Queen's speech announcements on low paid work will "level playing field" for legitimate businesses, says expert

Out-Law News | 05 Jun 2014 | 2:32 pm | 1 min. read

Proposals to crack down harder on those who abuse the UK's national minimum wage rules and outlaw certain abuses in the use of zero-hours contracts show that the government is "not averse to a little lighter regulation around low-paid workers", an expert has said.

Few details of the proposals have emerged following their announcement during the Queen's speech programme of legislation which will be introduced before the next general election. However employment law expert Stuart Neilson of Pinsent Masons, the law firm behind Out-Law.com, said that changes in these areas had the potential to "level the playing field" between reputable employers and those in breach of the rules in sectors where casual work was common.

"Combined with recent changes to the tax rules that apply to agency workers these changes represent a clear attempt by the government to tighten up regulation of low-paid and casual work. If the changes crack down on some of the abuses of recent years then they are to be welcomed," he said.

"For those sectors where casual employment may be prevalent, such as agriculture and construction, reputable employers will welcome rules to enforce a level playing field. However, they will be concerned about whether the resources exist to enforce new regulation and, furthermore, new regulation could impose greater compliance costs on businesses," he said.

Zero hours contracts are contracts under which an employer does not guarantee to provide the worker with any work and pays the worker only for work actually carried out. Under these contracts, individuals are not obliged to accept work that is offered. Critics of zero hour contracts say that businesses use them to avoid giving workers the status of 'employee' and eligibility for the full range of employment rights; however, business groups claim that using this type of contract gives firms the flexibility to cope with fluctuations in demand, particularly during challenging economic times.

The government intends to use an upcoming Small Business, Enterprise and Employment Bill to "crack down on abuse" of this type of contract. Although it has not announced how it plans to do this, a recent consultation exercise set out a number of potential ways to tackle the use of exclusivity clauses, up to and including an outright ban. Exclusivity clauses are used to stop a contracted worker from working for another company even where the contract does not guarantee them a minimum number of hours.

Other elements of the proposed Bill outlined by the government are measures which would make it easier for small businesses to access alternative methods of finance; the introduction of a legal requirement for "frequent reviews" of the regulations affecting small businesses to ensure that these are either cut or remain effective; making some childcare regulations more flexible; and stronger rules on director disqualifications.