New rights for workers on the way

Workers and employees are set to benefit from a wide range of new workplace rights, according to plans set out by the government just before Christmas.

The plans include important new rights for workers on casual and “zero hours” contracts; a new enforcement agency to enforce holiday pay for low-paid workers and beefed-up rights for all employees, including a “day one” right to a written contract.

Most of the changes are planned for April 2020, but some will come into force during 2019.

The changes have been set out in a government paper called “Good Work Plan” which sets out how the government plans to implement the proposals in the Taylor Review of modern workplaces, published in 2017.

The proposals are designed to take into account how advances in technology are changing how, when and where people work and to “future proof” then labour market.

What's in the proposals?

The Good Work plan covers three themes:

• Fair and Decent work

• Transparency and clarity

• Fairer enforcement

Fair and decent work

The main proposals here are a new “right to request a more stable contract” for workers on casual or zero hours contracts; repeal of the so-called “Swedish Derogation” in  agency workers' contracts and a new Industrial Strategy Council to measure and track “job quality”.

The right to request a more stable contract will apply after 26 weeks' service and there will be a procedure in which the employer must address the matter within 3 months.

We expect the process will reflect the current “right to request flexible working” procedure, with employers given scope to refuse for genuine business reasons.

The “Swedish Derogation” has been a device used by employment agencies to avoid giving agency workers parity with permanent workers after 12 weeks' service. This involved making provision for some pay between contracts, but the derogation has been widely abused.

Transparency and clarity

Important new and strengthened rights are to be put in place about written employment contracts. From April 2020, all employees will have the right to a written contract from day one of their employment.

And “workers” who are not employees will also be entitled to a written contract on day one too. This is completely new, as currently only employees have the right to a written contract. 

Contracts will have to contain additional information, including the proposed length of the assignment; notice periods; sick pay; maternity and paternity leave entitlement and specific days and times of work.

 The aim is to improve clarity of the relationship, pay and hours of work and to avoid complex disputes about underpayment, etc.

Clarity on employment status

Clarifying and codifying the differences in employment status -  the difference between “employees” “workers” and the “self-employed” seems to have proved a challenge too far for this set of proposals, with promises of “further research” in an area that is “not straightforward”, according to the proposals. 

It's also proposed that the tests on employment status will be streamlined so that the same rules apply, as far as possible, for tax law as for employment law - although again, this is subject to further consultation.

Fairer enforcement

The big idea here is to consolidate several agencies that already enforce standards in low-paid sectors into a Labour Market Enforcement Agency. These agencies include the Gangmasters and Labour Abuse Authority and the Employment Agency Standards Inspectorate and may also to include the part of HMRC that enforces the National Minimum Wage. This idea was proposed by the newly-appointed Director of Labour Market Enforcement, Sir David Metcalfe, in his first Enforcement Strategy paper published in 2018.

Significantly, enforcement of holiday pay in low-paid sectors could pass to this new agency, with the view that this more direct enforcement method will encourage compliance more than the threat of individual employment tribunal proceedings for what are often relatively small amounts of money.

Finally, the penalty employment tribunals can levy on employers for “aggravated breaches” of employment regulation increases from £5,000 to £20,000 from April 2019 and employers that fail to pay tribunal compensation can now be “named and shamed” - this applies from 18th December 2018.

A fair package?

The proposals are likely to be welcomed by most employers as they help create a more level playing field between traditional employers and those who use more casualised labour. The clarification of rights, particularly relating to holiday pay and written contracts, will help the law-abiding to operate within the law.

However, the proposals in the Taylor Review about “dependent contractor” status don't appear to have been pursued and there remains a grey area between “workers” - who are entitled to the minimum wage and paid holidays - and the genuinely self-employed. The promised “employment status” tools and codification seems as far away as ever. Many operators in the so-called “gig economy” have been anxious to label their workers “self-employed” and there seems little in the proposals so far to prevent those operators from using cleverly-drafted contracts to continue to do so.

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