The Government has set out numerous planned changes to employment law in its recently published Good Work Plan. The Plan is split into 3 parts and in this article (being the second of a series of three articles), we look at some of the plans relating to “Clarity for Employers and Workers”. (If you missed the first article, you can find it here.)
Employment Status Tests
During the last few years there have been a number of high-profile cases regarding employment status). The Good Work Plan recognises that the current employment status legal tests are not really fit for purpose anymore, particularly given our evolving economy and the way work is often structured nowadays. There is therefore a commitment to improve the clarity of these tests, although it remains to be seen exactly how this will be done. It seems that there may be closer alignment with the tax status tests which only has two categories (being employee and self-employer, rather than the three currently used by employment law - being employee, worker and self-employed). It has also been acknowledged that there needs to be greater emphasis on the level of control that exists in the work relationship. However, we still await the detail of how the employment status legal tests will actually be clarified.
Written Statement of Basic Terms
Employees are entitled to receive a written document from their employer setting out their basic employment terms. Currently, no such entitlement exists for workers. However, this will change as a new obligation for employers to issue a written statement to their workers, as well as their employees, will be introduced. The change is expected to come into force in April 2020.
Also, currently employers have two months in which to provide the written statement but legislation will change this to instead make it a “day one” right. This will ensure that both parties are clear about the contractual terms from the outset.
Further, additional content will need to be included in the documentation in future as a number of new elements have been added, including:
- details of paid leave (such as maternity leave and paternity leave);
- the duration and conditions of any probation period;
- benefits that the individual is entitled to;
- greater detail regarding hours of work (including the specific days of work); and
- any training entitlements provided by the employer.
Key Facts for Agency Workers
Continuing the theme of improved communication and transparency, there will be new legislation to require employment businesses to provide every agency worker with a document to be known as a Key Facts Page. This will need to detail:
- the type of contract that the worker is employed under;
- the minimum rate of pay they can expect;
- how they will be paid;
- if they will be paid through an intermediary company;
- any deductions or fees that might be taken; and
- give an estimate or an example of what this means for their take home pay.
This development is in recognition that for agency workers in particular, the situation can be very difficult for them to understand especially where there are intermediary umbrella companies involved in the relationship.
There will be legislation to extend the holiday pay reference period from 12 weeks to 52 weeks. This could be an important development for workers who have variable hours because, currently depending on when they take their holiday, they might get lower holiday pay. For example, if a roofer worked only 20 hours per week in January to March (due to limited daylight hours and bad weather) but 40 hours per week in June to August (when the days are longer and the weather is dry), the pay that he would receive for holiday taken in April would be half the pay that he would receive had he taken the holiday in September.
There will also be a campaign to ensure that individuals understand their right to take holiday and a new holiday entitlement calculator will be launched.
Clarity for employers and workers In order to address recent disagreements around the employment status of individuals, particularly those in new and emerging work arrangements, the law needs to be more transparent. Employers and individuals need to easily understand how the law applies to their particular situation. They also need to be clear on the terms and conditions both parties are required to enter into at the start of the relationship and understand what protections apply to stop problems emerging later. ... Having a separate framework for determining employment status for the purposes of employment rights and tax adds to the confusion for individuals and employers, and can drive behaviour detrimental to workers and more likely to result in noncompliance from a tax perspective. Matthew Taylor recommended that renewed effort should be made to align the employment status frameworks...