The government has published its long awaited response to the Taylor Review of Modern Working Practices.
The Response, entitled ‘Good Work’, emphasises the government’s stated commitment to improving the ‘quality’ of work in the UK, not just the quantity, as explicitly called for by the Taylor Review. (See our previous alert here for a summary of the Taylor Review’s recommendations). However, at the same time, the Response acknowledges the need to ensure the UK retains sufficient workforce flexibility to capitalise on new opportunities for economic growth, including on-going expansion of the ‘gig sector’, and advances in digital and automated technology. Clearly, achieving both these goals will require a complex balancing exercise. It is therefore unsurprising that, despite accepting most of the Taylor Review’s recommendations, the government has made many of the key issues around implementation subject to yet further consultation, much to the annoyance of the unions, who accuse it of seeking to kick any genuine employment reform into the long grass.
However, the four specific consultations announced in the Response at least have the potential to trigger far reaching changes:
Employment status: While the government does not consider it necessary to introduce an additional category of employment status, the government is open to the possibility of adopting the Taylor Review's recommendation to ‘rebadge’ workers as ‘dependent contractors’, (aimed at those engaged in the gig economy). On employment status more generally, the government acknowledges that the current law is not easily understood, and the consultation seeks views on various legislative options to make the process of categorization of employment status easier for both individuals and businesses. Proposals include changes to the factors used to determine whether an individual falls into one of the three existing employment status categories of employee, worker/dependent contractor and self-employed; the potential introduction of a single ‘all-encompassing’ employment status test (referencing some of the tests currently used in other countries, such as length of service, or percentage of income that comes from the employer in question); and the alignment of tax liabilities and employment status, in order to remove the current confusion in this area. To see the consultation, click here.
Enforcement of employment rights: Proposals include introducing a ‘name and shame’ scheme for employers who fail to pay employment tribunal awards; quadrupling employment tribunal fines for employers showing malice, spite or gross oversight to £20,000; increasing penalties for employers who have previously lost similar cases; and defining ‘working time’ for flexible workers who finds jobs through an app based service. To see the consultation, click here.
Agency workers recommendations: The government is consulting on proposals to repeal laws allowing agencies to employ workers on cheaper rates (the ‘Swedish derogation’). It also proposes giving agency workers the right to a clear breakdown of who pays them and any deductions that are made from their wages. To see the consultation click here.
Measures to increase transparency: The government proposes giving all workers a list of day-one rights (including holiday and sick pay entitlements) and a new right to a payslip for all workers (including casual and zero-hours workers). Among other things, the transparency consultation also seeks views on whether the government should amend the rules on continuous service so that a break in service of up to one month (as opposed to a week, as at present) would not give rise to a break in continuity. To see the consultation, click here.
So how will this actually impact on employers?
As yet, we have only very limited details of how any changes to the law will operate, and no confirmed implementation dates for any recommendations. However, the ‘proposals’ set out in the Response which are likely to have the most impact on day to day HR operations, if they are ultimately enacted, include:
- The right for all workers (not just employees) to be given a list of day-one rights, including holiday and sick pay entitlements
- The right for all workers (including casual and zero-hours workers) to receive a payslip
- Permitting a break in service of one month (rather than the current one week) without breaking continuity of service
- Changing the pay reference period for holiday pay from 12 to 52 weeks (in order to help with calculating a representative amount of holiday pay for atypical workers with no fixed hours)
- The right for all workers, not just zero-hour and agency workers, to request a more stable contract, providing more financial security for those on flexible contracts (such that workers who regularly work a certain number of hours over 12 months could claim a right to such hours, and agency workers on site at a hirer for more than 12 months could request a direct contract of employment with the hirer). Possible introduction of higher minimum wage rates for workers on zero-hours contracts (dependent on the Low Pay Commission’s assessment of the likely impact of such a change, which the government has confirmed it will be requesting).
You can access a copy of the full Response here.
How else can EEF help?
As always, EEF will continue to keep you updated on relevant HR and employment law developments. Dates for our popular Spring Member Briefing: Employment Law Update are now available. You can reserve your free place here.
EEF will be responding to the consultations announced in the Response and would welcome members’ input. Member’s interested in contributing should contact Verity Davidge, EEF Head of Education & Skills Policy