On 7 February the UK Government published its ‘Good Work’ plan, setting out how it intends to take forward the recommendations contained in the Taylor Review of Modern Working Practices published last summer. The Review was tasked with investigating how modern working practices are having an impact on the world of work.
The Government’s press release (issued some hours before the actual response) promised a lot, claiming that “millions” of workers would now benefit from enhanced rights. The response itself, however, delivered a great deal less in terms of actual concrete proposals to benefit workers in the short term. All of the big issues, such as how we deal with the complex issue of employment status, are to be the subject of further consultations. Not in itself a bad thing since employment status is a complex and important issue and it is crucial that the Government considers these issues carefully to ensure that any legislative changes do not lead to unintended consequences, but not quite the revolution which some hoped for. That said, since the flak attracted by the initial Review came roughly equally from both sides of industry, one can at least commend it for its balance. The same is not true of the Government’s proposals.
We summarise below the key proposals from the four consultation documents issued by the Government:
- Employment status: This is the consultation that will be of most interest to most employers (and not just those in the gig economy). Employment status is at the core of both our employment law and tax systems. If legislative changes are made in this area, this may have significant implications for employers.
The Government acknowledges that there is a “compelling case” for greater clarity in this area and the consultation seeks views on a range of options and proposals to achieve this, from setting out in statute the current case law pointers for employment status to introducing brand new tests. It also invites views on how the employment status tests may need to be updated to reflect modern working practices and on aligning the tests for employment status and tax purposes.
This consultation will run until 1 June 2018.
- Measures to increase transparency in the labour market: The Government agrees with the Taylor Review that we need greater certainty between workers and employers as to their respective rights and responsibilities. It has already issued draft legislation to come into force next April that will extend the right to receive a payslip to all workers and require more information to be included on such payslips (which rather begs the question of who will count as a “worker”, but never mind). Other proposals include:
- Extending the right to receive a written statement of employment particulars to all workers, not just employees. The Government is also seeking views on whether to require employers to provide additional information in the statement.
- Extending the break in service period for continuous service purposes beyond one week. Currently the statutory rules on continuity of employment mean that if there are gaps between assignments lasting longer than one week then an individual’s continuity of employment may be broken. This means that employment rights that apply after a qualifying period (such as the right to claim a redundancy payment or unfair dismissal) are harder to access for individuals who work on a casual “as required” basis. The Government is seeking views on the extent to which it should make continuity easier to preserve.
- Extending the holiday pay reference period for workers without normal working hours from 12 to 52 weeks. The thinking here is that the amount of the worker’s holiday pay would then better reflect their normal pay and not be affected so much by seasonal variations in working hours. The Government has rejected the Taylor Review’s very sensible recommendation to introduce rolled-up holiday pay, as European case law makes it clear that such a practice is unlawful (although it is nonetheless very common). It is however seeking views on whether there are other ways in which atypical workers might be able to benefit from flexibility in how they receive their holiday pay.
- Giving individuals the right to request “a more predictable and stable contract”. The Government believes that all workers should have more choice, where possible, in how and why they work, including having a right to request a more predictable and stable contract. Quite what this would entail in practice is still unclear.
The Government will also be looking into how the Information and Consultation of Employees Regulations 2004 could be amended to make them more effective; the Government acknowledges that this legislation is currently not widely used.
This consultation will run until 23 May 2018.
- Agency workers: The Government is considering a number of changes regarding agency workers and the enforcement of their rights, including:
- Improving the information provided to work seekers on rates of pay and who is responsible for payment. The Government is seeking views on requiring employment businesses to provide work seekers with a “key facts” page at the time they register with the business containing certain basic information. This is driven by concerns that the use of umbrella companies in the work chain can mean that workers are confused about who they are actually employed by, who is responsible for paying them and how much they will be paid.
- Extending the remit of the Employment Agency Standards inspectorate to cover umbrella companies and intermediaries in the supply chain. The Government is seeking views on how the regulation of umbrella companies and other intermediaries by EAS would improve working conditions for work seekers.
- Ensuring the ‘Swedish Derogation’ is being used appropriately. The Government has responded to calls from some quarters to repeal the exemption that allows agency workers to opt out of entitlements to pay equality with permanent staff by saying that it needs to understand first the extent of any possible misuse. If the consultation reveals widespread evidence of misuse then repeal of this provision may be appropriate.
This consultation will run until 9 May 2018.
- The enforcement of employment rights: The Taylor Review made a number of recommendations on the enforcement of employment rights and the Government agrees that it needs to take action in this area. It says that it is committed to:
- Establishing a ‘naming and shaming’ scheme for employers who do not pay employment Tribunal awards. It is seeking views on how best to achieve this.
- Increasing the aggravated breach penalty limit to at least £20,000. Employment Tribunals are already able to impose penalties of up to £5,000 per worker against employers where there has been an aggravated breach of employment law. As we highlighted in a previous blog piece, very few aggravated breach financial penalties have been imposed on employers and still fewer have actually been paid. Increasing the penalty therefore seems unlikely to have much of an impact. The suggestion that even though this measure would be largely pointless, it makes good PR headlines for the Government is obviously totally unworthy.
- Making the State responsible for enforcing basic statutory sick pay and holiday pay rights for the most vulnerable workers. The Government will now obtain views on the extent of non-compliance with these rights to help determine how enforcement might best be achieved, but again this is posited on knowing first who is actually a worker.
The Government says that it also accepts that tougher penalties should be imposed on employers who ignore previous Employment Tribunal judgments, though this must clearly depend on the employer’s reasons for doing so or it will become a route through to US-style class actions in the Tribunal even in areas where different facts might possibly lead to different outcomes. The Government has declined to take any action on reversing the burden of proof in Tribunal claims where employment status is in dispute.
This consultation will run until 16 May 2018.
And in case anyone was wondering what happened to the Government’s wholly ill-conceived 2015 Call for Evidence on whether non-compete clauses are stifling innovation, the Good Work plan (page 58) says that the Government has finally decided that it is not necessary to take any further action in this area at this stage. Told you so.