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Farrer & Co | The Good Work Plan - how good is it?

New year, new rights? At the end of 2018, the Government published its latest, and more detailed response to the Matthew Taylor Good Work Review. The Government heralded its Good Work Plan as the “largest upgrade in a generation to workplace rights”. It sets out the Government’s vision for the future of the UK labour market and draws on the four consultations held earlier in 2018.

Broadly speaking, the Good Work Plan follows the Taylor Review’s themes of: (i) providing workers with increased rights in an attempt to tackle the one-sided flexibility; (ii) providing workers and employers with better clarity; and (iii) seeking to keep pace with the modern ways of working created by new business models and rapid technological change. We take a look below at some of the key proposals in the Plan and what effect they may have.

The key proposals:

Employment status

The Government agreed with the Taylor Review’s recommendation for the introduction of legislation to streamline the employment status tests for employment and tax purposes to ensure “the differences between the two systems are reduced to an absolute minimum”. The Government promises to bring forward detailed proposals on how the two frameworks can be aligned, so the effect of this will become clearer in time.

The Taylor Review also recognised the difficulties involved in determining employment status in some circumstances and that more clarity is needed. Following further consultations, the Government agreed with this conclusion and has commissioned independent research so that any legislation brought forward to address this issue will particularly help those with uncertain employment status. Again, only time will tell how this will play out.

Right for workers to request predictable and stable contract

Despite the hopes of some for legislation to tackle the issue of zero-hour contracts and the perceived ‘one-sided flexibility’, the Government has chosen not to ban such contracts on the basis that the flexibility they offer does benefit some workers.

Instead, the Good Work Plan proposes a right to request a more fixed working pattern for those who do not have one; this right will arise after 26 weeks of service and is simply an option to those workers whom would like greater certainty. There are no details on what the enforcement mechanism will be, but it is likely to be similar to the right to request flexible working.

Written statement

The requirement for employers to provide a written statement of terms and conditions will be extended to workers. Additionally, the employer will be required to provide this by the first day of employment rather than the current timeframe of within two months of commencing employment.

Continuous service

The Government is proposing to extend the length of the gap in employment which has the effect of breaking continuous service from one week to four weeks. This is a recognition of the changing world of work and will allow more employees access to ongoing continuity of service, which impacts on various employment rights.

Tips

There is a proposed prohibition on employers making deductions from staff tips. There is no detail on how this will be done, so we await legislation to address this issue.

Holiday pay

The Government has agreed with the Taylor Review’s recommendation for a 52-week reference period to determine holiday pay. This will help to ensure that certain workers, particularly those in seasonal and atypical roles, are not prevented from benefiting from their full holiday entitlement nor limited in choosing when to take holiday.

The Swedish derogation

The so-called Swedish derogation is essentially a legal loophole that allows employers to, in certain circumstances, pay agency workers less than permanent staff. It was introduced in an attempt to provide a benefit to some agency workers by allowing them to opt for lower but continuous pay even where there are gaps in assignments. However, BEIS research has shown that some employers are simply using this derogation to pay agency workers less.

The Government, in line with the recommendations in the Taylor Review, has brought forward legislation to repeal the Swedish derogation and prevent the use of this type of contract to withhold agency workers’ equal pay rights.

Information and consultation

The Government largely agreed with the Taylor Review’s recommendation that steps must be taken in order to improve employees’ voice to help achieve the aim of fair and decent work. The existing Information and Consultation of Employees Regulations provide a framework to encourage long-term information and consultation arrangements between employees and their employers by providing a mechanism for employees’ views to be considered in major workforce reforms.

In an attempt to make this framework more accessible, the Good Work Plan states that the threshold needed for a request to set up Information and Consultation arrangements will be lowered from 10% to 2% of employees. The 15 employee minimum threshold for initiation of proceedings will remain in place.

Fairer enforcement

The Government has brought forward legislation to increase the maximum level of penalty an Employment Tribunal can impose upon an employer where there has been an aggravated breach of employment law. This will be increased from £5,000 to £20,000.

Additionally, Employment Tribunals will be under the additional obligation to consider the use of sanctions for repeated breaches.

Summary

Despite the Government suggesting this is the “largest upgrade in a generation”, its effect will actually be far more modest. Nevertheless, the Government has already announced the first statutory instruments to help implement some of the above key proposals from the Good Work Plan.

To summarise, the Good Work Plan does provide a response to all the Taylor Review recommendations. However, it lacks any real detail about the implementation of many of the major reforms it promises, and although some new legislation surrounding these proposals has begun to emerge, for the most part, only time will tell what these proposals truly mean. However, with April 2020 being the earliest that most changes are likely to come into effect, we may be waiting a while.

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