Good Work Plan: employment status; zero-hour contracts and agency workers
The government has published its Good Work Plan, which contains a commitment to not only maintain workers’ rights as the UK leaves the EU but also to enhance them. The suggested reforms are the latest response to the Taylor Review of modern working practices (which we blogged about here). The key proposals are outlined below, with implementation dates where these are known.
The nature of the employment relationship is key to determining an individual’s employment rights, as employees, workers and the self-employed have different rights and protections. The government has committed to legislate to ‘improve the clarity of the employment status tests, reflecting the reality of modern working relationships’; and to bring forward detailed proposals on aligning the employment status frameworks for employment rights and tax purposes. Any clarification of employment status would be very welcome, however, given that the government is commissioning independent research to underpin any future legislation, we may not see change any time soon.
The Taylor Review recommended that the employment status test should place more emphasis on control and less on the (often rarely exercised) right of substitution, something discussed in the consultation which took place earlier in the year.
There has been much talk about the need to legislate to tackle the current perceived abuse of zero-hour contracts. This is, to some extent, dealt with by the proposal to give those working variable hours a right to request a ‘more predictable and stable contract’ after gaining 26 weeks’ continuous service. They might, for example, ask for certainty around the minimum number of weekly working hours; or for fixed days on which they could be asked to work. No details have been provided as to what procedural or enforcement mechanism might apply when requesting a more fixed working pattern. It may well be similar to the process which applies when making a statutory flexible working request, in which case there will be an obligation on employers to consider valid requests within three months and to deal with them reasonably, only refusing requests on one or more of the statutory grounds.
Agency workers can currently exchange their right to be paid equally to permanent counterparts if they enter into a contract guaranteeing pay between assignments (the so-called Swedish derogation). In response to evidence of the derogation being abused by some employers, the use of contracts which withhold agency workers’ equal pay rights are going to be banned from 6 April 2020.
In addition, all employment businesses are going to be required to provide agency workers with a Key Facts Page. Specific information will have to be given on the type of contract, pay and deductions.
Continuity of service
It is recognised that those working intermittently can find it difficult to access some employment rights as they do not accrue sufficient continuity of service. It is proposed that the current rule on continuity of employment will be changed so that a break of up to four weeks (rather than a week) between contracts will preserve continuity.
At the moment, after having worked for a month, employees have a right to a written statement of certain employment particulars (which must be provided within two months). The right to a written statement is to be extended to all workers from April 2020 (not just employees) as a day one right. More information will have to be provided than is currently required, including details of all types of paid leave (e.g. maternity and paternity leave); and the duration and conditions of any probationary period.
The Taylor Review highlighted that both individuals and employers would benefit from more transparency over holiday pay. To do this the government plans to launch an awareness campaign and introduce new guidance. Also, in response to difficulties experienced by seasonal workers, the holiday pay reference period is to be extended from 12 to 52 weeks from 6 April 2020 for workers without normal working hours. Where a worker has been employed for less than 52 weeks, the reference period will be the number of weeks they have been employed.
A ban is to be introduced on employers making deductions from staff tips, following a 2016 consultation. No information is provided on how this will come into effect but possibly the existing unlawful deduction from wages legislation will be extended.
Information and consultation
Legislation will be introduced to lower the threshold required for a request to set up information and consultation arrangements from 10% of the workforce to 2%. The 15 employee minimum threshold will still apply. This will come into force on 6 April 2020.
In an effort to make the system for enforcing employment rights clearer, fairer and more efficient it is proposed that a single enforcement body will come into force in early 2019 to better protect vulnerable workers; new powers will be created to allow investigations by the Employment Agency Standards Inspectorate into umbrella companies (particularly where it is suspected that agency workers have received inadequate pay); and state enforcement of workers’ holiday pay rights will be introduced with payment of arrears backed up by financial penalties (similar to the enforcement of the national minimum wage). Also, the maximum employment tribunal fines for employers who have shown malice, spite or gross oversight (aggravated breaches) will be increased from £5,000 to £20,000 with effect from 6 April 2019.
Although none of the changes are coming into force immediately, employers should start considering the potential impact of the reforms, particularly on their agency and zero-hour workers.
For more information on any of the proposals outlined in the Good Work Plan, please get in touch. We will update this blog when we hear more on the timescale and detail.
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