Andrew Rayment, an employment partner at Walker Morris LLP, offers an insight into the government’s Good Work Plan
While 2019 is likely to be dominated by Brexit developments, it is also set to be an eventful year for employment law as the government enacts its recently-announced Good Work Plan. Hailed by the government as ‘the biggest package of workplace reforms for over 20 years,’ it is the culmination of the Taylor Review into working practices in the modern economy which made key recommendations to promote ‘good work.’
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Background
In July 2017, Matthew Taylor published the independent Taylor Review of Modern Working Practices which looked into the issues in the UK labour market such as the implications of new forms of work, the rise of digital platforms, and the impact of new working models.
The review made 53 recommendations to the government. In February 2018 the government published a full response, accepting the vast majority of the recommendations.
Alongside the response, the government also launched four consultations to seek stakeholder views on the approach to implementing changes to the law employment status, agency worker rights, increasing transparency in the labour market, and enforcement of employment rights recommendations.
The Good Work Plan draws on the feedback from these consultations and sets out the government’s commitments to improve working conditions for agency workers, zero-hour workers and other atypical workers in the UK economy. As the Taylor Review identified, the British model of flexibility works well. However, the plan states that as well as benefiting from the rise in more flexible and varied ways of working, it is imperative that the government prevents erosion of the key protections workers should expect to rely on.
The timetable for implementation of all aspects of the plan is not yet laid out but, as 2019 progresses, we can expect to see more draft legislation being published, and it is likely that most of the changes will take effect in 2020.
The measures in the Good Work Plan include…
A commitment to improve the clarity of the employment status tests
There is no question that the existing employment status tests have contributed to a lack of clarity faced by individuals and employers. Recent cases on worker status involving ‘gig’ employers such as Uber, Citysprint and Deliveroo only serve to illustrate this point.
The government has recognised in the Good Work Plan that having a separate framework for determining employment status for the purposes of employment rights and tax makes it very confusing for individuals and employers. It comments that it can drive behaviour detrimental to workers and that it is also more likely to result in non-compliance from a tax perspective. Matthew Taylor had recommended in his review that renewed effort should be made to align the employment status frameworks for the purposes of employment rights and tax to ensure that the differences between the two systems are reduced to an absolute minimum.
The government agrees that this is the right ambition and has said that it will bring forward detailed proposals on how the frameworks could be aligned and do more to help individuals and businesses understand their rights and tax obligations in light of emerging business models.
This is an area that employers will be monitoring very closely. As recent case law has shown, it can be notoriously difficult to determine whether an individual or self-employed contractor is a worker or an employee and this can lead to significant business risk and exposure to claims for back payment of wages.
It is interesting that Matthew Taylor had highlighted that an individual can have nearly every aspect of their work controlled by a business (from rates of pay to disciplinary action) and still be considered to be self-employed if a right for the individual to send a substitute to work in their place exists. He recommended that the tests that determine whether someone is self-employed or has worker rights should place more emphasis on control and less on the notional right – rarely in practice exercised – to send a substitute, reflecting new business employment models. The government has agreed with his conclusion that businesses should not be able to avoid their responsibilities by trying to misclassify or mislead their staff.
A right to request a more stable and predictable contract after 26 weeks
There will be a right for workers to request a more stable and predictable contract after 26 weeks in post. It is likely that this will be similar to the current right to request flexible working and this will be clarified in future draft legislation. There is, however, no proposal to ban the use of zero-hours contracts.
An increase in the time period required to break continuity of employment
This will be increased from the current one week to four weeks. Effectively, this could mean that someone intermittently working for an employer once a month could gain continuous service.
Continuous service is important because many employment rights are earned over time (for example, the right to claim unfair dismissal or a statutory redundancy payment). This can mean 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. Currently, a gap of one week in employment with the same employer can break what counts towards continuous service for calculating employment rights. The government has said that, to reflect the changing world of work, it will legislate to extend this break to four weeks, allowing more employees to gain access to employment rights.
A reduction in the threshold to request information and consultation arrangements
The government wishes to encourage higher levels of employee engagement in business and has issued draft legislation reducing the threshold required to request information and consultation arrangements from 10% to 2% of the workforce, with effect from April 2020.
By way of background, the Taylor Review had highlighted that for work to be fair and decent, workers must have a voice and that high levels of employee engagement improve organisational performance and boost productivity. It examined the current information and consultation regulatory framework and highlighted that, in order for the rights to be more accessible, the threshold of agreement required for information and consultation arrangements to be implemented needed to be reduced. Currently, a request to set up such arrangements requires at least 10% of employees to support it.
The Government has stated that lowering the threshold required to set up information and consultation arrangements from 10% to 2% of employees is an important step in improving voice in the workplace. The 15-employee minimum threshold for initiation of proceedings will remain in place.
Ending the ‘Swedish derogation’ in the Agency Workers Regulations 2010
The ‘Swedish derogation’ excludes agency workers from the right to equal pay with permanent employees in the same role if they have an employment contract which guarantees pay between assignments.
The Agency Workers (Amendment) Regulations 2019 are due to come into force on 6 April 2020 and will remove this derogation from the Agency Workers Regulations 2010 to give agency workers a right to pay parity with permanent comparable employees after 12 weeks.
Extending the right to a written statement of terms to workers
The Employment Rights (Employment Particulars and Paid Annual Leave (Amendment)) Regulations 2018 are due to come into force on 6 April 2020. This brings in a right to be provided with a written statement of terms on the first day of employment, rather than within the first two months as required by the Employment Rights Act 1996; adds to the amount of prescribed information which a written statement must contain; and amends the Working Time Regulations 1998 to increase the reference period for determining an average week’s pay (for the purposes of calculating statutory holiday pay) from 12 weeks to 52 weeks. This will protect workers with no normal working hours whose pay fluctuates.
It’s worth noting here that all workers must be provided with an itemised pay statement from April 2019. The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 will require itemised payslips to contain the number of hours paid for where a worker is paid hourly.
Improved enforcement measures
The Good Work Plan announced new measures, from April 2019, designed to improve enforcement, including a process for publishing the names of employers who fail to pay tribunal awards on time and an increase (from £5,000 to £20,000) to the financial penalties for employers who commit an ‘aggravated breach’ of employment rights.
What next?
As the government firms up its timetable for implementing the Good Work Plan, now is a good time to identify which of the various measures will most impact the business. By keeping an ear to the ground and an eye on the future, management will be in a good position to plan ahead and carry out any preparatory work to enable managers to meet any challenges that arise.
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