Your essential briefing on The Good Work Plan and subsequent developments
What is The Good Work plan?
On 17 December 2018 the government published its proposals to take forward some of the recommendations in the Taylor Review of Modern Working Practices (the Good Work Plan).
As reported in Emplaw Monthly, four consultations were launched by the government on the back of the Taylor review. The proposals published in the Good Work Plan are intended to implement many of the proposed employment reforms.
The cumulative effect of the proposed changes is intended to ‘significantly change the enforcement landscape’.
Since the publication of The Good Work Plan the government has introduced the Agency Workers (Amendment) Regulations 2019, The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 , and Employment Rights (Miscellaneous Amendments) Regulations 2019 which contain provisions for implementing some of the proposals. Where this is the case, they are referenced in this article.
Summary of the key proposals and subsequent actions
Legislation to reduce the thresholds of support for information and consultation rights
The Taylor Review highlighted the need for workers to have a voice, noting that high levels of employee engagement improve organisational performance and boost productivity. The Good Work Plan proposes legislation which will lower the threshold required to set up Information and Consultation arrangements from 10% to 2% of employees. The 15 employee minimum threshold for initiation of proceedings will remain in place.
Following the publication of The Good Work Plan, the government introduced the Employment Rights (Miscellaneous Amendments) Regulations 2019 which came into force in April 2019 and contain the statutory provisions to lower the threshold required to set up Information and Consultation arrangements from 10% to 2% of employees, to come into effect from 6th April 2020.
Extending redundancy protection for pregnant women and new parents
The government response in the Good Work Plan reported that it is reviewing the legislation relating to redundancy protection and considering whether this is sufficient.
In January 2019 the government published a consultation seeking views on extending redundancy protection for pregnant women and new parents. The consultation proposes that the government extend the current protection afforded under the Maternity and Paternity Leave etc Regulations 1999 to cover the period of pregnancy and a period after, an extension of six months. It asked how best to achieve that and who would be covered, for example, those taking shared parental leave or adoption leave. The consultation closed on 5th April 2019 and a response was published in July 2019.
In the consultation response, the government confirms that it intends to implement most of its consultation proposals. It remains to be seen whether these changes will be implemented in full under the new Prime Minister and, if so, whether that will be in the short or longer term.
Subject to the above, in summary the government has confirmed that it will:
• ensure the redundancy protection period applies from the point the employee informs the employer that she is pregnant, whether orally or in writing;
• extend the redundancy protection period for six months once a new mother has returned to work (expected to start immediately maternity leave is finished);
• extend redundancy protection for those taking adoption leave, following the same approach as the extended protection being provided for those returning from maternity leave i.e.– it will be for six months beyond return;
• extend redundancy protection for those taking shared parental leave, taking account of the following key principles and issues:
o the key objective of this policy is to help protect pregnant women and new mothers from discrimination;
o the practical and legal differences between shared parental leave and maternity leave mean that it will require a different approach;
o the period of extended protection should be proportionate to the amount of leave and the threat of discrimination;
o a mother should be no worse off if she curtails her maternity leave and then takes a period of Shared Parental Leave;
o the solution should not create any disincentives to take Shared Parental Leave;
• establish a taskforce of employer and family representative groups. The taskforce will make recommendations on what improvements can be made to the information available to employers and families on pregnancy and maternity discrimination. It will also develop an action plan on what steps government and other organisations can take to make it easier for pregnant women and new mothers to stay in work.
Other proposals to support families
The government also published three consultations entitled Good Work Plan: Proposals for families The consultations focus on additional support for employed parents as follows::
· Parental leave and pay: this consultation sets out high level options for reforming existing entitlements which could help parents to balance the gender division of parental leave. Closing date is 29 November 2019.
· Neonatal leave and pay: this consultation looks at proposals for a new leave and pay entitlement for parents of babies that require neonatal care after birth. Closed on 11 October 2019 and response published September 2020.
· Transparency of flexible working and family related leave and pay policies: this consultation looks at whether employers should have a duty to consider if a job can be done flexibly and make that clear when advertising a role. It also considers options for requiring large employers (those with 250 or more employees) to publish their family related leave and pay and flexible working policies. Closedon 11 October 2019.
The up to date status of the governments response to these consultations is at https://www.gov.uk/government/consultations/good-work-plan-proposals-to-support-families
Holiday pay - raising awareness
The Taylor Review recommended that the government should do more to promote awareness of holiday pay entitlements, increasing the pay reference period to 52 weeks to take account of seasonal variations and give ‘dependent contractors’ the opportunity to receive rolled-up holiday pay. The Good Work Plan accepts this in part. It commits to launching a holiday pay awareness campaign and to increasing the pay reference period to 52 weeks but the proposal on rolled-up holiday pay is not accepted.
In March 2019, BEIS launched an awareness campaign and published guidance on calculating holiday pay for workers without fixed hours or pay and in November 2019, the government published Holiday Entitlement-Guide on Calculating Statutory Holiday. It should be read together with the guidance on How to calculate holiday entitlement for workers on different types of contract and is designed to be used in conjunction with Holiday entitlement: calculate leave entitlement and the online tool holiday entitlement calculator. The new guide provides additional detail on the calculations used within those pages.with regards to workers on different types of contracts such as casual, irregular or annualized hours.
The increase in the pay reference period had been legislated for in The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 to take effect from April 2020. These amend s.16 of the Working Time Regulations to change the reference period that applies for calculating an average week’s pay where a worker has variable remuneration. This is achieved by modifying the relevant references to Chapter II of the ERA from 12 weeks to 52 for these purposes. Where a worker has been employed by their employer for at least 52 weeks, the reference period is increased from 12 weeks to 52 weeks. Where a worker has been employed by their employer for less than 52 weeks, the reference period is the number of weeks for which the worker has been employed.
For more information about calculating holiday pay with reference to Chapter II of the ERA please see the Emplaw Law card Holiday and Holiday Pay
Extension to workers of statement of rights on appointment
The Good Work plan provides that All employees and workers will be entitled to a written statement of terms from day one of the working relationship (at present the obligation applies within two months of starting work). Note, all' workers' are already entitled to a written payslip from April 2019 ( the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No. 2) Order 2018 which came into force on 6 April 2019.
The written statement will set out enhanced information in addition to the current mandatory information that must be provided in a written statement.(s.1 Employment Rights Act 1996 (ERA 1996) and see Written Statement of Employment Particulars
The provisions to extend the existing employee right to a written statement of particulars of employment and associated enforcement provisions to workers are contained in the Employment Rights (Miscellaneous Amendments) Regulations 2019, to come into effect from 6th April 2020.
The provisions to make the right to a written statement of particulars of employment apply when an individual begins employment (a day 1 right). and additional particulars which must be included in the written statement have been set out in the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 , to come into force on 6th April 2020. The statement must be provided on day 1 of employment (rather than within two months of starting work). The current exemption for employment lasting less than one month will be abolished. The statement will be required to include further details than at present, covering:
How long a job is expected to last (or end date of a fixed term contract)
How much notice is required?
Details of eligibility for sick leave and pay
Details of other types of paid leave (e.g. maternity/paternity leave)
Duration and conditions of any probationary period
Remuneration and benefits (not just pay)
Which specific days of the week the worker is required to work, and whether or not such hours or days may be variable, and if they may be how they vary or how that variation is to be determine
Details of training entitlements, training requirements and details of any training that will not be paid for by the employer
For more information please see Emplaw law card Written Statement of Particulars
Agency workers - the Swedish derogation
The government notes in The Good Work Plan that there is evidence that workers are not benefiting from the opt-out known as the Swedish derogation. This refers to Regulation 10 of the 2010 Agency Worker Regulations which disapplies regulation 5, insofar as it relates to pay, where a permanent contract of employment is entered into between a temporary work agency and the agency worker. Regulation 5 is the right for the agency worker to the same basic working and employment conditions as the agency worker would have been entitled to if they had been recruited directly by the hirer. The Good Work Plan notes that' BEIS research uncovered cases where pay between assignments does not happen because individuals can be kept on very long term contracts with an employer, without their right to equal pay. Umbrella companies or employment businesses can also devise schemes to keep their exposure to a minimum, many contrary to therequirements set out in the regulations'.
Therefore, the Swedish derogation for agency workers is to be scrapped so agency workers will no longer be excluded from the equality provisions of the Agency Workers Regulations. The aim is to guarantee equal wages with those of comparable permanent workers for all long-term agency workers.
Since the publication of The Good Work Report, the Agency Workers (Amendment) Regulations 2019 have been introduced, to come into force from 6th April 2020. These contain provisions to scrap the Swedish derogation and to require temporary work agencies to inform agency workers who were treated under the derogation that they have the right to equality of treatment from 6th April 2020 - the statement must be given by 30th April 2020.
For more information on the Swedish derogation, see Related Card Agency Workers
Agency Workers - specific information to be given
The Good Work Plan provides that agency workers will need to receive ‘key facts’ information, including who is responsible for their employment, any element of pay from an intermediary, any fee and relevant benefits.
Since the publication of The Good Work Report, The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019 have been introduced, These insert a new regulation 13A into The Conduct of Employment Agencies and Employment Businesses Regulations 2003 ("the Conduct Regulations") to require employment businesses, from 6th April 2020, to issue agency workers with a ‘key information document’. This must include information such as the type of contract the work- seeker will be engaged under, the rate of remuneration and holiday entitlement as well as deductions and fees payable. The Employment Agency Standards Inspectorate (EAS) will be responsible for ensuring the new requirement is complied with.
For more information on the Conduct Regulations, see Related Card The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2016
Alignment of employment status frameworks for the purposes of employment rights and tax
The increase of case law and issues in the gig economy has prompted calls for clarity. It is an individual’s employment status that determines which statutory employment rights apply and how much tax is required to be paid. The rise of new business models and employment practices have caused increasing numbers of disagreements about the employment status of individuals and concerns that some individuals may not be receiving the rights they are entitled to.
The Good Work plan provides that the government has opted not to create a new legal definition of ‘dependent contractor’ but will put forward proposals to better align the current framework of employment law and tax provision so that there are minimal differences.
However the government's consultation on employment status (which closed in June 2018 before the publication of the Good Work Plan) is still awaited (as at November 2019) and no further progress on creating the desired clarity has been forthcoming.
Legislation to improve the clarity of employment status tests
In the Good Work Plan, the government stated its agreement with Matthew Taylor’s conclusions that businesses should not be able to avoid their responsibilities by trying to misclassify or mislead their staff. This is particularly significant at a time when private sector employers are (or should!) review the engagement of their freelances in advance of liability under IR35 being shifted to private sector employers in April 2020.For more information on IR 35 see Law card Employee or Self- employed
The government proposes to legislate to improve the clarity of current employment status tests, potentially placing more emphasis on control and less on the right to substitution. The government will also improve the guidance and online tools available to help people understand their status.
The government noted the Taylor Review conclusion that an individual can have nearly every aspect of their work controlled by a business and still be considered self-employed if a right for the individual to send a substitute exists.
In October 2019 HMRC announced that a revised online CEST (Check Employment Status for Tax) test will be introduced before the end of 2019. It is the case of course that this applies to the assessment of status for tax purposes only
The Taylor Review called on the government to improve access to justice. The government proposes in the Good Work Plan to enhance enforcement of statutory holiday pay (and possibly sick pay) by giving enforcement powers to HMRC. The approach will mirror the financial penalties and enforcement approach that already applies to underpayment of the National Minimum Wage. There will also be support to aid compliance for businesses genuinely trying to understand and comply with the law.
The government proposes to encourage businesses at the top of supply chains to work with their suppliers to take corrective action when employment law non-compliance is identified to enable collaboration over corrective action.
The three main enforcement bodies, the EAS, HMRC and the Gangmasters and Labour Abuse Authority (GLAA) will work more closely together, share information and cooperate more closely with the Insolvency Service and Acas in order to improve enforcement.
The government proposes to extend the role of the Employment Agency Standards Inspectorate (EAS) so that it has a remit over umbrella companies and intermediaries. There will also be a consultation over whether the EAS should be able to fine non-compliant employment agencies.
The government stated it would bring forward proposals in early 2019 for a new, single labour market enforcement agency to better ensure that vulnerable workers are more aware of their rights and have easier access to them.
A Single Market Enforcement Body Consultation was launched in July 2019 and closed on 6th October which seeks views on the case for a new single labour market enforcement body and whether this could deliver:
• extended state enforcement,
• a strong, recognisable single brand so individuals know where to go for help.
• better support for businesses to comply with the rules
• coordinated enforcement action, with new powers and sanctions . Proposals include the ability to impose civil penalties under both the gangmasters licensing (GLAA) and employment agency standards (EAS)regimes where arrears of wages are involved at the same level as the NMW penalties
• pooled intelligence and more flexible resourcing
• closer working with other enforcement partners, including immigration enforcement, health and safety and others
The government response is awaited.
Legislation to increase the maximum level of penalty imposed by employment tribunals in cases of aggravated breach to £20,000
The Good Work Plan stated that the government proposes to increase the maximum level of penalty that employment tribunals can impose in instances of an aggravated breach from £5,000 to £20,000. There will be a new obligation on ETs to consider the use of sanctions where employers have lost a previous case on broadly comparable facts.
The provisions to increase this level of level of penalty under section 12A of the Employment Tribunals Act 1996 (c.17) (part 2) are contained in Part 2 of the Employment Rights (Miscellaneous Amendments) Regulations 2019, and came into effect from 6th April 2019.
For more on financial penalties see Enforcement of Tribunal Awards
Naming and shaming
The Good Work Plan announced that employers that default over payment of employment tribunal awards will be targeted under new proposals. Such employers risk being identified if they fail to offer a satisfactory explanation within 14 days of receiving a notification.
As a result a naming scheme was introduced whereby from 18 December 2018 employees can register employers with BEIS who have failed to pay at least £200 of a tribunal award
For more on the naming scheme see Enforcement of Tribunal Awards
‘One sided flexibility’: legislation to give all workers the right to request a more stable contract
The Good Work Plan states that legislation will be introduced to allow all employees and workers with varying hours and shift patterns (including agency and zero hours workers) to formally request a more fixed working pattern after 26 weeks of work for the same employer. It is anticipated that the new legislation will mirror the flexible working regulations, which will be extended to workers.
Further to these announcements in the Good Work Plan and work by the Low Pay Commission, BEIS, in July 2019, published a consultation on measures recommended by the Commission which focus on so-called “one-sided flexibility” – i.e. some low-paid casual, zero hour and gig workers and the Commission’s finding that shift cancellations and short notice of work schedules were significant problems.
The Consultation canvassed views on:
· a right to reasonable notice of work schedule
· compensation for shift cancellation or curtailment without reasonable notice
The Commission had also recommended a new right to switch to a contract which reflects normal hours worked. The Consultation does not contain this because, per BEIS, a similar proposal is in the Good Work Plan already and it “will legislate to introduce a right for all workers to switch to a more predictable work pattern.” We await that legislation.
The consultation ended on 11th October 2019 and a government response is awaited.
Extension of time required to break a period of continuous service to make it easier for employees to access their rights
Matthew Taylor identified that those who work intermittently for the same employer can find it difficult to gain or access some of these rights because they may struggle to build up continuous service.
Under the Good Work proposals, continuous service for the purpose of qualifying for certain employment rights will therefore be deemed not to be broken where there is a gap between assignments or a pause in work of up to 4 weeks (the present limit is one week). This will assist employees in atypical working relationships to establish continuity of service. However no further government proposals on this commitment have been brought forward
Legislation to ban employers from making deductions from staff tips
In some sectors, tips, gratuities and service charges can be a significant part of staff income; however, a minority of employers retain tips earned by staff. The government proposes introducing legislation to impose a ban on employers making deductions from staff tips.
The Queen’s speech in October 2019 announced that the government will bring forward the Employment (Allocation of Tips) Bill to ensure that tips are kept in full, or distributed fairly and transparently to, those who work for them.
Statutory Sick Pay
The Taylor Review recommended reform of Statutory Sick Pay so that it is ‘explicitly a basic employment right, comparable to the National Minimum Wage, for which all workers are eligible regardless of income from day 1’ In The Good Work Plan the government confirms simply that it is looking to reform Statutory Sick Pay and will be consulting on measures to encourage and support all employers to play their part. They will also consider whether changes are required to the enforcement mechanism.
The Department for Work and Pensions and the Department for Health and Social Care launched a consultation, which closed on 7th October, putting forward a package of measures which encourage early and supportive action by employers for their employees with health conditions.
There are several aspects which will have important implications for employers, if they are pursued in due course. Amongst these are a potential:
- New right to request work(place) modifications for employees not covered under the current EqA duty to make reasonable adjustments provisions;
- Strengthening of statutory guidance for employers to encourage them to take early, sustained and proportionate steps to support a sick employee to return to work, before that employee can be fairly dismissed on the grounds of ill health affecting their capability;
- Reform of Statutory Sick Pay to simplify current provision; allow for flexibility during a period of return to work following sickness absence; widen eligibility to those currently below the lower earnings limit and strengthen compliance and enforcement, possibly in a similar way to enforcement of NMW;
- Improvement in employers’ and self-employed people’s access to good advice and support, ensuring that all employers understand and are able to act on their responsibilities to their employees;
- Redesigning of SSP rebates for SMEs;
- Increase in access of SMEs to OH services
- Introduction of automatic reporting of sickness absence through payroll systems (so that government has the data to be able to provide timely and targeted guidance to employers on how to manage sickness absence).
The Good Work Plan can be read here:
The Taylor Review of Modern Working Practices is found at www.gov.uk/government/publications/good-work-the-taylor-review-of-modern-working-practices