The new helpline will give employers and employees advice on issues including the National Minimum Wage, the Agricultural Minimum Wage, Working Time (48-hour average working week), employment agency standards and gangmaster licensing.
The launch of the single helpline comes as a new poll showed nearly half of people (48%) wrongly thought employment agencies can charge workers a fee for finding them a job.
The helpline has been developed in conjunction with employers, trade unions and various Government enforcement agencies following recommendations from the Vulnerable Workers Enforcement Forum.
McFadden said: "This Government has done a lot to improve rights at work but it's also essential to make sure these rights are properly enforced. A simple system for reporting abuses and giving advice and information to employers and workers is a critical part of that.
"We want to transfer the burden of navigating the system from the worker to the Government. This is an important step and we are determined that the recession does not become an excuse to deny people their basic rights at work".
The Recruitment and Employment Confederation (REC) has welcomed the news.
Commenting on the new helpline, Tom Hadley, the REC's director of external relations, said: "The minority of rogue providers who mistreat workers are also in the business of undercutting legitimate agencies.
"The REC has consistently called for better enforcement of existing regulations and for a more joined-up approach by different Government inspectorates. Today's launch is a step in the right direction and coincides with the REC's own Serious About Standards campaign as well as ongoing work with employers to promote good practice in the supply chain."