The government says its reforms represent the ‘largest upgrade in a generation to workplace rights’. Michael Shroot discusses the implications for employers.
The Good Work Plan, introduced by the government in December, contains ambitious reforms to ensure the UK meets the challenges of the changing workplace environment.
The fresh legislation substantially improves workers’ rights and includes a day-one statement of rights for all workers, including those in the gig economy.
The legislation was developed following recommendations made in the Taylor Review of Modern Working Practices last year, with 51 of the review’s 53 recommendations being taken forward.
Main points of the new legislation
The Good Work Plan involves:
- Closing the ‘Swedish derogation’ loophole – which allowed agency workers to be employed on cheaper rates than permanent staff
- Extending the right to a day-one written statement of rights to workers that must include details on rights such as eligibility for sick leave and pay, along with information on other types of paid leave, for instance maternity and paternity leave
- Quadrupling maximum employment tribunal fines for employers who have shown ‘malice, spite or gross oversight’ from £5,000 to £20,000
- Extending the holiday pay reference period from 12 to 52 weeks, in order to ensure people in seasonal or non-typical jobs get the paid time off to which they are entitled
- Reducing the threshold needed for a request to set up ‘Information and Consultation’ arrangements from 10 per cent to 2 per cent
- Giving all workers, including agency staff, the right to request a more stable contract
- Increasing the amount of time considered to be a break in continuous service from one week to four, making it easier for workers to access their rights.
In addition, employment status tests will be overhauled to enhance clarity and address modern working conditions.
Meanwhile, frameworks to determine employment status and employment for tax purposes will be aligned to ensure the differences between the two systems are minimised.
Zero hours contracts will remain
The government agrees with The Taylor Review that the blanket banning of zero-hour contracts would ‘negatively impact more people than it helped’.
It also says platform-based working – such as ride-sharing app Uber and takeaway food delivery operator Deliveroo – offers ‘genuine two-way flexibility’ for businesses and workers.
Although it would be misguided to believe that the controversy around zero-hour contracts will disappear, they remain part of the workplace world, at least for the foreseeable future.
The thinking behind the reforms
The government believes its reforms will ensure workers can access fair and decent work, while giving businesses greater clarity on their obligations and ensuring enforcement is fair and fit for purpose.
Business Secretary Greg Clark says the ‘largest upgrade in workers’ rights in over a generation’ is pivotal to creating a labour market that rewards people for hard work, ‘celebrates good employers’ and drives productivity and earning potential nationally.
He said: “Our reforms will cement the UK’s status as a world leader in workers’ rights now and well into the future and we will be the first country in the world to address the opportunities and challenges of the gig economy and the changing world of work, and its impact on a modern economy.”
Reaction from business leaders
Responses from business organisations to the measures have been cautiously upbeat.
Matthew Fell, chief UK policy director at the CBI, says good employers will welcome new laws giving all workers the right to request more predictable working hours, which he believes will facilitate conversations that are vital to ensuring flexibility benefits both parties.
However, Matthew Fell agreed with businesses’ concerns that legislation to reform employment status rules risks making the law less able to adapt to new forms of work in the future.
As with any major legal change, effectiveness and drawbacks will only become apparent when the new system has been implemented for some time, and we will report back in due course.
For further advice on new termination payment rules, call Michael Shroot on 0161 761 4611 or email him at michael.shroot@whnsolicitors.co.uk
