Government publishes Good Work Plan: Top 10 things to note
Government publishes Good Work Plan
The Government has published proposed changes to employment law.
This sets out a number of proposed changes to employment law, many of which will have a big impact. More detail is needed in respect of these proposals, but we have a clear direction of travel.
- The Government proposes to align the employment status frameworks for employment rights and tax. This is welcome, as having separate frameworks is confusing for both individuals and employers. However, no firm plans have been announced. Further independent research will be carried out to inform the proposals.
- The concept of ‘worker’ will be retained for employment law purposes and there is uncertainty as to how tax status will align with this.
- The current emphasis on personal service (whether an individual can send a substitute) in employment status tests will be changed by placing more weight on control. It will be interesting to see what balance is struck and how and when this will be reflected in HMRC’s Check Employment Status Tool. This is particularly topical in light of changes to off-payroll working in the private sector that will apply from April 2020 and the judgements that businesses will need to make in determining employment status.
- The Government will improve its guidance and online tools on employment status. This might indicate that anticipated changes will build on existing tests, rather than bring something new.
New enforcement agency
- A single agency is proposed, combining 4 areas of enforcement including National Living Wage (NLW), statutory sick pay and holiday pay. The impact could be significant and is likely to build on the success of NLW enforcement by HMRC. Employers will need to be confident of compliance in such areas.
National Minimum Wage (NMW)
- NMW legislation will not be amended to take account of uncertain hours (e.g. in the gig economy). This is unsurprising, as it would be a difficult task. However, the Government does need to address some fundamental issues, such as clarifying ‘working time’ for NMW purposes in the gig economy. It may be that this is dealt with by HMRC guidance.
- Two significant proposals have been made. The first is that the reference period for calculating an average week’s pay be extended from 12 to 52 weeks. The second is, as mentioned above, a new enforcement agency for vulnerable workers’ holiday pay rights.
- The period of time to break continuity of service will extend from 1 to 4 weeks. This will have a significant impact on the rights of low pay/zero hours/uncertain hours’ employees. This will have no impact on ‘workers’ (unless they successfully challenge their status).
Requesting more predictable and stable contracts and written terms
- All workers and employees will have the right to request a more fixed working pattern (number of hours or fixed days) after 26 weeks of service. This is welcome, but more detail is required as to the reasons an employer can give for refusing such a request.
- All employees, workers and agency workers will be entitled to a written statement covering details of their employment/engagement and rights on day one. This is a significant change. Currently, only employees are entitled to this information within two months of commencement of employment.
Agency workers – ban on Swedish derogation
- The Swedish derogation (which allows agency workers to opt out of their right to be paid equally to permanent employees in return for guaranteed pay between assignments) will be removed. This change was expected as the derogation was easy to exploit and depressed pay for many. This will be significant for companies currently using this approach, and will require changes to their engagement models.
- New legislation will ban deductions from staff tips.
- The maximum limit of an aggravated breach penalty will increase from £5,000 to £20,000 for employers.
Information and consultation
- The threshold required to request information and consultation arrangements will be reduced from 10% to 2% of employees. This is unlikely to have a significant impact, as currently only a small number of employees request such arrangements.
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