UK: Government’s “Good Work Plan” sets out employment law reforms following the Taylor Review

The Government has today published its “vision for the future of the UK labour market”, the Good Work Plan, which builds on its earlier response to the Taylor Review (see our summary here) on the impact of digital platforms on modern working practices and the rights of workers.

This publication sets out what the Government describes as “ambitious” proposals for employment law reform, together with feedback from the four recent consultations on employment status, transparency, agency workers and enforcement.

The Government states that it has accepted the vast majority of the recommendations from the Taylor Review and proposes legislative changes “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”.

The key planned reforms are to:

  • extend the time required to break a period of continuous service from one week to four weeks;
  • bring forward detailed proposals to align the employment status tests used in the employment law and tax contexts to reduce differences to “an absolute minimum”;
  • legislate to improve the clarity of employment status tests to tackle the problem of businesses misclassifying their staff;
  • give all workers a right to request a more stable contract – i.e. a more fixed working pattern – after 26 weeks on a non-fixed pattern;
  • extend to workers the right to be given a written statement of rights on the first day of work (rather than within two months) and to extend the information required for workers and employees (eg, to cover eligibility for sick leave and pay and details of other types of paid leave);
  • repeal the “Swedish Derogation” which currently allows agency workers to be paid less than if they were directly hired provided they have a contract of employment with the agency and are paid between assignments;
  • oblige companies to provide specific information to agency workers, to include: the type of contract the worker is employed under, the minimum rate of pay to expect, how they are to be paid, if they are paid by an intermediary company, any deductions or fees that will be taken, and an estimate or example of what this means for their take-home pay;
  • legislate to ban employers from making deductions from staff tips;
  • extend the holiday pay reference period from 12 to 52 weeks;
  • reduce the threshold for employees to request the establishment of an information and consultation procedure (or ‘domestic works council’) from 10% to 2% of employees;
  • increase the maximum level of penalty that the Employment Tribunal can impose in instances of aggravating conduct by employers from £5,000 to £20,000;
  • bring forward proposals in early 2019 for a new, single labour market enforcement agency;
  • legislate to oblige Employment Tribunals to consider the use of sanctions where employers have lost a previous case on broadly comparable facts;
  • extend state enforcement, on behalf of vulnerable workers, to underpayment of holiday pay; and
  • increase state enforcement protections for agency workers when they have pay withheld or unclear deductions made by an umbrella company.

The Government has not yet committed to any timelines nor presented any draft legislation for consultation.  Whether or not the package of employment law reforms will match the government’s rhetoric remains to be seen.

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The Government has now laid regulations to bring into effect some of the planned reforms highlighted above.

  • The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 were made on 17th December and come into force on 6 April 2020.  They make the right to a written statement of particulars of employment a day 1 right (although some of the information can be provided separately within two months) and require additional information to be included;  employees employed before 6 April 2020 will have the right to make one request for a written statement including the new additional information, and to be notified of changes to terms included in the additional information.  The Regulations also amend working time rules so that, for workers with variable remuneration, the reference period for calculating their statutory holiday pay will be increased from 12 weeks to 52 weeks (or such lesser period as they have been employed).
  • The draft Employment Rights (Miscellaneous Amendments) Regulations 2019 include the planned increase to the penalty for aggravated breaches to £20,000, to come into force on 6 April 2019.  They also provide for two other changes to come into force from 6 April 2020: the extension of the right to a written statement to ‘workers’, and the reduction in the threshold for requesting an information and consultation procedure to 2% of total employees.
  • The draft Agency Workers (Amendment) Regulations 2018 provides for the abolition of the Swedish derogation, with effect from 6 April 2020.

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