Out-Law News 3 min. read

Workers’ rights dominate labour market reforms

The UK government has unveiled a revamp of employment laws designed to protect workers’ rights and address the development of a gig economy.

Among the reforms introduced in new legislation, the government plans to repeal the so-called ‘Swedish derogation’, which allows agency workers to be employed on cheaper rates than permanent counterparts beyond 12 weeks; quadruple maximum employment tribunal fines for employers who are demonstrated to have shown malice, spite or gross oversight from £5,000 to £20,000; and extend the holiday pay reference period from 12 to 52 weeks to give seasonal workers paid time off .

The legislation also extends the right to a ‘day one’ written statement of rights, which will now include detail on rights such as eligibility for sick leave and pay. leave.

Meanwhile the threshold required for an employee request to set up information and consultation arrangements will drop from 10% of the workforce to 2%.

The reforms will implement the majority recommendations made by Matthew Taylor in his review of modern working practices 'Good Work' in July 2017. The government said it had “gone further” than the Taylor review in some areas.

Employment law expert Diane Nicol of Pinsent Masons, the law firm behind Out-Law.com, was the only lawyer on the four person Taylor review panel. She said that promises for more work to be done in two key areas meant full implementation of the recommendations would be further delayed.

“The government accepts there is clarification needed on employee/worker/self-employed status but has now commissioned independent research to underpin any future legislative proposals,” Nicol said. “Given the political climate at play one has to wonder whether this will ever see the light of day but I remain hopeful we will see clarity eventually.”

She pointed to plans to make further proposals to bring employment and tax regimes closer together as an example of more potential delay but said it was an important proposal given that the differences often drive employer/engager behaviour.

“Also disappointing is the apparent tinkering with the Information and Consultation Regulations and lowering the threshold to 2% of workers and employees as opposed to 10% of employees,” Nicol said.

“This was a chance to make this a workable framework for employee engagement and, whilst the government has taken some steps by including the workforce in this proposal, not just employees, and is going to involve ACAS [the Advisory, Conciliation and Arbitration Service], employer bodies and the TUC [Trades Union Congress] to work through how the UK can improve employee engagement, it falls a bit short of what we recommended” Nicol said.

Nicol said many of the proposals should be praised, including the right for all workers to request a predictable and stable contract after 26 weeks which goes further than the Taylor recommendations on this point, the removal of the Swedish derogation, the day one statement and enhanced enforcement.

“Employers do need to start considering the impact of these changes particularly on their flexible workforce.  However, they are to some extent still in the dark with no clarity yet on employee/worker status or the tension between the tripartite employment system and the binary tax system,” Nicol said.

The ‘Good Work Plan’ (64 page / 1.6MB PDF) which details the reforms says that it will put Taylor’s ambition for all work to be “fair and decent” at its heart. The government said it would introduce legislation to give all workers the right to request a more stable contract, and extend the time required to break a period of continuous service to make it easier for employees to access their rights.

The legislation will also seek to clarify employment status, and agency workers will have enforcement protections increased.

In early 2019 the government plans to bring forward proposals for a new single market labour enforcement agency, to ensure that vulnerable workers are more aware of their rights and to support businesses in complying with the law.

The government has also published its response to the Labour Market Strategy set out by director of labour market enforcement, David Metcalf, in May this year. The response (41 page / 385KB PDF) sets out in more detail the plans to form a single enforcement agency and takes forward the bulk of Metcalf’s 37 recommendations.

It focuses on the steps to be taken to raise awareness of employment rights, improve intelligence and strengthen enforcement efforts. These will include better use of social media campaigns targeted at workers, extending the right to a payslip to all workers and shifting to more proactive enforcement methods.

However the government rejected some of Metcalf’s recommendations, including the recommendation to increase the penalty multiplier for employers not paying the national minimum wage.

As well as releasing the Good Work Plan and the response to the Labour Market Strategy, the government has launched a consultation into changes to the National Minimum Wage Regulations regarding salaried workers (15 page / 246KB PDF).

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