All clear now? Good Work Plan published

United KingdomScotland

We finally have some information on the government’s plans to change employment status and workers’ rights following the Taylor Review into Good Work. There are no major surprises in this document, entitled the Good Work Plan, and will mostly involve modest changes. There is also no timetable indicating when these proposals will come into force. Employers who hire workers on variable hour contracts and have high numbers of atypical workers are likely to be the most impacted by the changes.

While we do know that the test to determine employment status will be contained in new legislation, we have still to see the detail on what this will contain. For many employers this is the key issue – where will the lines be drawn when it comes to workers, self-employed and employees? I’m afraid the answer to those questions have still to be determined.

Employment businesses and umbrella companies will also face some major changes as result of the ban on the “Swedish derogation” with agency workers, and the extension of the Employment Agency Standards Inspectorate to cover umbrella companies.

We have listed the key changes using the government’s chapter headings below.

Fair and decent work

  • In an attempt to tackle “one side flexibility” the government plans to legislate to give all workers the right to have a “more stable” contract. After 26 weeks, an employee will be able to ask their employer for a fixed working pattern. This might involve a fixed approach to minimum hours or working on certain days. As such, the government has ruled out introducing higher National Minimum Wage rates for non-guaranteed minimum hours.
  • There will also be an extension in the time required to break a period of continuous service to make it easier for employees to access their rights. The current period of one week will be extended to four weeks.
  • The government will introduce a ban on the “Swedish derogation” which enables agency workers to be exempt from the right to equal payment after 12 weeks if they are hired as employees by the agency and paid between assignments by the agency.
  • The thresholds of support for information and consultation rights will be reduced from 10% to 2%. The 15 employee minimum threshold for initiation of proceedings will remain in place.
  • Legislation will be introduced to ban employers from making deductions from staff tips.

Clarity for employers and workers

  • Access to a new and expanded version of the written statement will be a Day 1 right for all workers and employees. The current right to a written statement only extends to employees as workers are excluded. At the moment, the written statement must be provided within 2 months of starting work. The government has said that the content of the Day 1 list will include: how long a job is expected to last, (or the end date of a fixed-term contract); how much notice an employer and worker are required to give to terminate the agreement; details of eligibility for sick leave, maternity leave and paternity leave; the duration and conditions of any probationary period; all remuneration (not just pay) – contributions in cash or kind; and which specific days and times worker are required to work.
  • The introduction of a key facts page for agency workers. Specific information should be given to agency workers “to help them make informed choices about the work they accept”.
  • The government agrees that the differences between the employment status framework for tax and employment rights should be reduced to a minimum. They have said they “will bring forward detailed proposals on how the frameworks could be aligned.”
  • Changing the legislation to determine employment status. While the Government notes that Matthew Taylor recommended a move away from focussing on the right of substitution to greater emphasis on control, the government has accepted that there is a need for change without producing the detail. “We have commissioned independent research to find out more about those with uncertain employment status, which will help us to understand how best to support them when bringing forward legislation.” They also plan to improve the online status tool.
  • In an attempt to curb problems around vulnerable seasonal workers receiving lower rates of holiday pay, the reference period for calculating holiday pay will shift from 12 weeks to 52 weeks. A longer reference period is likely to increase the costs of holiday pay for most employers who refer to the 12-week period.

Fairer enforcement

  • The government plan to introduce a new state enforcement system for holiday pay and are considering the most appropriate body to do this.
  • State enforcement protections for agency workers will be increased to assist with situations where they have pay withheld or an umbrella company has made unclear deductions.
  • Employers who do not pay tribunal awards will be named and shamed.
  • New guidance will be issued to encourage claimants to apply for the tribunal to award aggravated breach penalties, which are rarely used. The maximum level of penalty that Employment Tribunals can impose in instances of aggravated breach will increase from £5,000 to £20,000.
  • Legislation will also be introduced to create an obligation on Employment Tribunals to consider the use of sanctions where employers have lost a previous case on broadly comparable facts.
  • A new single labour market enforcement agency will be introduced to ensure that vulnerable workers are more aware of their rights and have easier access to them and that businesses are supported to comply.

With employment lawyers scouring this document for any hint of concrete details, perhaps the best approach is to simply read between the lines. The government’s statement at page 48 would certainly indicate the reintroduction of tribunal fees, an issue that will have a greater impact than most of these changes combined. “There are currently no fees in the employment tribunals following a Supreme Court judgment. If fees are reintroduced we will consult on this.”

We plan to send a further law-now on the impact of these proposals in the New-Year. Wishing you all a merry Christmas.