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Government proposes raft of new employment legislation under Good Work Plan

24 Jan 2019 By Francis Churchill

New rights for agency workers and requirements on holiday pay among response to Taylor Review's recommendations

The government hailed it as the biggest package of workplace reforms in almost 20 years, and the most significant ‘upgrade’ to workers’ rights for a similar period. And no matter what your political standpoint on the issues it raises, the Good Work Plan – a smorgasbord of proposals meant to bring UK employment law into the modern era – contains something to affect almost every organisation.

Announced as legislation just before Christmas, the plan – if enacted in full – would bring a total of 51 of the Taylor Review’s 53 recommendations on modern working practices into law. 

The most notable proposals are the end of ‘Swedish derogation’ contracts, and a new requirement to provide employees with a statement of rights from day one of starting work. The former, in particular, has been a contentious area for many years. Under the Agency Workers Regulations, employers have to pay temporary workers the same rate as full-time staff after 12 weeks. 

However, under Swedish derogation – which many view as a loophole – the worker is employed full-time by an agency and not the end client, allowing them to be paid for consecutive 12-week stints. This is expected to be effectively banned by April 2020. 

Warehousing, logistics and hospitality – where the use of contract or agency workers is particularly prevalent – will be among the most affected sectors. But Julia Kermode, chief executive of the Freelancer and Contractor Services Association (FCSA), was unfazed by the changes. “We believe [Swedish derogation] can be done compliantly and we don’t have an issue with it. However, the government feels it is possible that some workers could be exploited through this model and that’s why they’re repealing it,” she told People Management.

“For hiring clients, they will need to be aware it is going and factor in any cost differential when they’re planning their workforces,” she adds.

Kermode is enthusiastic about the new requirements on statements of rights. “[It’s] really positive because sometimes workers don’t always know how they’re engaged, whether they’re employees or who their employer is,” she says.

The onus for producing a key facts document will likely rest on the recruitment agency, she adds: “It’s an extra burden on recruitment businesses, but I think once we get up and running and used to it, it shouldn’t be too difficult to work with. The recruitment sector is a professional sector so I wouldn’t be surprised if a lot of them do that anyway.”

The plan also proposes a right to request a more stable contract after 26 weeks of casual employment – an apparent consolation for those hoping to see an end to zero-hours contracts – and enhanced awareness of rights to holiday pay. 

The scale of such changes has raised concerns in some quarters. “I agree with almost all of what they’re doing. I think a lot of it tidies things up,” says Helen Jamieson, CEO and founder of HR consultancy Jaluch. “I just thought the timing of it was enough to blow most employers’ brains.”

Jamieson is particularly worried about the ability of SMEs to cope with the administrative burden of the proposed rules, coming off the back of GDPR, uncertainty around Brexit and, she says, a heightened wave of M&A and redundancy related activity towards the end of 2018.

Perhaps the most potentially impactful part of the plan is the intention to align the status of individuals around tax and employment rights. 

“Detailed proposals” around this will follow, but the government has already said it wants to clamp down on businesses which “misclassify and mislead” people about their employment status. The broader aim must be to end anomalies which see some individuals taxed as self-employed but entitled to holiday pay and other worker rights.

“This will help employers by providing clarity on employment status,” says Susan Ball, head of employer advisory services at Crowe UK. Currently, there are three employment statuses defining rights – employed, self- employed and the halfway house ‘worker’ status – but just two tax statuses.

But even the best of intentions can go awry. “It’s a can of worms,” says Dave Chaplin, CEO of Contractor Calculator. “Because [employment status] touches so many areas, they need to take a holistic view across tax and employment rights in order to come up with a grand plan, maybe implement that over 10 years, and give people five years to prepare for it,” he says. 

Whether such a timeline is realistic is yet to be seen, and is subject to more immediate political concerns – most notably Brexit. But businesses have certainly been served notice that change is on the way.

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