Your essential briefing on The Good Work Plan and what the draft legislation says

What is the 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). In our Employment  highlights 2018  article, we highlighted this topic as one to watch; in such a fast-moving area of the law, it should come as no surprise that these proposals have been put forward before the year is out.

As mentioned in our newsletter, four consultations were launched by the government on the back of the Taylor review. The proposals published on Monday are intended to implement many of the proposed employment reforms. In particular, the government intends to repeal the Swedish derogation for agency workers (which excludes agency workers who have an employment contract with an agency from the right to the same pay as workers who work directly for the same employer). The test for employment status will also be reviewed and clarified.

The cumulative effect of the proposed changes is intended to ‘significantly change the enforcement landscape’.

Following the publication of  The Good Work Plan the Government published draft 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

‘One sided flexibility’: legislation to give all workers the right to request a more stable contract

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.

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 new 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.

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 government 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 Report, the Government published draft   Employment Rights (Miscellaneous Amendments) Regulations 2019  which 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.

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.

Extension to workers of statement of rights on appointment

All employees and workers (including agency workers) will be entitled to a written statement of terns from day one of the working relationship (at present the obligation applies within two months of starting work). This statement will set out enhanced information such as:

  • 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 (not just pay)
  • Which specific days and times workers are required to work.

This information is in addition to the current mandatory information that must be provided in a written statement.

All workers are already to be entitled to a written payslip from April 2019.

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 draft  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 draft Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 , to come inot force on 6th April 2020. The regulations provide that employers can decide to provide particulars in instalments providing all are provided within 2 months and the majority are provided when the individual begins employment. 

Transparency for employers and workers

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 notes that there is evidence that workers are not benefiting from the opt-out known as the Swedish derogation (as highlighted above). There are cases where pay between assignments does not happen because individuals can be kept on very long-term contracts without the right to equal pay. 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. This will guarantee equal wages with those of comparable permanent workers for all long-term agency workers.

Following the publication of  The Good Work Report, the Government published draft Agency Workers (Amendment) Regulations 2019   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 treatmemt from 6th Appril 2020- the statement must be give by 30th April 2020.

Specific information to be given to agency workers

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. Failure to provide this information exposes an employer to enforcement action by the EAS.

Alignment of employment status frameworks for the purposes of employment rights and tax

As highlighted in our Christmas highlights newsletter, 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 government 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.

Legislation to improve the clarity of employment status tests

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.

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 to be self-employed if a right for the individual to send a substitute exists.

Fairer enforcement

The Taylor Review called on the government to improve access to justice. The government proposes 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.

With regard to holiday, the pay reference period for workers with non-standard hours will increase from 12 to 52 weeks..Legislative provison for this is set out in The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 which amends 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. 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

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 will also 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.

Legislation to increase the maximum level of penalty imposed by employment tribunals in cases of aggravated breach to £20,000

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 the draft  Employment Rights (Miscellaneous Amendments) Regulations 2019, to come into effect from 6th April 2019.

Naming and shaming

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.

 

The Good Work Plan can be read here:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/765128/good-work-plan.pdf