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The Good Work Plan: The Government announces changes to Employment and Recruitment Law

 

The Government has published its Good Work Plan which sets out their vision for the future of the UK labour market and is their response to the suggestions made by the Taylor Report.

Despite some of the headlines, the Good Work Plan only contains broad statements of intent.  It contains little of “when” and “how” the Government will implement their proposed changes.

However, we now know the following about the intended direction of travel for employment and recruitment law changes:

Status: We have been saying for some time in connection with the proposed changes to IR35 that the Government needed to look at simplifying and aligning the tax and employment law definitions on employment status.  It appears they may have listened as they have stated an intention to do exactly that and to make the online tool for determining status more user friendly.  They are committed to “clarify employment status so that it reflects the reality of modern working relationships.

Written Statement: The intention is that there will be a day-1 right for all workers to receive a written statement of the main terms of their engagement.  There will be a requirement for additional information to be included in the written statement: the length of the contract; notice period; sick leave and pay; other types of leave; duration and conditions of any probationary period; all remuneration (not just pay); as well as days and hours of work.

Key Facts Page: In addition, recruiters will need to provide and prove that the worker has received a simple, easy to understand sheet setting out the key facts of their engagement, including: the type of contract that they’re being issued with; the minimum rate of pay; how they will be paid; if an intermediary (umbrella) is being used any deductions or fees that will be taken; an estimate or worked example of how any fees will impact on their take home pay.

Continuous Service: Currently if there is a break of one week between assignments or working, you start again calculating the employee’s continuous service.  This will be extended to 4 weeks so that more people will get the benefit of the longer continuous service.

Holiday Pay: The reference period for calculating holiday pay will be extended from 12 weeks to 52 weeks.  They will not be bringing back rolled up holiday pay.

State enforcement of holiday pay entitlement is to be introduced and an awareness campaign launched.

Swedish Derogation: The contracts that recruiters can use to avoid pay parity after 12 weeks on an assignment are to be abolished.

Umbrellas: Intermediaries used to pay workers are to be regulated by the Employment Agencies Inspectorate.

ET Awards: There are plans to increase the penalties for those companies that do not pay what Employment Tribunals order and to increase penalties for repeat offenders and to name and shame the offenders.

Engagement: The threshold for introducing information and consultation arrangements is to be lowered from 10% to 2%.

Stable Employment: Introduction of a right to request a more predictable and stable contract.

Tips: Ban employers making deductions from staff tips.

Different businesses will be impacted differently depending on their current practices.  As the Good Work Plan is largely the Government’s response to the Taylor Report it’s no surprise that the biggest impact will be felt by recruiters and those working in the gig economy.  We’ll be publishing another bulletin with a little more detail on how the changes may impact on recruitment businesses, to those of you in recruitment soon

Due to the lack of detail at this stage there is not a great deal that businesses can do other than review their current practices and identify whether and to what extent they will be impacted.

For recruiters it’s important that you open a dialogue with your engager clients and educate them of the likely changes so that you can work together to identify the issues and how working practices will need to be adapted to ensure continued compliance.  This is especially important if a business has pay parity issues and currently use Swedish Derogation/Regulation 10 contracts; use umbrella companies or contractors in the supply of services and have long term workers/contractors providing services.

We will keep you updated on developments and will be running a series of Compliance Seminars for anyone who is affected.  If you’re interested in securing your place please contact Stephen McGonigle.

If you would like to make arrangements for us to hold a training session for your engager clients or your consultants on the impending changes, please contact Simon Whitehead.

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This bulletin contains general overview information only. It does not constitute, and should not be relied upon, as legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter.