Employment Focus | The Good Work Plan – What does this mean for employment law?

Earlier in the year, we saw the implementation of some of the first pieces of legislation resulting from the government’s Good Work Plan (the “Plan”), which was originally published on 17 December 2018, and described as “the biggest package of workplace reforms for over 20 years”. We therefore take a look at the main themes of the reforms and what they mean for employers.

The Good Work Plan followed the launch of the Independent Review of Employment Practices in the Modern Economy led by Matthew Taylor in 2016 (the “Review”) and his report ‘Good Work: the Taylor Review of Modern Working Practices’ which was published on 11 July 2017. The report included a number of recommendations to improve working life and employment rights, with a particular emphasis on vulnerable workers, including agency workers, casual workers and zero-hours workers in the ‘gig economy’.

The Government’s response to this was published on 7 February 2018 in ‘Good Work: a response to the Taylor Review of modern working practices’. The Plan then set out the Government’s strategy which is broken down into three main themes:

  1. Fair and Decent Work

Matthew Taylor wrote about the problem of workers on insecure and atypical contracts for long periods of time, referring to this as ‘one-sided flexibility’. The Government is going to introduce a right for all workers to request more predictable and stable contracts after 26 weeks’ service. The plan is that these will be dealt with like flexible working requests.

Some of the Government’s other main commitments under this theme include:

  • Legislation to extend the period of time to break continuous service, from 1 to 4 weeks. This flows from the Report’s finding that casual employees can struggle to accrue certain employment rights.
  • Abolition of the “Swedish Derogation” in regulation 10 of the Agency Workers Regulations 2010. This allows employment businesses to avoid giving agency workers pay parity with comparable direct recruits if they have an employment contract providing the right to pay between assignments. The government intends to repeal the Swedish Derogation, so that all agency workers have a right to pay parity after 12 weeks.
  • Legislation to prevent employers making deductions from staff tips.
  • Legislation to amend the Information and Consultation of Employees Regulations 2004 (SI 2004/3426) in terms of lowering the percentage required for a valid request for an employer to negotiate an agreement on informing and consulting its employees. The threshold is to be lowered from 10% to 2% of the total number of employees employed by the employer, subject to the existing maximum of 15 employees.
  1. Clarity for Employers and Workers

Matthew Taylor recommended that the different employment statuses, and the rights and obligations attached to these, needed to be more transparent. The Government is going to legislate to improve the clarity of the employment status test, reflecting the modern working relationship. However, it has said very little about how it intends to make things clearer.

In terms of the commitment made in this regard, the Government has confirmed that it will:

  • Give all workers the right to a written statement of particulars under section 1 of the Employment Rights Act 1996. It will also add to the information which must be provided in these, to include information about on the length of time a job is expected to last, the notice period, and eligibility for sick leave and pay among other things.
  • Increase the reference period for determining an average week’s pay for holiday pay purposes from 12 to 52 weeks. This is to ensure workers who do not have regular working patterns throughout the year are not disadvantaged by having to take holiday at quieter times when their weekly pay is likely lower. Indirectly it may also give some much needed clarity to the calculation of holiday pay where workers have variable elements of pay (such as commission, shift allowance, etc…) following recent European Court of Justice decisions.
  • Launch a campaign to raise awareness of holiday and holiday pay rights among employers and individuals. This will include guidance with real life examples to help the interpretation of holiday pay rules.
  • Introducing state enforcement of holiday pay rights for vulnerable workers.
  • Require all employment businesses to provide agency worker-seekers with a Key Information Document containing prescribed information including the type of contract, the minimum expected rate of pay, and how they will be paid among other things.
  1. Fairer Enforcement

The Government refers to the Employment Tribunal Project and the Civil Enforcement Project, which aim to make it simpler to bring claims and enforce awards. The Government plans to simplify the process of bringing Tribunal claims, creating a “seamless” system.

In terms of changes that have already taken place, as of 18 December 2018, the names of employers who do not pay tribunal awards are to be published upon application. In addition, the government has increased the maximum penalty for “aggravated” breaches of employment law from £5,000 to £20,000. This took effect from 6 April 2019.

In addition to the above, the Government intends to:

  • Introduce sanctions (presumably a penalty) for employers’ repeated breaches on the same issue. The government will consult with interested parties on the detail. New regulations will also oblige tribunals to consider the use of these sanctions.
  • Change the state enforcement mechanisms. Currently, employment rights are enforced by the Employment Agency Standards Inspectorate (EASI), the Gangmasters and Labour Abuse Authority (GLAA), HM Revenue and Customs (HMRC) and the Health and Safety Executive (HSE). The Government is proposing a new single labour market enforcement agency to help vulnerable workers be more aware of their rights and to support businesses to comply. The government is also looking to strengthen the enforcement of statutory sick pay and will consider whether a revised mechanism is necessary. The dispute process for sick pay is currently run by HMRC.

New legislation

The following new pieces of legislation are all due to come into force on 6 April 2020 –

The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 (SI 2018/1378). These:

  • Amend the Employment Rights Act 1996 so that a written statement of terms must be given on or before the first day of employment (currently it is within 2 months if an employee is to be employed for more than 1 month).
  • Add to the information that must be given in the written statement to include:
  1.  the days of the week a worker is required to work, whether the working hours may be
  2.  variable and how any variation will be determined;
  3.  any paid leave to which the worker is entitled;
  4.  details of all remuneration and benefits;
  5.  any probational period; and
  6. any training entitlement provided by the employer, including whether any training is mandatory and/or must be paid for by the worker.
  • Amend regulation 16 of the Working Time Regulations 1998 to increase the reference period for determining an average week’s pay (for the purposes of calculating holiday pay) from 12 weeks to 52 weeks, or the number of complete weeks for which the worker has been employed.

The Agency Workers (Amendment) Regulations 2018 remove the “Swedish Derogation” from the Agency Workers Regulations 2010.

The Conduct of Employment Agencies and Employment Business (Amendment) Regulations 2019 (SI 2019/725) will require all employment businesses to provide agency work seekers with a Key Information Document before agreeing the terms by which the work-seeker will undertake work.

The Employment Rights (Miscellaneous Amendments) Regulations 2019 (SI 2019/731) then came into force in two parts:

  1. On 6 April 2019 – the penalty for an “aggravated” breach of employment law rose from £5,000 to £20,000; and
  2. On 6 April 2020 – the right to a written statement will be extended to all workers rather than just employees; and
    – the threshold required for a request to set up information and consultation arrangements will be lowered from 10% to 2% of employees, subject to the existing minimum of 15 employees.

What should employers be doing?

The proposed changes remain relatively small and discreet, and plans to manage the largest reforms, such as the confusion around status, have yet to be confirmed. Given the current preoccupation with Brexit, it could be some time before there is any change in this regard.

That being said, there are some things employers could do in readiness for the changes we know are arriving next year. For example, consider the changes to the holiday reference period and how that might be implemented where required and put measures in place to ensure relevant staff will know the new rules relating to contract content and when they will have to be provided. In the leisure industry, employers should consider how tips are distributed and change any processes which will eventually become unlawful.

It is otherwise going to be a matter of waiting for more draft legislation and timings in relation to some of the more significant changes.

Should you want to discuss the Good Work Plan further or any of the immediate reforms, please do not hesitate to contact a member of our employment team.

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