In 2016, Matthew Taylor (Chief Executive of the Royal Society of the Arts) was commissioned by the government to lead a review of modern employment. In response to this review, ‘Employment Practices in the Modern Economy,’ the government formulated the ‘Good Work Plan’ which proposes a series of reforms to employment law.
The aim of Matthew Taylor’s report was to consider employment practices in the context of modern business models, and assess how legislation might need to change to support contemporary ways of working and the so-called ‘gig economy’. The need for clarity on employment status, provisions for the increasing number of people who work flexibly, and issues around taxation were all raised in this important review.
On December 17th 2018 the government published the ‘Good Work Plan’ which, in their words, sets out a ‘vision for the future of the UK labour market’. The plan – the most comprehensive collection of workplace reforms since the 1990s – details the government’s intention to bring employment law into line with modern working practices and technological advancements. However, most of the reforms will not come into effect until April 2020.
The Good Work Plan: Proposed Reforms
The Good Work Plan recommends a number of legislative and policy changes to improve clarity around working relationships, employment status, and workers’ rights in general. The proposed reforms include:
- Legislation to improve employment status tests so that the tests for employment and tax purposes are as closely aligned as possible (and so that they better reflect the reality of modern working practices). Currently the test for employment law is different from that for tax law (e.g. for the purposes of tax individuals are either employed or self-employed, whereas employment law also recognises a hybrid category of ‘worker’), which can be confusing for employers and individuals alike.
- The right to a written statement containing the particulars of employment to be extended to workers. Currently (under the Employment Rights Act 1996), employers are required to provide employees (not ‘workers’) with a written statement containing basic particulars of employment. This statement must be provided no later than two months after the employee has commenced work. However, the rise of contemporary working practices has increased the number of workers, who are not entitled to such documentation, and are thus not in possession of the information needed to ensure they understand the terms and conditions of their work. The Good Work Plan recommends introducing new legislation which will require a written statement of employment to be provided to both employees and workers on the day they start work.
- The right to request a stable contract. Legislation will be introduced that gives employees and workers the right to request a ‘predictable and stable’ contract (once they have been employed for 26 weeks). This is aimed at balancing flexibility of working arrangements with individuals’ need to be able to plan for the future, although it should be noted that the proposed new right is merely to request a stable contract, not to be provided with one.
- Extension of the continuous service break. Under the current law, the time taken to break a period of continuous service is just one week. As a result, many people with intermittent working patterns struggle to access their employment rights (as these are earned over a period of continuous employment). The new legislation will extend the gap from one to four weeks.
- Reforms to the calculation of holiday pay entitlement. Employment law is rather unclear when it comes to calculating holiday pay for people with a variable income. At present, holiday pay is calculated on the basis of income over the preceding twelve weeks, but for a number of employees and workers this may not be representative of their usual earnings. For example, an employee might have a low basic salary but earn a variable amount of commission from month to month; or, alternatively, a worker’s hours might change hugely from month to month, particularly if their employment is seasonal. To try and make the process of calculating holiday pay fairer, it has been proposed that the reference period be extended from 12 to 52 weeks.
- Ban on making deductions from staff tips. For certain workers (particularly those who work in the service industries) gratuities can form a significant part of their income. Despite public outcry about the withholding of tips in recent years, a small number of employers still don’t pass gratuities onto their employees – a practice which will be prohibited under the new legislation.
- Equal pay for agency workers. The UK exemption known as the ‘Swedish derogation’ (which, in specific circumstances, allows agency workers at an organisation to be paid less than its permanent employees doing the same job) will be removed from the Agency Worker Regulations. This means that, following 12 weeks’ service, agency workers will be entitled to receive the same pay as permanent employees within the same organisation.
- Increase to the maximum level of penalty an employment tribunal can impose in instances of aggravated conduct. Where an employer is held by the tribunal to have committed a substantial breach of its obligations (i.e. an ‘aggravated breach’), tribunals currently have the authority to award additional compensation of up to £5,000. This amount will be increased to £20,000. It has also been noted that the penalty is not being used as frequently as it could be – the increase in level of penalty, as well as the proposed introduction of new guidance for judges, places an obligation on tribunals to consider imposition of the penalty more widely. In light of this firmer stance against employment law breaches, employers are advised to seek specialist legal advice in instances of dismissal or in the event of any action that could lead to a claim.
If you have concerns that the proposed changes might affect your business, or if you require more information, please don’t hesitate to contact Bellevue Law today. We act for both employees and employers and can offer expert advice on a wide range of employment issues – from constructive dismissal to discrimination.
Disclaimer: this material is a general overview only, and is not intended to provide legal advice.