Hello and welcome to the first of our employment videos for 2019. My name’s Paul Griffin and I’m Head of the Norton Rose Fulbright Employment Team in London.
Following its response to the Taylor Review on Modern Working Practices published last year, just before Christmas, the Government published its Good Work Plan setting out the next steps in its proposals for the future of the UK labour market.
These proposals are the subject of today’s video.
As covered in our video last spring, the Government published various consultations together with its response, the most extensive of which was the one on employment status.
In the consultation, they sought views on the main problems with the current system and whether the test for employment status should be set out in legislation and, if so, what that test should be?
The Government has now confirmed in its Good Work Plan, that it will legislate to clarify the test for determining employment status - but it gives no detail as to how this will be done.
The Government also accepts the Taylor review recommendation that the differences between the employment status tests for employment rights and tax purposes should be reduced to an absolute minimum - but once again no details are given as to how this will be achieved, just that detailed proposals will be brought forward in due course.
It seems unlikely, however, that the tests for tax and employment purposes will be exactly the same in the future – currently there’s a three-tier approach to employment status for employment purposes whereas, for tax, individuals are either employed or self-employed – with nothing in between. But the Plan gives no indication of how the tests will become more closely aligned.
Enforcement of rights
The Taylor Review recommended that the Government make the enforcement process simpler for workers, by taking enforcement action against employers who don’t pay tribunal awards. Currently a worker can begin the penalty system against defaulting employers, but BEIS has no power to pursue the actual award, only payment of the penalty.
In its Plan, the Government accepts that the enforcement process could be simpler. However, pending the outcome of the ongoing court and tribunal reform programme, they only commit to a review of the existing paper guidance.
This will include how to use the existing employment tribunal penalty scheme which was introduced in 2016. No changes to the process are proposed - the Government considers the scheme to have been a success, in that over 1.5 million pounds owed to workers for unpaid tribunal awards has been recovered since then.
However, the current system doesn’t help the worker whose ex-employer isn’t persuaded by warning or penalty notices to pay the sums owed.
The Plan also confirms the Government‘s proposal to introduce a scheme for the naming and shaming of employers who fail to pay tribunal awards. The way in which they’ll identify these employers is from workers’ use of the penalty scheme. If employers fail to pay up when prompted, then they’ll go on the list for publication.
The scheme was launched in December and applies to all tribunal awards registered with BEIS on or after the 18th of December last year.
The Government also confirmed its plan to increase the maximum financial penalty for employers’ aggravated breaches of employment rights from £5,000 to £20,000 – and regulations have already been published which make this increase in respect of breaches of workers’ rights occurring on or after the 6th of April this year.
An obligation will also be placed on employment judges to consider use of these and other sanctions available, rather than leaving it entirely to their discretion – so this may increase the likelihood of sanctions being imposed on employers in the future.
The Taylor review made various recommendations to increase transparency and clarity between workers and employers.
As part of this overall objective, the Government has confirmed its intention to extend to all workers the right to a section 1 written statement of terms and conditions – which currently only employees enjoy - and to expand the information to be included in the statement. This will include details of all benefits in addition to pay, and all paid leave entitlements.
Employers will also have to provide the statement from “day one” of employment, rather than after two months as is currently the case.
These changes have already been put in place, and will apply to those who begin employment on or after the 6th of April 2020, and to workers who start on or after that date.
In addition, those already employed who request a section 1 statement on or after the 6th of April 2020, must be provided with a statement within one month of the request.
The Taylor review also highlighted the difficulties faced by some workers, particularly those whose weekly earnings vary week to week, in receiving holiday pay which is a true reflection of their average weekly pay.
If calculated according to the current 12-week reference period, the amount of holiday pay could be significantly less if taken shortly after a less busy period.
So the Good Work Plan confirms that the holiday reference period will be increased from 12 to 52 weeks, to give a more accurate representation of a week’s pay for atypical or seasonal workers who don’t work the same number of hours each week.
This change to the law will come into force on the 6th of April next year.
Further to the suggestions made in its consultation paper, the Government also confirms its intention to introduce the right for all workers, whether on zero hours contracts or not, to request from their employer a more predictable and stable contract.
Whilst it’s acknowledged that some workers may be content to work varied hours each week, those who would like more certainty, will have the right after 26 weeks’ service , to request a more fixed working pattern, perhaps as to the number of hours they’re guaranteed each week, or the days on which they’ll work.
Finally, on the Taylor review recommendations for agency workers’ rights, the Government confirms its intention to repeal what is known as the “Swedish derogation”.
This derogation allows agency workers to exchange their rights to be paid equally to their permanent counterparts, for a contract which guarantees them pay between assignments.
In reality, however, many agency workers don’t benefit from this arrangement because there are rarely gaps between their various assignments.
In addition, the Government will require all employment businesses to provide every agency worker with a “Key Facts Page”. This will include details of who’s responsible for paying them, the type of contract they’re engaged under, details of their pay, and any fees, costs or charges which will be deducted.
These changes come into force on the 6th of April next year.
This video is intended to provide you with a summary of the Government’s latest plans following the Taylor Review.
We shall of course let you know when there are any further developments, but if you’d like any more information, or have any questions on any aspect of today’s topic, then please don’t hesitate to contact us.