The Good Work Plan – any good?

Background

In November 2016, the Government launched the Independent Review of Employment Practices in the Modern Economy. Its purpose was to consider the implications of new models of working, including those used in the “gig economy”, for the rights and responsibilities of companies and individuals. Matthew Taylor’s report - Good Work: the Taylor Review of Modern Working Practices - was published in July 2017.

Many of the proposals in the Taylor report could have a significant impact on many employers, including for “nuts and bolts” matters such as worker status, holiday pay, zero-hours contracts, the minimum wage and working time. When the Government published its initial response in February last year, it promised action on nearly all of the Taylor Review’s 53 recommendations. 

Four consultation documents were published alongside the Government’s response, dealing with: employment status; increasing transparency in the labour market; agency workers; and enforcement of employment rights. These largely focused on seeking views on the detail and the impact of potential changes, rather than committing to any specific changes to the law.

The Good Work Plan has now been published, which sets out the Government’s considered position on Taylor’s recommendations, and is described as the Government’s “vision for the future of the UK labour market”. This remains, however, largely just a list of proposals, accompanied by some (but not all) draft legislation. As yet, there are no firm dates for when many of the reforms will come into effect or what much of the important legislative detail will look like.

Proposals for reform

The following is a summary of the main proposals:

• Employment status clarification. The Government says it will “bring forward detailed proposals” on how the employment status frameworks for the purposes of employment rights and tax should be aligned, and there will also be legislation to “improve the clarity of the employment status tests”. This has the potential to be significant, but there is no further information yet about what this will involve or draft legislation. This is a key area which both employers and employees find difficult at the moment, but finding a solution is far from easy as the tests have been developed through case law and tend to be very fact specific (as shown by the Supreme Court’s decision in the Pimlico Plumbers case). As noted in the plan, “defining employment status and ensuring our legislation is fit for purpose in a changing world is not straightforward”. The Government has commissioned further independent research on those with uncertain employment status to help with this task, so it would appear that detailed proposals are not imminent.
• A new right for workers to request a more predictable and stable contract. This would allow workers who work variable hours to ask for a fixed working pattern after 26 weeks of service, such as minimum hours or fixed days of work. There would simply be a right to make the request, and the plan does not suggest there will be any obligation on employers to agree. The new right may be subject to specific rules similar to those which currently apply to the right to request flexible working. The UK was likely to be required to adopt such a law anyway under the EU’s proposed Transparent and Predictable Working Conditions Directive (subject of course to Brexit developments).
• Extending the relevant break in service for the calculation of the continuous service qualifying period from one week to four weeks. This is designed to help those who work intermittently for the same employer and so find it difficult to build up employment rights.
• Removal of the “Swedish derogation” in the Agency Workers Regulations 2010, and banning this type of contract from being used to withhold agency workers’ equal pay rights. The Swedish derogation currently allows temporary work agencies to avoid matching pay by engaging agency workers in a way that allows for pay between assignments. Draft Regulations will remove this provision from 6 April 2020, including an obligation on agencies that have previously used the opt-out to provide a written statement to all affected agency workers explaining the change. There will also be protection from unfair dismissal or detrimental treatment for enforcing these new rights.
• A ban on employers making deductions from staff tips. This is to ensure that workers receive all of the tips that that customers leave for them. Presumably this will be done by amending the rules on unauthorised deductions from wages.
• Extending the right to a statement of employment particulars to all employees and workers from day one. This right currently only applies to employees, and the statement can be provided up to two months into employment. The information to be given in this statement is also to be expanded, covering matters such as probationary periods and family leave. Two sets of Draft Regulations have been published (here and here), which indicate that the new rights will apply to employees and workers who begin employment on or after 6 April 2020. There is a related proposal for a “Key Facts page for all agency workers”, providing basic information about the contract, pay rates and pay arrangements.
• Increasing the reference period for holiday pay from 12 weeks to 52 weeks. Currently, workers without normal working hours have their holiday pay calculated based on the previous 12 weeks. The Government is concerned that this can result in workers losing out if they take holiday at certain times of year, e.g. seasonal workers. The relevant calculation of a “week’s pay” is used for various different purposes and is taken from the Employment Rights Act 1996. Under Draft Regulations, due to come into force on 6 April 2020, the Government proposes to amend the Working Time Regulations to replace the relevant references to 12 weeks with 52 weeks in holiday pay cases. The Government also plans an awareness campaign and new guidance to ensure workers understand their rights to holiday. In addition, there will be a new state enforcement system for holiday pay – although the body responsible for this has not yet been identified.
• Introducing a “name and shame” scheme for employers who fail to pay Employment Tribunal awards. The Department for Business, Energy and Industrial Strategy (“BEIS”) has published details of this scheme. It will be linked to the existing BEIS penalty scheme, which allows individuals to ask for enforcement of unpaid awards through payment of an additional penalty. If individuals register with the penalty scheme they will also be able to register with the naming scheme. This means the effects may be limited as employers who are not being pursued under the penalty scheme will not be subject to the naming scheme either. A naming round will take place every quarter, showing the name of the employer and the amount of the unpaid award. There will also be a review of guidance on how to enforce awards, with a “vision” to build a seamless end-to-end digital system for the entire lifecycle of an Employment Tribunal claim.
• Implementing stronger sanctions for employers who have previously lost similar cases and greater use of aggravated breach penalties and costs orders. The current limit on financial penalties for aggravated breaches by employers will be increased from £5,000 to £20,000 for breaches of rights beginning on or after 6 April 2019, under Draft Regulations. There will also be new guidance on how the use of these powers can be encouraged. To date, very few penalties have been imposed, so it is not clear how increasing the limit will make a difference if parties are unwilling to ask for this and/or judges are reluctant to impose a penalty that goes to the Government rather than the employee. There are also plans for new sanctions in respect of repeated breaches by the same employer, with an obligation on judges to consider the use of these sanctions. No further detail is provided as there will be further consultation with “interested parties”.
• Lowering the threshold required for a request to set up information and consultation arrangements from 10% to 2% of employees (while keeping the 15-employee minimum threshold). This is to make the right to information and consultation more accessible, as part of a recognition of the benefits of giving employees a voice. Draft Regulations indicate that this will come into effect from 6 April 2020.

The Good Work Plan addresses all the Taylor Review recommendations but is very short on detail as to how or when the most major reforms will be implemented. There is also little discussion of the outcome of the four related consultation exercises. The full set of responses to three of the four consultations have been published online but, although the relevant pages say the plan draws on this feedback, there is no explanation of how it has been taken into account.

While the plan gives useful information on what is likely to happen, it is too early for employers to take many steps to prepare. The draft regulations that have been published so far are relatively straightforward, and most changes will not come into effect until April 2020 at the earliest. Draft legislation and firm timings are needed for the more significant changes in relation to employment status and the right to request a more predictable contract. With the imminent Christmas holidays and ongoing Brexit negotiations, it’s probably best not to hold your breath…