December 20, 2018

The Government’s “Good Work Plan”: key points for employers

The Government has announced that it will make a range of policy changes and introduce new laws to provide new protections for employees and workers. Its 'Good Work Plan' has been published following the four consultations that followed its Good Work Report, which was in response to the Taylor Review.

The changes set out in the Good Work Plan aim "to ensure that workers can access fair and decent work, that both employers and workers have the clarity they need to understand their employment relationships, and that the enforcement system is fair and fit for purpose".

10 key points for employers:

Below, we have updated the ten key points from the Government's Good Work Report that we identified in our previous update, to reflect the proposals set out in the Good Work Plan. Draft legislation has already been published in relation to some of these proposals with the intention that they take effect in either April 2019 or April 2020. For others, further work needs to be done so the timetable is less clear.

  1. More clarity on employment status – the Government states that it will introduce new legislation to clarify the test for employment status that reflects modern working practices. This will be a difficult task. It states that it will also seek to align how the law deals with status for tax purposes with the status for employment rights purposes. There is no set timetable for these potentially significant proposals for new legislation.

    In addition, to improve clarity and understanding, individuals and employers will have access to an online tool that determines employment status in the majority of cases.
  2. Extension of the right to written particulars to all workers – From April 2020, all workers (not just employees) will be entitled to receive a document setting out the key terms of their contract (known as "written particulars") from day one of their contract (rather than within two months as at present).  There will also be new requirements for additional mandatory information provided in the written particulars.
  3. Extension of the right to a payslip – the Government announced previously that from 6 April 2019, all workers, including casual and zero-hour workers, will have the right to a payslip.  For part-time workers, this must state the number of hours they are being paid for.
  4. Right for all workers to request a 'more stable' contract - there will be a right for all workers, not just zero-hour and agency workers, to request a more predictable and stable contract after 26 weeks's service.
  5. Making it easier to show continuity of service – to enable atypical workers to establish 'continuity of service’ more easily (giving them access to key rights), the qualifying ‘break in service’ period will be extended from one week to four weeks. This means that an employee will generally have continuity of service even if they have gaps in the work of up to four weeks. The change applies from April 2020.
  6. New protections for gig economy workers – the Taylor report recommended introducing higher National Minimum Wage/National Living Wage rates for hours that are not guaranteed as part of the contract, as well as alternative options to tackle low pay. However, following advice from the Low Pay Commission in a report published on the same day as the Good Work Plan, the Government will not be taking this forward. The LPC proposed a number of alternatives to address one-sided flexibility, which the Government says will be subject to further consultation.
  7. Holiday rights and working time for seasonal, casual and zero hours workers – the holiday pay reference period will be increased to 52 weeks (from the current 12 weeks) in April 2020. The Government will also launch a holiday pay awareness campaign.
  8. Protections for agency workers – agency workers will have the right to be provided with a Key Facts Page, to include information on the type of contract, their rate of pay, who is responsible for paying it and any deductions or fees that will be taken. The 'Swedish derogation' will be abolished, which currently allows workers who have a contract that provides for a minimum level of pay between assignments to be excluded from the right to comparable pay with permanent employees. These changes apply from April 2020.
  9. Enforcement of vulnerable workers' rights to holiday pay, sick pay and the NMW and wider review of statutory sick pay – there will be a new state enforcement system for holiday pay. In the context of the Statutory Sick Pay reforms, the Government will consider whether to make changes to the enforcement provisions.
  10. Enforcement of tribunal awards and increasing tribunal fines for employers – the Government will:
  • introduce a new "naming and shaming" scheme for employers that fail to pay tribunal awards and make it easier for successful claimants to enforce payment.
  • increase the maximum penalty from £5,000 to £20,000, for 'aggravated' breaches of employment rights with effect from 6 April 2019.
  • require tribunals to consider stronger punishments for employers that ignore previous tribunal judgments against them.

In addition to the above…

  • It appears that the re-introduction of tribunal fees looks increasingly likely given that the Good Work Plan statement to Parliament indicated it was "under consideration" by the Government.
  • Following a consultation in 2016 employers will be banned from taking "administrative fees" or other deductions from staff tips with effect from April 2020.
  • 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. This will apply from April 2020.