Employment law reforms: the “Good Work Plan”

The rise of the gig economy and zero hours contracts have brought massive changes to the working life for millions of people. However, the legislation that governs employer behaviour has failed to keep pace. The Good Work Plan is the Government’s proposal for how to bring our laws up to date and balance flexibility with individual rights.

Some of these changes will come into force in April 2020, but the detail on many of the largest areas is yet to be decided. The Government is understandably pre-occupied with Brexit, so it may be some time before we see much progress.

Flexibility and security

Flexibility can be beneficial for employees and employers, but there are concerns that employers are too often being asked to carry business risk – for example, by overuse of zero hours contracts.

There is no proposal to ban zero hours contracts, but the Good Work Plan proposes that, after 26 weeks on a non-fixed working pattern, individuals will be able to request more certainty.

This is expected to be a process similar to current flexible working applications, where the application can be refused if there are good business grounds to do so.

The Good Work Plan also proposes that the gap in employment required to break continuous service will be extended from one week to four. This will mean that individuals who have lots of short contracts with the same employer will find it easier to build up the service needed for rights like unfair dismissal or statutory maternity pay.

Employment status

Those working in the UK can be employees, workers or self-employed, and there are different tests for employee status in tax and employment law. The Government recognises that the current situation is unsatisfactory and it was hoped that the Good Work Plan might contain some concrete proposals for simplification and certainty. Unfortunately nothing has been proposed and employers will have to continue to work with the old law and wait for developments.

Agency workers

Companies are normally required to pay agency employees equivalent pay to their own employees. However, they can pay less if agency contracts guarantee pay between assignments. The Good Work Plan says that these contracts are being used as a loophole to underpay agency staff and this rule will be removed from April 2020. This will mean agency staff are entitled to equivalent pay to direct hires after 12 weeks of work.

Holiday pay

For employees in seasonal businesses, their working hours can vary significantly between busy and quiet periods. Currently employers calculate holiday based on pay in the last 12 weeks, which can mean employees who only manage to use their holiday in quiet periods can lose out significantly. From 6 April 2020 this calculation period will change to 52 weeks, meaning holiday pay will more closely reflect average pay.

Tips

New legislation will ban taking administrative fees and other deductions from tips.

Documentation

Most employers already issue statements of terms and conditions to their employees on day one of employment. From 6 April 2020 this will become a legal obligation, and apply to workers as well as employees. The scope of the statements is also being slightly expanded.

Information and consultation

Employers with more than 50 employees are required to provide collective information and consultation to a workforce council on big business changes like restructuring, if the employees support it happening. The threshold for this support is currently 10% of the workforce. For the employers with over 750 employees, this will drop to 2% from April 2020. In some ways, this is more radical than it looks – in the largest companies it will make it easier for unions and workforce councils to have input in big changes.

Enforcing good behaviour

Tribunals can award penalties of up to £5,000 for aggravated conduct. From April 2020 this will increase to £20,000. Consultation is also planned on a far wider set of reforms, which could include the ability to ‘name and shame’ employers who don’t pay tribunal awards, reform of sick pay, the ability for HMRC to enforce holiday pay breaches and tribunals’ ability to sanction employers who repeatedly lose tribunals on similar facts.

What do I need to do?

• Check that your holiday pay systems are ready to run the new calculation rules from April
• Check your HR systems issue statements of terms and conditions on the first day of employment (or before employees start)
• Also check you issue statements to workers as well as employees
• If you use agency staff, review pay terms ready for the changes from April
• If you have more than 750 employees, review your works council arrangements. If these are not already active post April it will become easier for employees to demand they are used.

The biggest changes that could come out of the Good Work Plan are those to employment status and zero hours employees. Unfortunately, those are the areas with least detail. We will keep you updated – do get in touch with Rachel Roberts at [email protected] or on 01242 246 455.