Following a Government-commissioned review of employment working practices in the UK which was published in 2017, a number of developments in employment law reform are expected over the coming months.
The Government published its latest proposals in December, covering a number of areas for change, some intended to improve the enforcement of employment rights, some to increase transparency and clarity of rights between employers and workers (including issues relating to employment status) and others to improve the rights of atypical workers. This post highlights some of the key areas for change.
A key area for change is in relation to the employment status of individuals.
In the UK there is currently a three-tier approach to employment status for employment purposes. Individuals are either employees; workers; or self-employed contractors and their employment status determines the level of employment protection rights to which they are entitled.
Employees enjoy the full range of employment rights including protection from unfair dismissal and redundancy rights, workers enjoy a more limited set of rights which include the right to the national minimum wage and paid holiday, whilst self-employed contractors enjoy none of these rights.
Although there is no statutory definition of a self-employed contractor, definitions of “employees” and “workers” are set out in UK employment legislation. However, an individual’s employment status is determined by a range of criteria which has been established over the years through case law. The review recommended that these criteria be clarified and set out in legislation so that individuals would be provided with more certainty about their status and related rights.
The UK Government has now confirmed that it intends to legislate to clarify the test but has not yet given any detail as to how or when precisely this will be done. However, detailed proposals are promised and are likely to make significant changes to the current law.
Enforcement of rights
The UK Government accepts that the process for enforcement of workers’ rights should be more straightforward. Pending the outcome of the ongoing court and tribunal reform programme which is currently underway, they have introduced a scheme for the naming and shaming of employers who fail to pay tribunal awards which applies to all tribunal awards registered on or after 18 December last year.
In addition, with effect from 6 April this year the maximum financial penalty for employers’ aggravated breaches of employment rights will be increased from £5,000 to £20,000. This penalty is imposed in addition to any compensation awarded to the worker.
In order to increase transparency and clarity of rights and obligations between workers and employers, the right to a written statement of key terms and conditions of employment, which is currently enjoyed by employees only, will be extended to all workers with effect from 6 April 2020.
In addition, it, must be provided from the first day of employment, rather than after two months as is currently the case, and must contain more information, such as details of all benefits in addition to pay, and all entitlements to paid leave.
The Government proposes to make a number of changes to the law to improve the rights of atypical workers, such as agency workers and seasonal workers.
With effect from 6 April 2020, employment businesses must provide all agency workers with a “Key Information Document” setting out key information such as details of the type of contract they are engaged under, who is responsible for paying them and details of their pay and any fees or other deductions which will be made.
In addition the “Swedish derogation” (which currently allows agency workers to exchange their rights to be paid equally to their permanent counterparts for a contract which guarantees pay between assignments) is to be repealed from the same date.
In order to address the difficulties faced by some atypical workers (particularly those whose weekly earnings vary week to week or season to season), in receiving holiday pay which is a true reflection of their average weekly pay, the holiday reference period (which is currently the 12-week period before the holiday is taken) is to be increased to 52 weeks. This change also comes into effect on 6 April 2020.