Good Work Plan – What does this mean for employers?

February 6th 2019

The Government’s ‘Good Work Plan’ was published in December 2018 in response to the Taylor Review, with the heart of its vision stated as being its “commitment to improving quality of work in the UK”. In this article we look at what these new workplace laws will mean for employers.

The Government appears to have accepted several recommendations made by Matthew Taylor.  Businesses should be aware of these commitments because if they are successfully implemented, they will enhance workers’ rights in the UK. Employers need to understand these rights and ensure they have reviewed their current workplace practices so they can implement the new laws, as and when they are introduced.

The Government’s commitment to some of the Taylor Review proposals offers an element of certainty, both for employers and employees, as to how the legal landscape might look for workers’ rights post Brexit, albeit further clarity is certainly required in the form of draft legislation and timings.

In the meantime, here are some of the key changes from the Good Work Plan that you need to be aware of.

Written statement extended to workers
In April 2019, the right to receive a written statement of main terms is being extended to those with worker status, the new laws will mean that this is a day one right for workers and employees and that businesses will have to ensure that their employment documentation is ready and in order.

With a new right for workers to request a more stable contract once they reach 26 weeks’ service being introduced, employers will undoubtedly need to spend more time handling these requests and carrying out contract discussions.

Holiday pay reference period
The holiday pay reference period will increase from 12 weeks to 52 weeks causing a change in calculations for those in payroll departments and the period to break continuous employment will increase from 1 week to 4 weeks.

Whilst these changes recognise the increasing flexibility of modern work, employers who fail to apply the new time periods will face significant risks if they incorrectly calculate holiday pay or fail to apply employment rights properly based on continuous service.

Employment status tests
The current employment status tests, an area of confusion for many employers, will receive legislation to improve clarity.

Employers will hope that the new law makes the task of determining employment status clearer and easier for all parties. The ban on making tip deductions was confirmed while a future prohibition on the use of Swedish derogation contracts or ‘Pay Between Assignment’ contracts for agency workers was also announced.

Sanction regime
A failure to implement these new laws properly will leave employers open to risks such as internal grievances and employment tribunal claims. There will also be new, higher penalties introduced for those who breach workplace laws, with the maximum penalty for an aggravated breach quadrupling to £20,000 and new legal sanctions which would penalise employers who commit repeated breaches.

Good Work Plan Summary
An overall summary of the key proposals that the Government has committed to legislate upon, and which employers should therefore be aware of are:

1. A right to request a more predictable and stable contract after 26 weeks’ service (although employers are not obliged to agree to requests).

2. An extension of the period required to break continuous service for the purpose of gaining employment rights from 1 week to 4 weeks.

3. Repeal of the Swedish derogation, this currently allows employers to pay agency workers less than their own employees in some circumstances and banning the use of this type of contract to withhold agency workers’ equal pay rights.

4. Improving the clarity of the employment status tests to reflect the reality of modern working relationships.

5. Extending the right to a written statement to all workers and making it a day one right. The Government also intends to expand the required information in these statements to be as useful as possible for both the employer and employee.

6. Extending the holiday pay reference period from 12 to 52 weeks.

7. Requiring all employment businesses to provide every agency worker with a Key Facts Page including important details, such as the type of contract the worker is employed under and the minimum rate of pay, they can expect.

8. Enforcement of tribunal awards, increasing the maximum aggravated breach penalty from £5,000 to £20,000. Naming employers who are not paying their tribunal awards in a published list and requiring employment judges to consider the use of sanctions in cases of repeated breaches by the same employer.

9. A new enforcement system for vulnerable workers in respect of their holiday pay rights, whereby an enforcement body can pursue any payment of arrears on their behalf.

Many will welcome the new measures, indeed as stated by the Confederation of British Industry: “focusing on issues like employee engagement, fairness and inclusion boost productivity as well as being the right thing to do” and many businesses are likely to share this view. After all, employees who are properly incentivised and feel that they are being treated fairly by their employer are more likely to make a greater contribution to their company.

At a more basic level, The Good Work Plan certainly alerts employers to their obligations and the implications of non-compliance. Pending further draft legislation, employers need not take any immediate steps by way of preparation, given that details relating to when and how the above reforms will be implemented are very limited.  Watch this space.

JRW has many trusted connections in the business community so should assistance be required in any area but in particular with HR issues then we can make recommendations to businesses needing help, so please get in touch and do not bury your head in the day to day business.

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