Government Proposes Biggest Reform of Employment Law in 20 Years
In July 2017, Matthew Taylor published his Good Work report into the implications of new forms of work on worker rights and responsibilities and employer freedoms and obligations.
The government has now published a Good Work Plan proposing a number of changes to employment law, and draft legislation for some of the changes has already been released.
Changes Coming Into Force on 6 April 2020
On 6 April 2020, the following employment law changes will be made as part of the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018.
- Break in Continuity of Employment – The break between periods of employment which breaks continuity will be increased from one week currently to four weeks. This is likely to have the biggest impact on temporary workers as it will easier for them to accrue the two-year qualifying service to engage unfair dismissal rights. Employers will need to track temporary employees more closely and take far more care in ending temporary assignments when an individual has qualifying service.
- Holiday Pay Calculation of a Week’s Pay – For calculating a week’s pay for holiday pay purposes, the reference period for variable pay will increase from 12 weeks to 52 weeks. This should be a change welcomed by employers as holiday pay calculations will be less exposed to short term variations in pay.
- Agency Workers – The Agency Workers (Amendment) Regulations 2018 will abolish the exemption which excludes agency workers from the right to equal pay with comparable direct employees if they have an employment contract with their agency which guarantees pay between assignments (commonly known as the Swedish Derogation).
The Employment Rights Regulations 2019
The government has proposed the following changes as part of the Employment Rights (Miscellaneous Amendments) Regulations 2019, which currently has no universal commencement date.
- Written Statement of Terms and Conditions – Employers will be required to provide employees with their written statement of terms and conditions on the first day of work (rather than within two months) and this right will also be extended to workers. Employers will need to review their recruitment processes and ensure employment contracts are being issued to employees and workers on or before their first day.
- Aggravated Conduct Penalties – Employment tribunals can currently issue penalties against an employer for aggravating conduct. These are hardly ever imposed. The government proposes to increase the limit on the penalties from £5,000 to £20,000. This will come into force on 6 April 2019.
- Information and Consultation Thresholds – To encourage engagement in the workplace, the percentage required for a valid employee request for an information and consultation agreement governing how their employer will consult about economic and employment-related matters will be lowered from 15% to 2% of the workforce.
Additional Changes
There are other major proposed changes to employment law within the Good Work Plan which are not currently part of proposed legislation.
- Test for Employment Status – Currently, the employment tribunals and the HMRC take different approaches to considering whether an individual is an employee, a worker or is self-employed. It is entirely possible that someone might be, for example, a worker for employment law purposes but self-employed for tax purposes. The government is proposing that the same status test is used for employment law and tax purposes and that these tests are ‘streamlined’. Harmonising and clarifying the employment status tests should hopefully make it easier for employers to determine whether an individual is truly self-employed. Employers will need to review all contracts with supposed ‘contractors’ to determine whether the contractor retains their self-employed status under the new employment status rules. This may lead to more individuals being added to payroll and/or renegotiation of contracts.
- Right to Request Fixed Working Pattern – The government is proposing a right to request a fixed working pattern for those who do not have one. Entitlement to the right will be after 26 weeks on a non-fixed pattern. There is likely to be considerable discretion for the employer to refuse the request, akin to flexible working requests.
- Tips – A ban on employers making deductions from staff tips.
The government is billing the Good Work Plan as the biggest reform of employment law in 20 years. However, the plan has stayed away from making any detailed proposals regarding the larger changes proposed by Matthew Taylor to tackle the increasing perceived unfairness and unlawfulness within the gig economy and for zero hours workers. It remains to be seen how the government will tackle these pressing employment concerns. At present, the governments proposed changes represent more of a tinker with existing legislation then any form of whole scale reform.
