The U.K. government has published a long-awaited package of legislation, regulation, and reforms called the “Good Work Plan,” which it says is “the biggest package of workplace reforms for over 20 years.” The legislation is the government’s response to “The Taylor Review,” a July 2017 assessment from Royal Society of Arts Chief Executive Matthew Taylor, which examined modern working practices and set out seven principles to address challenges facing the U.K. labour market.
Business Secretary Greg Clark unveiled the package of reforms on 17 December; and, according to the press release announcing the plan, it aims to ensure “workers can access fair and decent work” and give “businesses greater clarity on their obligations and ensure the enforcement system is fair and fit for purpose.” The plan includes:
- new legislation to upgrade workers’ rights—including a Day 1 statement of rights for all workers setting out leave entitlements and pay;
- plans to bring forward proposals for a new single labour market enforcement body to ensure workers’ rights are properly enforced; and
- an end to Swedish derogation, which enables some firms to pay agency workers less than permanent staff.
At least 51 of the 53 recommendations made by Taylor are being put in place, some of which have gone further than the review and make the United Kingdom the first country in the world to address the opportunities and challenges of the gig economy. The government is also committing to write legislation that will improve employment status tests so that they more accurately reflect the reality of modern working relationships. As part of the package, the government has also implemented many of the reforms suggested in the Labour Market Strategy set out by Sir David Metcalf, the director of Labour Market Enforcement, including detailed plans to tackle exploitation of low-paid workers.
The proposed legislation falls under three headings: fair and decent work, clarity for employers and workers, and fairer enforcement.
“I am pleased that the vast majority of my 37 recommendations have been accepted, including my recommendations regarding a shift to more proactive enforcement and improving joint working between the three enforcement bodies under my remit and wider organisations within labour market enforcement.”
Sir David Metcalf, Director, Labour Market Enforcement
Fair and decent work
The government will bring forward legislation to introduce a right for all workers to request a more predictable and stable contract, allowing those who wish to retain flexibility to do so, but giving the right to others to request a more fixed working pattern after 26 weeks of service. It will also extend the break in continuous service to allow employees who are working flexibly or for multiple employers to gain access to employment rights. Currently, a one week break in service can be reason to prevent employees gaining these rights, but this will be extended to four weeks. According to the Swedish derogation, “Agency workers can exchange their right to be paid equally to permanent counterparts (‘opt out’ from this part of the Agency Worker Regulations) in return for a contract guaranteeing pay between assignments.” But this has not worked to agency workers’ advantage, as some employers have taken advantage of the situation to pay agency workers at lower rates than permanent employees while in reality employing them permanently.
In the government’s Industrial Strategy document, job quality is based on five foundational principles: “satisfaction; fair pay; participation and progression; well-being, safety, and security; and voice and autonomy.” The government will adopt and track a set of metrics to assess the implementation of these principles and evaluate the quality of work in the labour market against these metrics where applicable. On fair pay, within the current proposals, the government will legislate to ban employers from making deductions from staff tips. Employees’ voices being heard is governed by the Information and Consultation regulations. Currently, for employees to be given a voice, 10 percent of them must request consultation with their employer; but the government aims to lower this threshold to 2 percent of employees.
Clarity for employers and workers
The rise of new business models and employment practices has caused significant disagreement around the employment status of “workers,” which has also raised concerns that some businesses may not be providing people with the rights they are entitled to while others may not be paying the right taxes. With the rise in the number of self-employed, these concerns have increased significantly; in addition, there are currently two different frameworks for determining employment status for the purposes of tax and for employment rights, causing further confusion. The government will bring forward detailed proposals on how these frameworks can be aligned. Taylor also highlighted that “an individual can have nearly every aspect of their work controlled by a business (from rates of pay to disciplinary action) and still be considered to be self-employed if a right for the individual to send a substitute to work in their place exists.” Legislation will be brought forward to redress this, though only after additional independent research into the effects of potential legislation has been conducted.
Information about employment status and rights will now be given to all workers—not just employees—and it will be given to them on “day one,” rather than after two months. Furthermore, the information required to be included in a written statement covering details of employment contract and rights will be expanded. A Key Facts Page will be required to be given to agency workers, and the format of this will be developed along with business groups. The government will also introduce new guidance to support the interpretation of holiday pay rules, which Taylor found were not well understood. This will be accompanied by an updated and improved holiday entitlement calculator. It will also legislate to increase the reference period for determining an average week’s pay for the purposes of calculating holiday pay from 12 weeks to 52.
Even when a worker brings a successful claim against an employer at an Employment Tribunal, some employers refuse to pay the fines to the employee. The government is implementing two programmes, the Employment Tribunal Project and the Civil Enforcement Project, to make it easier to bring cases to Employment Tribunals and to force claims to be paid. Non-paying employers will be “named and shamed,” and legislation is being written for fines for non-payment of claims to be increased to a maximum of £20,000 (U.S. $25,400) from £5,000 (U.S. $6,350) and to facilitate the use of compulsory sanctions against repeat offenders.
The Taylor Review also found that the use of umbrella companies—that are paid by the employing firm, which then pays workers—has been increasing, but did not feel that this was to the benefit of lower-skilled, lower-paid roles. Such companies will now be covered by the Employment Agency Standards Inspectorate so that their fairness can be ensured. In early 2019, proposals for a new, single labour market enforcement agency—as opposed to the four main agencies responsible currently—will be brought forward. This will ensure that vulnerable workers are more aware of their rights and have easier access to them and that businesses are “supported” to comply. This will also benefit from additional powers and resources for enforcement.
The more recent Labour Market Enforcement Strategy (LMES) reforms were also largely accepted by the government—and many overlapped with the Taylor recommendations, such as those on enforcing holiday pay and regulating umbrella companies. Of the other issues raised, legislation for one of the reforms has already been implemented and, by April 2019, all workers will receive a payslip with the number of hours worked and their pay amount on it. The reforms also seek to enhance enforcement resources for the bodies in charge of protecting employment rights. The LMES also made recommendations to address non-compliance in supply chains, which the government is consulting on, namely making the brand name at the top of the chain bear responsibility for non-compliance found further down in its supply chain. The government responded initially by suggesting a private notification to the head of the chain and the supplier to give them the opportunity to correct before publicly raising the issue.