The UK Government recently published its Good Work Plan, a package of labour market reforms proposed in response to the review conducted by Matthew Taylor into the changing British labour market and which published its conclusions in July 2017 (Good Work: the Taylor Review of Modern Working Practices). This plan was described by the Government as the largest upgrade in a generation to workplace rights. Following the Government’s initial response to the Taylor Report in February 2018 and the consultation it subsequently conducted, the Good Work Plan sets out a number of proposals under three headings – fair and decent work, clarity for employers and workers, and fairer enforcement. Whilst detailed legislation has not yet been put forward in relation to all the changes to be made, the key proposals are as follows.
Fair and Decent Work
- Repeal of the Swedish derogation for agency workers: Currently, agency workers can agree to waive their right to be paid equally with those employed directly by the business for which they perform work, if the agency worker’s contract with the employment agency by which he or she is engaged provides for the agency worker to receive a minimum level of pay between assignments. This provision is known as the “Swedish derogation” and was intended to provide agency workers with some protection in terms of income during gaps in employment. However, the evidence has suggested that the Swedish derogation was not being used appropriately by agencies or employers, with individuals in practice often being engaged on long-term contracts on low pay with no gaps in assignments. Draft regulations have been published to repeal the Swedish derogation, with effect from April 2020.
- Reduction in threshold to request information and consultation arrangements: The Government wishes to encourage higher levels of employee engagement in businesses. It has therefore issued draft legislation reducing the threshold required to request information and consultation arrangements from ten percent to two percent of the workforce, with effect from April 2020.
- Gap required to break continuity of service extended from one to four weeks: Modern working practices mean that individuals may be working flexibly, intermittently and for multiple employers. This can make it hard to accrue employment rights such as unfair dismissal which require a minimum period of continuous service, because currently a break in service of more than one week may break continuity of employment. The Government proposes to extend that period of one week to four weeks so that more individuals will be able to access employment rights. There is no date yet for implementation of this proposal.
- The right to request a more stable contract: The Government proposes giving workers who are working flexibly the right, after 26 weeks’ continuous service, to request a more stable and predictable contract (for example, by asking for greater certainty around the number of hours offered, or to fix the days on which an individual may be asked to work). Although there are no details of the proposed entitlement yet, this right may well be structured to work in a similar way to a flexible working request. The example given of how this new entitlement might operate is of a zero hours worker who tends to work 30 hours per week requesting a contract guaranteeing that level of work.
Clarity for Employers and Workers
- Holiday pay reference period to be extended from 12 to 52 weeks: Holiday pay for workers who do not have fixed pay patterns is currently calculated by working out average pay over a 12 week reference period. This will be extended to a 52 week reference period from April 2020 and will benefit seasonal and atypical workers who may currently be penalised if their 12 week reference period falls over a quiet work period.
- Right to a written statement of particulars of employment to be extended and to apply to all workers from day one: From April 2020, the right to a written statement of particulars of employment will be extended to apply to all workers – currently only those who qualify as employees enjoy this right. Also, the statement will be required to be provided on day one of the appointment, whereas currently the statement has to be provided within two months of the start date. In the proposed new regulations there will still be the option to provide some of the information in instalments over a period of two months. The content of the written particulars of employment statement is also to be extended to include more detail with regard, for example to work patterns, any probationary period, and details of all benefits (including paid leave other than holiday such as maternity leave).
- Key facts page for agency workers: The Government also proposes to require businesses to give specific key facts to agency workers on day one of their engagement, including matters such as their rate of pay, how the agency worker will be paid, and by whom. The aim is to improve transparency of terms for agency workers and to deter agencies from burying key information in lengthy contracts.
- Clarifying the tests for employment status: The Government intends to clarify the distinction between “workers” – who benefit from rights such as the statutory level of annual leave provided for by the Working Time Regulations, the national minimum wage and protection from unlawful discrimination – and those who are self–employed. The Taylor Review identified this as an area where there is a risk of exploitation and noted the many recent “gig economy cases” in which individuals classed by businesses as self-employed have been found to be “workers”. It is also proposed that there should be greater alignment between the tests applied for the purposes of employment rights and tax. The Good Work Plan acknowledges that reform in this area is not straightforward and the Government has commissioned independent research to help it to formulate its future proposals.
- Reform of the Employment Tribunal System: The Good Work Plan refers to a separate ongoing project to reform and streamline the Employment Tribunal system, including introducing “digital service delivery.” This will include improving the systems for enforcing Employment Tribunal awards. In addition to the existing Employment Tribunal penalty scheme (run by the Department for Business, Energy and Industrial Strategy) which helps individuals to enforce Employment Tribunal awards, the Government launched a new system in December 2018 to “name and shame” employers who do not pay Employment Tribunal awards by publishing a list of non-payers.
- Maximum penalty for aggravated breach of employment law to be increased to £20,000: The maximum penalty for “aggravated breach” of employment law, which can be added to an Employment Tribunal award, will be increased from £5,000 to £20,000 with effect from April 2019. The Good Work Plan also proposes new sanctions for employers who repeatedly breach the law on the same issues (e.g. persistent failure to pay the national minimum wage). There are no detailed proposals in this regard at this stage.
Employers should keep an eye on those areas where detailed proposals for reform have not yet been forthcoming and also ensure that their HR and other systems are up to speed to ensure compliance as and when the relevant changes come into force.