. That is a significant departure; we were given no adequate explanation for it during Committee or Report on the Employment Rights Act 2025. On what evidential basis have the Government decided that the enforcement problems, which were previously confined to high-risk sectors, now require a body with universal reach? What assessment has been made of the risk that this broader mandate will dilute the quality and focus of enforcement, rather than improving it? The Minister just mentioned a framework agreement, but am I not right in saying that this Committee has not yet seen even a draft of it? Perhaps the Minister will clarify that aspect.

This matters acutely for small and medium-sized enterprises, which are already facing more than £600 million in costs flowing from the Employment Rights Act—costs that are, in large part, administrative in nature, such as in record-keeping, compliance processes and reporting obligations. These activities will now fall within the Fair Work Agency’s line of sight. These businesses, many of which are without dedicated human resources functions or legal support, will be exposed to an agency that is armed with powers of entry, powers to seize documents and electronic records, and now, through this instrument, powers to obtain communications data covertly. What guidance will be issued to ensure that enforcement action against small businesses is proportionate? What safeguards exist to distinguish a genuine, minor administrative error from deliberate wrongdoing? Will businesses that make honest mistakes face the prospect of document seizure, substantial financial penalties and the full weight of this agency’s investigatory apparatus?

I turn to resourcing. The Fair Work Agency will absorb the functions of three existing bodies: the GLAA, HMRC’s minimum wage enforcement directorate and the Employment Agency Standards Inspectorate. Presumably, the staff of those bodies will transfer to the new agency. Can the Minister just confirm that all existing employees will transfer under TUPE? If not, which staff will not transfer and on what basis? For those who do transfer, will their terms and conditions be preserved in full?

Beyond staffing, I should also ask the Minister directly what the budget is for the Fair Work Agency. The Government’s own impact assessment gestures at set-up costs, yet we have no published, costed funding plan for the Fair Work Agency as a unified agency. I hope the Minister is aware of the report of the Business and Trade Committee, which had some very critical comments to make about the lack of any such plan. The impact assessment said:

“Limited evidence and an incomplete design of the operational and organisational structure of the FWA mean that it has not been possible to quantity the impact of benefits arising from its introduction nor the majority of associated costs. Where costs have been calculated they are limited to the one-off costs faced by businesses in order to familiarise themselves with changes to the enforcement system. We estimate that these costs would be £33m”.

The Committee added that it was still in the dark about the overall cost of this particular agency. Its recommendation, as I understand it, remains unaddressed.

I also raise the question of the Equality and Human Rights Commission. The Government have pointed to the FWA as a mechanism to reduce duplication in the enforcement landscape. I welcome the goal of coherence, but can the Minister explain precisely what duplication exists under the present system that the new agency will remedy? How can she address directly the concern, raised by the Equality and Human Rights Commission itself, that Schedule 4 to the Employment Rights Act opens the door to extending the Fair Work Agency’s remit into discrimination law?

We all agree that workers in this country should be protected from exploitation and abuse. But support for that goal does not require acquiescence in a body whose mandate is broader than justified, whose resourcing is unconfirmed, whose approach to proportionality is undefined, and whose relationship with businesses and workers remains unclear. I hope that the Minister can alleviate some of the concerns that I have raised today.

I thank the noble Lord for his series of questions on this matter. To come back to its core, the statutory instrument has a strictly limited purpose to ensure that the same investigatory powers currently applying to the GLAA transfer smoothly to the new Fair Work Agency. The Fair Work Agency will enforce the legislation listed in Schedule 7—not all employment legislation. On day one, the Fair Work Agency will take the same remit and powers of current regulators, subject to existing and enhanced safeguards, which will continue to apply.

On the noble Lord’s question about going wider, as I mentioned, this applies only to serious crimes under the legislation that have a minimum 12-month sentence threshold. This is a very limited series of offences—the most serious that we encounter in the labour market today. He also asked when the framework agreement will be published. It will be published on 7 April alongside the statutory instrument coming into force.

The noble Lord questioned the culture of and approach to enforcement and recalled that we have previously discussed the interests of small businesses and micro-businesses and the culture of enforcement more generally. We have thought about how the Fair Work Agency will go about its work. The idea of a single enforcement body will make it easier for small employers to understand their obligations and get the right guidance early. The agency is focused only on taking firm action against the small minority of rogue employers who exploit workers, and the idea is to ensure fair competition for responsible businesses. That is the approach we are taking. This statutory instrument is about transferring those legal powers that are currently housed within one agency to another.

On resourcing and funding, the budget for the Fair Work Agency will be set out in the usual way through the department’s allocation processes. Given that the Fair Work Agency will have additional areas of remit under the Employment Rights Act, it will have a larger budget than its predecessor organisations combined. We will communicate that budget when the organisation is set up. On the question of the transfer of employees, all staff will transfer under the Civil Service equivalent of TUPE—that is the model that will be used.

Motion agreed.

Committee adjourned at 6.53 pm.