The Good Work Plan: What do you need to know about proposed employment law reform?

You may have heard on the news this week about the announced reforms to employment law. Some reporters have heralded the changes as a major overhaul and reported that it will provide additional rights for millions of workers, however if you delve into the detail it does not appear to be as comprehensive or radical as the headlines will lead you to believe.

Background

For those of you who are regular readers or who have attended one of our training or update events, you will know that the Taylor Review, a major consultation and review of the modern world of work in the UK, led to a number of proposals and recommendations for reform, many of which were accepted by the government in early 2018.

The government have now outlined a more detailed strategy for change in the Good Work Plan (a copy of which you can read here: Good Work Plan).

What do you need to know? The Headlines

1. ‘We will legislate to give all workers the right to request a more stable contract’.
2. ‘We will extend the time required to break a period of continuous service to make it easier for employees to access their rights’.
3. Will ‘ban the use of agency worker pay-between-assignment contracts which allow business an opt-out from equal pay arrangements between agency workers and permanent workers’.
4. Will ‘measure the quality of work in the UK labour market using 5 principles; satisfaction; fair pay; participation and progression; wellbeing; safety and security; and voice and autonomy’.
5. Will ‘reduce the thresholds of support for information and consultation rights so more people can benefit from them’.
6. Will introduce a ‘ban on employers making deductions from staff tips’.
7. Will ‘extend to workers an entitlement to a statement of their rights on appointment’.
8. ‘Set out specific information that agency workers must be given to help them make informed choices about the work they accept.’
9. Align the framework for establishing employment status so that it is the same for employment rights as it is for HMRC.
10. Improve the clarity of the tests for establishing employment status to reflect the reality of modern working practices. To include improved guidance and online tools to help people easily understand their status and rights.
11. A tougher approach to employers who underpay holiday.
12. Increase the maximum penalty that an Employment Tribunal can impose in instances of an ‘aggravated breach’ to £20,000.
13. The ‘creation of a new Labour Market Enforcement Agency to better ensure that vulnerable workers are more aware of their rights and that businesses are supported to comply.’

What next?

The government are commissioning further work and research into the issues raised by the Taylor Review and particularly the points stated above which they plan to reform and/or legislate on in the future.

Some of the Regulations, which will likely become law, have been set out already and it looks likely that any changes will come into force in April 2020.

The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 – deals with the written statement of employment particulars and changes the rules for calculating a week’s pay for holiday pay purposes – see below.

The Agency Workers (Amendment) Regulations 2018 removes the Swedish Derogation rule for agency workers – see below.

The Employment Rights (Miscellaneous Amendments) Regulations 2019 – covers the right to a written statement of terms for workers, increases penalties for aggravated breaches, and lowers the percentage required for an agreement on informing and consulting (see above).

My predictions for change

1. ‘We will legislate to give all workers the right to request a more stable contract’

It is likely that qualifying employees i.e. those who have continuous employment of at least 26 weeks’ will be able to apply to have a contract with fixed working hours.

This will apply to those who have zero hours contracts or contracts with ad-hoc hours.

It is unlikely to be a strict requirement but rather I think that it will be the right to make a request which employers will have to consider and respond to, but if the business needs are such that guaranteed or fixed hours are not possible it can be turned down. This is likely to apply in much the same way as flexible working applications do currently.

2. ‘We will extend the time required to break a period of continuous service to make it easier for employees to access their rights’

This will be extended from 1 week to 4 weeks, so that an employee can have a break from doing any work for you for 4 weeks and they would still retain their length of service.

3. ‘Ban the use of agency worker pay-between-assignment contracts which allow business an opt-out from equal pay arrangements between agency workers and permanent workers’.

This opt-out is known as ‘Swedish derogation’ and enables employers to avoid equal pay rights for agency workers. It is very unpopular as it is seen to impact the most vulnerable workers and therefore this is likely to be banned so that agency worker rights cannot be avoided.

4. ‘Extend to workers an entitlement to a statement of their rights on appointment’.

The introduction of a mandatory requirement for businesses to provide workers with a written statement of their terms and rights, in the similar way to that set out in Section 1 of the Employment Rights Act for employees.

It is also likely that the information required to be given by employers to employees will be extended as well, so that more detailed information is required for employees and workers.

It will also become a day one right, rather than the current position which gives employers 2 months from the date the employee starts work, to provide the information.

If you are not currently giving workers and self-employed contractors a contract or agreement of some sort, then I recommend that as a matter of best practice you do this in any event.

5. ‘Set out specific information that agency workers must be given to help them make informed choices about the work they accept.’

As above it is possible that there will be legislation to prescribe the information required to be given to an agency worker.

6. New Holiday Pay and Entitlement guidance and a new online calculator

The government have indicate that there will be an awareness campaign to highlight holiday rights and make it easier for people to calculate and understand their entitlements. Whilst this is not new it is thought that if more people understand their rights and entitlements, they will be able to better access their rights to paid time off.

7. Holiday reference period to be extended to 52 weeks

Currently if you are trying to calculate the holiday pay for an employee who has irregular hours or pay you would use the previous 12 weeks pay to work out the average and this is what you would pay them during their holiday. The proposal, which in my view will make like easier, is to use a 52-week reference as the average.

8. Align the framework for establishing employment status so that it is the same for employment rights as it is for HMRC.

The rules regarding establishing if someone is an employee, worker or self-employed person differ between how HMRC will make a determination and how the Employment Tribunal will make their decision. This leads to confusion over an already complicated assessment and the proposal is, sensibly, to align the way it is established.

9. Improve the clarity of the tests for establishing employment status to reflect the reality of modern working practices. To include improved guidance and online tools to help people easily understand their status and rights.

This follows from the recent cases that have been proceeding through the Employment Tribunal and Courts in the UK, including the Pimlico Plumbers, Uber and Deliveroo cases.

I feel it is inevitable that there will be reform on this to create better definitions between employee, worker and self-employed status. Given the current uncertainty and changes in the way people are working with technology it is going to be a welcome change just as long as it is done properly and does not further complicate matters, which has happened in the past with employment reforms.

What is not included?

Many commentators believed that there would be changes impacting zero hours contracts or ban of them altogether, however this is not reflected in the Good Work Plan published and actually the only potential impact is that those employed on a zero hour contract would, as set out above, have the right to ask for a contract with set hours or hours which more readily reflect what hours they are actually working.

I have been advising my clients for years now that the use of zero hours contracts is right and can be justified where the requirement is genuinely for ad-hoc cover as and when required. I urge all businesses to regularly re-evaluate the usage of zero hour contracts and where possible provide employees with certainty as to their hours. If someone has been doing the same hours on a regular basis for several months, then a zero hours contract is not a true reflection of the situation.

If you have concerns about moving away from zero hour contracts and the implications for your business then please do get in touch and I would be very happy to discuss and give you reassurance that actually there is nothing to fear from ditching them altogether!

Do we need to do anything now?

Some of the changes are timetabled to be introduced in April 2020 so you have a bit of time to get your head around the changes. For the other changes there is no current firm date for these and therefore there is no requirement to make changes at this time, however I recommend that if you have people working for you as ‘self-employed contractors’ or ‘consultants’ that you seek advice and consider their real ‘status’ now rather than wait to make the changes later or after a problem arises.

If you would like a review of the way in which you work currently and to consider the impact of the proposals on your business I would be happy to arrange a free initial consultation by telephone, skype or in person at one of our offices – Isle of Wight, Salisbury or Eastleigh – email me: alison@realemploymentlawadvice.co.uk

Please feel free to leave a comment, question or observation below. Alternatively get in touch directly: hello@realemploymentlawadvice.co.uk

This article was written and researched by Alison Colley, Solicitor and Director at Real Employment Law Advice.

 Don’t forget getting advice from a Solicitor does not have to be complicated or costly!