Government reforms: Employment status – framework for modern employment

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What do we already know?

We updated you in our July 2017 Newsletter Government reforms (1): Employment status – Taylor Review that the Taylor Review of Modern Working Practices had been published which focused on the importance of quality work: “fair and decent work with realistic scope for development and fulfilment” for all.  The Review made detailed recommendations for reform of UK employment law in respect of those who are not engaged as traditional employees, both in the “gig economy” and elsewhere.

What’s new?

The Work and Pensions and Business, Energy and Industrial Strategy Committees have published a joint report, “A framework for modern employment” (available here).

Although this is not the Government’s official response to the Taylor Review (which is expected shortly), this report does contain a suggested draft Bill which aims to take forward some of the Taylor Review’s central proposals.

The report makes recommendations for primary legislation on the following issues:

  • Clearer statutory definitions of employment status: The Report recommends that the Government legislates to introduce greater clarity on definitions of employment status which should emphasise the importance of control and supervision.
  • Worker status by default: The Report recommends that companies with a self-employed workforce above a certain size should have the burden of establishing that an individual is self-employed in a worker status case, although the Bill as drafted would establish worker status by default in all status cases.
  • Higher National Minimum Wage for non-guaranteed hours: the Report recommends that the Government work with the Low Pay Commission to pilot a pay premium on the National Minimum Wage (NMW) and National Living Wage for workers who work non-guaranteed hours. The intention is that this would operate essentially as an overtime rate for hours worked over the worker’s guaranteed hours.
  • Extension of the allowance for break in service for continuous service: the Report recommends that gaps in employment of up to 1 month (rather than the current 1 week) should not break continuous service.
  • Employment Tribunals: the Report recommends that the Government creates an obligation on Tribunals to consider the use of higher, punitive fines and costs orders if an employer has already lost a similar employment status Tribunal case and that the Government takes steps to enable greater use of class actions in disputes over wages, status and working time.

The report also makes recommendations for secondary legislation, which include the following:

  • Extension of the entitlement to a written statement of employment particulars to workers from the first day of a new job: The statement would need to be given within seven days and contain a clear statement of employment status and details of the rights and entitlements of the individual by reference to that status.
  • Lowering the threshold for Information and Consultation forums: currently organisations must have 50 or more employees (not workers) and at least 10% and a minimum of 15 employees must request a forum. The Report recommends that workers should count towards both thresholds and the threshold should be reduced from 10% to 2% of the workforce.
  • Stronger penalties for repeat or serious breaches of employment legislation: the Report recommends that the Government brings forward stronger penalties including punitive fines and expands the ‘naming and shaming’ regime which applies to National Minimum Wage breaches to all non-accidental breaches of employment rights.

 

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