Perhaps one way of getting it past the tories would be to say that it would cut down on union power - will people join unions if there's an enforcement agency? And also point out that employment rights should not just be granted to the overwhelmingly labour-voting union members, but to tory workers too.

Yes, a lot of agencies are council based, but perhaps expanding the remit of an existing quango (see first comment thread) fits better with lib dem principles?