Good Work Plan - the Government re-commits to changing employment law
The Good Work Plan moves us a step closer to the implementation of the reforms recommended in last year's Taylor Review.
The Government has published its Good Work Plan which moves us a step closer to implementation of a number of the reforms recommended last year in the Taylor Review. This is being promoted as the largest upgrade in a generation to workplace rights, which is probably slightly overstating it. Nonetheless a number of the apparently small changes to employment law may have a more significant day to day impact for many employers.
The detail of the Good Work Plan
Some of the key details are as follows:
- All workers (and not just employees) will be entitled to a Statement of Terms and Conditions of Employment on day one of their engagement (not just within the first two months);
- Holiday pay will be calculated over a 52-week reference period rather than the current twelve weeks. In the complex arena of holiday pay claims and arguments, this may be a very important change for those of you who have workers whose pay (or commission/overtime/bonuses) fluctuate over the year, as it will even out such variations so that holiday pay reflects a year’s average;
- Continuity of employment will only be lost if there is a four-week break between engagements, rather than the current one week. This is a potentially significant change for those of you who engage casual employees, as the right to claim unfair dismissal (and other rights) will be gained far more easily and in many more cases;
- A new right for all workers to request a more predictable and stable contract is to be introduced (along the lines of the current right to request flexible working). Those working variable hours (or zero-hours contracts) will be able after twenty-six weeks of service to ask for fixed hours. A similar right will apply to those engaged through an Agency where they have been placed with you for twelve months, where they will have a right to request a contract of employment with you. This is intended to be a right to request, so you will not necessarily be obliged to agree to what is requested;
- The Swedish derogation will be abolished entirely. In summary, this derogation is important for those who use Agencies (or are Agencies) who engage/pay their workers between assignments. It currently has the impact of removing the obligation to match workplace pay and benefits which applies to other agency workers. If this applies to you please do talk to us about what it means (but for many of you it will not be important);
- A new state enforcement system will be introduced for holiday pay (although it now looks like it won’t be HMRC enforced). This may have significant repercussions for employers as currently enforcement is dependent upon an individual running a claim;
- There will be a consultation next year on measures to encourage and support all employers to play their part in improving access to Occupational Health and there may be changes to the enforcement mechanism for statutory sick pay;
- There will also shortly be a consultation looking at extending redundancy protections for women and new mothers;
- Perhaps surprisingly, the threshold for (the rarely used) right for employees to request to set up collective information and consultation arrangements will reduce from 10% to 2% of the relevant group of employees, albeit a 15 employee minimum threshold for a request will be retained. This may lead to more requests;
- The maximum penalty for aggravated breaches of employment rights will be increased from £5,000 to £20,000 with a greater onus placed on Employment Tribunals to consider it. This may perhaps mean that the penalty will be argued for or applied more than is currently the case. There is also an interesting commitment to “simplify the user’s journey through the lifetime of an Employment Tribunal claim” and a restated commitment to making enforcing Tribunal awards more straightforward and effective; and
- There is a commitment to introduce new law to improve clarity on employment status, reflecting modern working practices. The Government also says it will bring forward detailed proposals to align the tax and employment rights frameworks. This is potentially the most significant change of all. However the paper provides almost no detail about how this will be defined and, as we have said before, defining employment status is incredibly difficult. What exactly the potential law says will be all important. One key challenge with aligning tax to employment rights is that there is no tax category of ‘workers’; so the key question may be whether this means all workers (for whom the engager is genuinely not a client/customer) will need to be taxed as employees. If so, that will have significant implications for those who currently engage contractors.
What does this mean for me?
You may think you have heard all this before. That is because, on the whole, you have. These are all proposals raised by the Taylor Review and which the Government has previously committed to consider as part of their response. This new paper includes greater detail (such as four-week gaps in engagements being bridged for employment continuity) and a firmer commitment to bringing forward law in the near future. It therefore does appear that these proposals are more likely to become law, but we are still some way away from them actually being brought into force. We do not yet have new legislation (despite what has been widely reported).
If new law governing employment status is ever introduced, that change will be the most significant for many of you, particularly if tax and employment-rights are genuinely aligned. However the other changes are not fundamental changes to the tenets of employment law, but the practical day-to-day impact may still be significant for many of you.
If this alert raises any issues for your organisation, please do speak to us about it.