The Good Work Plan

25 December 2018

This article was featured in the February 2019 issue of the magazine.

Helen Hargreaves MSc CHFCIPPdip, CIPP associate director of policy, outlines the long-awaited government response to the 2017 review of modern working practices

In July 2017, Matthew Taylor’s Review of Modern Working Practices (‘the Review’) was published which looked into the issues in the UK labour market, such as: the implications of new forms of work; the rise of digital platforms; and the impacts of new working models.

The Review made 53 recommendations to which the government responded in February 2018. Whilst accepting all but two of the 53, the government issued a series of four consultations to seek stakeholder views on how these recommendations in the following areas should be implemented:

  • employment status

  • agency worker recommendations

  • increasing transparency in the labour market

  • enforcement of employment rights recommendations.

Since 2017, information has trickled out from government, but it wasn’t until publication of the Good Work Plan (‘the Plan’) (https://bit.ly/2QdPEdY) on 17 December 2018 that we gained insight to how the government intends implementing the Review’s recommendations. But, perhaps unsurprisingly, it is not without controversy; though the government announced that the plan includes “reforms that will cement the UK’s status as a world leader in workers’ rights and first country in the world to address the challenges of the changing world of work and its impact on a modern economy”, a contributor to the Trade Union Congress’s website (https://bit.ly/2Ri8dCz ) disagreed, saying: “The reforms on employment rights introduced by the government won’t change the balance of power in the workplace.” 

The Plan has synergy with strategy recommendations made by the director of labour market enforcement (‘the director’) in May 2018 (https://bit.ly/2FXlEy1). Both the Plan and the government’s response (https://bit.ly/2EtyGG6) to the director’s recommendations were published alongside the Low Pay Commission’s (LPC’s) advice (https://bit.ly/2RnZLS8) on the scale and nature of one-sided flexibility and options to address the issue. Together, the three documents address the government’s intention to focus on the workplace arena as a whole and deal with the issues raised by the Review. 

The Plan is broadly split into several main categories. 

 

...nothing in the document to suggest that the employer must agree to this request

 

Fair and decent work

At the heart of the Review’s recommendations is the intention that all work should be fair and decent, and for employers to offer opportunities that give individuals realistic scope to develop and progress. But whilst recognising that the UK has a wide range of working patterns, this brings with it the potential for abuse by some employers – what the Review termed ‘one-sided flexibility’ – where some businesses have transferred too much business risk to the individual, sometimes at the detriment of their financial security and personal wellbeing. The government hopes that the Plan, which includes the following measures, will redress this imbalance. 

  •  Legislate to give all workers the right to request a more stable contract – The Review identified that those employees who work intermittently over a period of time for the same employer can find it difficult to gain or access some employment rights. 

Those who are content to work varied hours each week will be able to continue; however, those who would like more certainty will be able to request a more fixed working pattern after 26 weeks’ service. There is nothing in the document to suggest that the employer must agree to this request.

  • Extend the time required to break a period of continuous service to four weeks to make it easier for employees to access their rights – The Review looked in detail at the role of agency workers in the UK economy, and the difficulties such workers experience accruing employment rights when they are working flexibly or for multiple employers. Under the current system employment rights are earned over time, yet a gap of only one week in employment with the same employer can break what counts towards continuous service; hence the suggestion, accepted by government, to extend the gap in service from one week to four.

λ Bring forward legislation to repeal the Swedish derogation and ban the use of this type of contract to withhold agency workers’ equal pay rights – Agency workers can currently exchange their right to be paid equally to permanent counterparts in return for a contract guaranteeing them pay between assignments – the ‘Swedish derogation’. However, the government has evidence to suggest that this type of contract is simply used by some employers to reduce the size of their paybill. 

λ Legislate to ban employers from making deductions from staff tips – The government acknowledges that whilst most businesses act in good faith and pass on tips workers earn for good service, there are a small number who retain tips earnt by their staff. Legislation will mean a better deal for workers and a level playing field for employers, and also ensure consumers can be confident in the knowledge that their tips are going to the staff as they intended. Policymakers at the Department for Business, Energy and Industrial Strategy (BEIS) have already been in touch with the CIPP policy team to establish what this will mean for payroll.

 

Worker status

In the UK, the individual’s employment status determines which statutory employment rights apply and how much tax is to be paid. However, evident from the many tribunal cases making national headlines, plus the introduction of off-payroll working (first in the public sector with the private sector following on in 2020), it is clear that employment status is not always easy to determine and greatly concerns the CIPP and its members. 

The government will bring forward detailed proposals on how the employment status and tax frameworks can be aligned and will legislate to improve the clarity of the employment status tests, reflecting the reality of modern working relationships. 

It will also improve the guidance and online tools available to help people understand their status.

Having a separate framework for determining employment status for the purposes of employment rights and tax adds to the confusion for individuals and employers. The Review recommended that renewed effort should be made to align the employment status frameworks for the purposes of employment rights and tax to ensure that the differences between the two systems are reduced to an absolute minimum. 

Of perhaps an even greater consideration for those engaging off-payroll workers is the Review’s observations 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. The Review recommended that the tests that determine whether someone is self-employed or has worker rights should place more emphasis on control and less on the notional right – rarely in practice exercised – to send a substitute, reflecting new business employment models. The government has confirmed that it will use legislation to tackle this issue. 

 

...detailed proposals on how the employment status and tax frameworks can be aligned...

 

Relationships, rights and obligations

Workers also need to be clear on the terms and conditions both parties are required to enter into at the start of the relationship and understand what protections apply to stop problems emerging later. The Review recommended that more needed to be done to make these relationships, rights and obligations more transparent. Measures in the Plan include the following:

  • Written statement – Legislation will make access to a written statement a day-one right for both employees and workers, and to ensure the content is as useful as possible to both the individual and the employer the information required will be expanded. In addition to the current mandatory information, the following will be required: 

    • how long the job is expected to last

    • how much notice an employer and worker are required to give to terminate the agreement

    • details of eligibility for sick leave and pay

    • details of other types of paid leave  e.g. maternity/paternity leave

    • the duration and conditions of any probationary period

    • all remuneration, not just pay

    • which specific days and times are required to be worked.

  • Agency workers – With so many different organisations potentially involved when placing an agency worker, the government believes there must be greater transparency for the worker. Legislation will require all employment businesses to provide every agency worker with a key facts page. It will be the responsibility of the employment business to issue and ensure the worker’s receipt of the key facts page which must include:

    • the type of contract a worker is employed under

    • the minimum rate of pay

    • how they are paid

    • the deduction of fees to be taken if they are paid through an intermediary, and an estimate or example of what effect this has on their pay.

  • Holiday pay – Another area where the Review identified that individuals would benefit from greater transparency is holiday pay entitlement. 

The government will launch an awareness campaign, targeted at both individuals and employers, to boost awareness and understanding to help ensure all workers are benefiting from their paid entitlement to leave. Although the CIPP are very pleased to see this announcement, it is perhaps the next item which will be of greater interest to CIPP members, as something that we have long campaigned for has finally come to pass. 

The government will legislate to extend the holiday pay reference period from 12 to 52 weeks. It will introduce new guidance, including real life examples, to support the interpretation of holiday pay rules. This will be accompanied by an updated and improved holiday entitlement calculator and the option of a new holiday pay calculator is being explored.

The BEIS has already been in contact with the Institute and our members have contributed examples to be included in this guidance.

 

Fairer enforcement

Whilst setting out legislation changes it will bring about to increase workers’ rights, the Plan also includes measures for ensuring these rights are fully realised.

  • Agency workers – In line with government’s enhanced approach to enforcement, it will increase state enforcement protections for agency workers where they have pay withheld or unclear deductions made by an umbrella company.

  • Penalties and sanctions – The government will legislate to increase the maximum level of penalty that Employment Tribunals can impose in instances of aggravated breach to £20,000. Further to this, it will legislate to create an obligation on tribunals to consider the use of sanctions where employers have lost a previous case on broadly comparable facts.

  • Enforcement agency – Although the establishing of the director of labour market enforcement has been an excellent innovation in terms of improving coordination and sharing intelligence across agencies enforcing employment law, the government think it can go further. It will bring forward proposals in early 2019 for a new, single labour market enforcement agency to better ensure that vulnerable workers are more aware of their rights and have easier access to them and that businesses are supported to comply.

    

Other points

In addition to the above, there are other points tucked away at the back of the Plan which may also be of interest.

  • Dependent contractor status – The Review suggested that those workers who are eligible for workers’ rights but are not employees should be termed as ‘dependent workers’. Whilst accepting the need to simplify employment status, the government is not adopting this new term.

  • Employment Agency Standards Inspectorate – The government intends introducing legislation to expand the remit of the Inspectorate enabling it to investigate complaints involving umbrella companies and to take enforcement action when required. 

  • NICs paid by employees and the self-employed – The Review recommended that the National Insurance contributions (NICs) paid by employees and the self-employed should be moved closer to parity, whilst addressing those areas of entitlement where self-employed people lose out. Whilst accepting that the small difference in contributory benefits no longer justify the scale of differences in NICs rates, the government has no plans to revisit this issue.

  • SSP reform – The Review suggested that eligibility to statutory sick pay (SSP) should become a day-one right, regardless of income, but that it should be accrued based on length of service in a similar way to holiday pay. This suggestion has formed part of a review of SSP currently being undertaken by the Department for Work and Pensions.

  • Premium rate for zero hours – At the time the Plan was issued, the LPC published its advice in response to the Review’s suggestion that zero-hours workers be paid a premium rate to address the issue of one-sided flexibility. However, the LPC didn’t feel this goal was met and instead recommended an alternative package of measures: 

    •  a right to switch to a contract which reflects normal hours

    • a right to reasonable notice of work schedule 

    •  compensation for shift cancellation or curtailment without reasonable notice

    •  information to workers. 

 

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