Employers, are you complying with the latest changes in the law?
In December 2018 the Government launched its Good Work Plan setting out a major overhaul of employment legislation. This Plan details a range of legislative changes and is arguably the biggest employment law shake up in the last 20 years! It’s important that all employers and HR functions are familiar with all the details, not just the one or two reforms that have been publicised by the press.
In this article you’ll find an outline of some of the key changes that the Good Work Plan will implement, and expected implementation dates, along with some ideas about what you, as an employer might want to think about doing to prepare.
1. Right to request a more predictable and stable contract
After 26 weeks service, workers will now be able to request a more fixed working pattern (e.g. in terms of hours or days) from their employer, and the employer will have to respond within a three month timeframe.
This is particularly aimed at zero hour workers who are on a zero hours contract for a long period of time, although in reality have working hours/patterns that are the same as permanent employees with fixed regular hours.
**Employment Status Tests: **There are also plans to align the employment status tests used by Employment Tribunals (to determine if someone is an employee, worker or self employed) and by HMRC (to identify is someone is employee or self employed for tax purposes) and reduce differences to a minimum, as well as improving the clarity of employment status tests to make it simpler!
Action: Whilst we don’t yet know the implementation date for either of these changes, it would be sensible to take the opportunity to review the contracts that you have in place and also current practices. When did you last do an audit of your employment contracts?
2. Extending the Break in Continuous Service
How often have you agreed that someone retiring can take a week’s break then return on a different contract of employment? Currently workers simply have to have a break of at least one week in their service in order to break their continuous service, meaning that after a break of one week they will be regarded as a new employee and have the rights that accompany someone who has just started. Often this suits both parties… but not always!
The upcoming legislation will extend this break to four weeks, and is principally designed to benefit those employees who work intermittently for the same employer and consequently struggle to ever build up employment rights. It will though affect those retiring and expecting to start next week on a brand new part time contract.
Action: We do not yet know the date that this is likely to come into force, but in the meantime it would be sensible to consider how you manage staff who work for you on an intermittent basis and remind managers that have staff coming up for usual retirement age to be very careful about what they are promising in terms of ongoing work.
3. Banishing the Swedish Derogation
Currently the law allows agency workers to exchange their right to be paid equally with a comparable permanent worker, in return for a contract with the Agency which guarantees pay between assignments (known as the Swedish derogation).
Although in some cases this may beneficial as it would ensure that the individual received pay even when there were gap in work, in reality the Review found that workers were not benefiting from this opt out. In reality they were not being paid between assignments, with agencies typically offering work that the individual was unable to accept. The agency would therefore argue that the candidate was not available for work and was consequently not paid.
Action: This will come into force on the 6th April 2020. In preparation for it, you will want to consider whether you use, or have any Agency Staff who make use of the Swedish derogation, and consider whether you want to consult with them (or the Agency you use) to change their contractual arrangements.
4. Banning Deductions from Staff Tips
Legislation will mean that employers will no longer be able to make any deductions from tips and staff must receive the tips they earn.
Action: We do not have an implementation date for this change, but if you are in an industry that receives tips, it would be sensible to consider how they are managed and what you are going to do if the business currently relies on taking some or all of the tips to turn a profit.
5. Reduction in Threshold for Information and Consultation Regulations (ICER)
Currently if an organisation has more than fifty employees and at least 10% of the workforce make a request to set up Information and Consultation arrangements, then the organisation must take action to set up a staff forum, or similar.
However, the Good Work Plan will reduce this threshold from 10% to just 2% of the workforce (providing that at least 15 employees have made the request). These changes are designed to ensure that more organisations have a forum that allows employees voices to be heard and have impact.
You can of course set one up yourselves, as most organisations do, in order to create a forum that reflects your own business needs. Voluntarily setting up also means you are not bound by the legal framework in the same way. Setting up a such staff representation shouldn’t be undertaken as tick box exercise. With the right training and support for staff reps it can become a vital business function that delivers for staff and leadership alike.
Action: This is expected to come into force on 6th April 2020. Acting preemptively and embracing staff representation may results in benefits beyond compliance.
6. Written Statement of Terms
The Good Work Plan will ensure that the right to a written statement of terms is available to workers as well as employees. It will also make it a right for employees and workers to have received a written statement on or before their first day of work.
The legislation will also be expanding the information that employers have to include in a written statement, and in addition to the current mandatory information, the statement will need to clarify things such as:
- How long a job is expected to last, or the end date of the fixed term contract
- Notice required
- Details of sick pay leave and pay
- Details of other types of paid leave e.g. maternity and paternity
- Duration and conditions of any probationary period.
Action: This will come into effect from 6th April 2020.
7. Key Facts Information for Agency Workers
It’s been identified that Agency Workers do not always have information about their contractual arrangements that they should have and that it’s sometimes buried in long, complicated contracts. To tackle this, all Agency Workers will have to have a document with the Key Facts, including:
- The type of contract they are employer under
- The minimum rate of pay they can expect
- How they are to be paid
- Any deductions/fees that will be taken and an estimate of what this may mean for their take home pay.
Action: Although we do not yet have an implementation date for this change, we recommend that you review whether you have or use any Agency Workers, and ensure that you (or the Agency has plans) have provided them with a Key Fact Sheet. It is also entirely sensible that you ask your agency for a copy of what you are providing to those working on your premises so everyone is in the know and no one gets any surprises further down the line!
8. Holiday Pay Reference Period
Currently when calculating holiday for individuals who don’t work fixed hours, it’s usual to go back for a 12 week period to calculate their average working hours and therefore calculate the holiday to which they are entitled for that period. However, the Review noted that those in seasonal roles and some atypical roles were not receiving their full entitlement as a result of this method of calculation, and therefore the legislation will be changed to make the reference period 52 weeks rather than 12, which will better reflect the working hours throughout the year.
Action: This will come into force on the 6th April 2020. It currently looks as though there will be no transitional arrangements so this will come in overnight. Therefore, you will need to make sure that you have the correct methodology for holiday pay calculations. It would be worth doing some advance to calculations to identify whether there are likely to be any cost differences to your business.
9. Employment Tribunal Penalties
The Government has confirmed that it will be introducing a name and shame scheme for employers who fail to pay Employment Tribunal awards. They already do this for those found not to be paying the National Minimum Wage as perhaps you have seen in the press in recent years?
Additionally, the penalty for Employers is to be raised from £5000 to £20,000 for ‘aggravated breaches’, i.e. where an employer has breached a worker’s rights and the breach has one or more aggravating factors, e.g. where the breach is deliberate or the employer has repeatedly beached the right concerned.
Action: The change in penalty for aggravated breaches will come into force on the 6th April 2019.
10. Taxation on workplace parking
Not in the Good Work Plan, but hopefully you picked up that the government has approved the rolling out of taxation on work place parking. This won’t apply to all workplaces, and it is down to local councils to decide whether to roll this out. In the initial roll out reports suggest that some employers picked up the tax bill on the car parking for their employees, whilst others chose to pass it on.
Whilst clearly there are numerous other changes being brought in with the Good Work Plan we thought it a good starter for ten to start your thinking with those topics we have set out above! Crazy timing we know with so much admin time having gone on GDPR last year and so much time this year being distracted with Brexit issues but unfortunately you will need to start putting things in place no later than the Autumn this year, ideally sooner.