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In July 2017, an independent but government sponsored review of modern working practices was published by Matthew Taylor, which put forward a number of recommendations on the issues arising out of the so-called “gig economy”. The government responded early in 2018 following substantial delay, launching a number of consultations on how to best implement some of the recommendations set out in the report. Following further delay, the government at the end of December confirmed that it proposes to make a number of changes to employment legislation to better protect individuals who work flexible and unpredictable patterns or who do not have guaranteed hours of work.

The most notable proposed changes are:

• Introduction of a right to request a more predictable and stable contract for all workers after 26 weeks of service, for example requesting a fixed minimum number of hours or fixed days of work.

• Extending the period of time required to break continuity of employment from one week to four weeks, allowing individuals who work intermittently to more easily build up continuous service.

• Increased protection of agency workers by abolishing the so-called “Swedish derogation”, whereby agency workers can opt-out of their right to be paid the same as those individuals working in the same role on a permanent basis, in return for receiving a contract from their employment agency which guarantees them pay between assignments. The responses to the consultation revealed that the Swedish derogation is widely misused and utilised to circumvent the requirement to pay agency workers the same as permanent staff.

• Introducing legislation making it unlawful for employers to make deductions from staff tips.

• Improving clarity on employment status for employers and workers, for example by bringing forward proposals on how the framework for determining employment status in the context of employment rights can be aligned with the test for employment status for tax purposes.

• Extending the right to receive a written statement of terms and conditions to workers, and making this day one right (currently employers have two months to provide this statement). The government also wants to expand the information required to be provided to include information on eligibility for sick pay/leave, details of other paid leave such as maternity leave, duration and conditions of any probationary period, which specific days and times a worker is required to work, details of all remuneration including payment in kind such as lunch or vouchers, the end date of a fixed term contract, and details of the notice periods required from both the employers and the worker to terminate the agreement. The government also plans to improve clarity for agency workers by introducing the right to a key facts page, which specifies details such as the type of contract they are employed under, the minimum rate of pay they can expect, how they will be paid, any deductions made by any intermediary company and an estimate of take home pay.

• Introducing legislation to extend the reference period over which average pay is calculated for those in atypical working patterns for the purposes of calculating holiday pay from 12 weeks to 52 weeks to ensure those with variable hours are not deterred from taking holidays.

• Increasing the maximum penalty for an aggravated breach of employment law from £5,000 to £20,000. Such penalties can be imposed by an employment tribunal where the breach of a worker’s rights has an aggravating feature such as where the breach is deliberate or repeated.

Somewhat surprisingly, given the length of time the government took to respond to the review and then to the results of its consultations, the government has already laid the first statutory instruments to implement these changes. From 6 April 2020, the reference period for calculating holiday pay and the day one right to employment particulars will come into force and will be extended to agency workers. The Swedish Derogation for agency workers will also be abolished. The increased penalties for aggravated breaches for employment law will come into force in April 2019.

It remains to be seen, however, whether the more difficult and controversial issues such as employment status and increasing the time required to break continuity of employment will also be dealt with quickly, or whether, with the uncertainty about Brexit likely to dominate parliamentary time for the foreseeable future, these issues will be shelved for the time being. We will let you know about these developments and what they mean for employers as they emerge.

If you have any queries regarding the proposed reforms or any of the issues discussed above, please contact a member of the  Stronachs Employment Team.

Annika Neukirch, Solicitor

Chambers Leading Firm 2019

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