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The Good Work Plan (GWP) could blindside UK businesses preoccupied by Brexit and now Coronavirus

The plan sets out the government’s ‘vision’ for the future of the labour market but will businesses be ready for change?

Thousands of UK businesses could be ‘blindsided’ by the Good Work Plan because they’ve been focused on Brexit.

But research by HR and employment law experts Citation reveals that many businesses may not be ready for the changes - with 59% saying they’d never even heard of the plan.

The problem is the GWP has been overshadowed by Brexit, according to Gillian McAteer, head of employment law at Citation.

And businesses, especially small and medium-sized enterprises (SMEs) which have less time for strategic planning, are simply unprepared for the “radical” changes it brings.

“The GWP is ambitious programme of reform,” Gillian says

“There’s only so much change British businesses can reasonably be expected to adapt to as they grapple with Brexit, with the full implications of that not yet certain.”

“But it’s clear many are completely unaware of their legal obligations as we approach 6 April.”

“Businesses could easily be blindsided by the GWP because Brexit has been the focus for so long.”

The overall aim of the plan is to strengthen employment rights, improve work lives and to find better ways to enforce the new legislation.

The government wants to tackle the ‘one-sided flexibility’ of the UK labour market, where some feel businesses have asked their workers to shoulder too much of the employment risk, and some changes seek to protect agency workers and others working under flexible work arrangements in particular.

“I do see some merit in the argument about one-sided flexibility - that it’s worked well for businesses but not a large segment of the working population,” says Gillian.

“There’s no doubt there’s a perception among a lot of businesses that employment equals risk, so they’ve chosen to have people working on a self-employed or casual basis.

“But the GWP is not about restricting flexibility, which has been a huge driver for economic growth, but ensuring fairer working practices, giving workers the rights they’re entitled to, and making it easier to enforce those rights.”

While measures will be introduced incrementally, from 6 April all workers as well as employees will have the right to a written statement of terms from day one of employment, rather than the two months employers are currently allowed.

The reference period for calculating holiday pay will also be extended from 12 weeks to 52 weeks so workers are less likely to lose out due to seasonal variations.

In addition, the Swedish Derogation, which gives employers the ability to pay agency workers less than their own workers in certain circumstances, will be abolished.

Gillian believes the new statements will prove “one of the most challenging areas” for businesses while bringing clarity for workers as they’ll include more information on their contractual terms such as their actual days of work, all paid leave and all benefits.

She also points to the “huge amount of confusion” faced by businesses when attempting to calculate holiday pay correctly (38% in Citation’s survey admitted they were unaware of how to include overtime and commission) with the prospect of state enforcement for underpayment of holiday pay to ‘vulnerable’ workers mirroring the tough penalties for underpayment of the minimum wage.

“The GWP will create a considerable administrative burden for businesses,” says Gillian. “The new statement of terms will have to be carefully worded and if you use lots of casual workers they’ll ideally need to be handed out at the start of each period of engagement.

“Similarly, it’s easy to calculate holiday pay for those on fixed hours but what about those on variable hours and working overtime? It’s a big ask to expect businesses to make sense of the changes, especially when many of the changes relating to holiday pay in recent years have come from court rulings rather than legislation.”

Given the high-profile legal battles involving Uber drivers, Pimlico Plumbers and Deliveroo couriers, another key aim of the GWP is improving the accuracy of employment tests (who’s an ‘employee’, a ‘worker’ or ‘self-employed’) to stop businesses avoiding their responsibilities. Employment status frameworks will also be aligned more closely with the tax frameworks to reduce confusion for individuals and employers.

But the government has yet to provide a timetable for any legislation or details of the online tools businesses can use.

“The government acknowledge the current situation is entirely unacceptable and there’s too much confusion surrounding the issue of employment status and they’ll legislate to make it clearer,” says Gillian.

“But we’ve got no idea when it will happen. So it’s a case of putting the cart before the horse because the government is imposing obligations without any guidance.”

Curiously, Citation’s survey revealed that 93% of businesses were either very confident or somewhat confident of the legal distinction between employee, worker and self-employed. But Gillian believes this confidence is “misplaced” because its based on incorrect assumptions, for example about the nature of documentation and status descriptions.

She acknowledges that some businesses may also be resistant to change because it’s almost ingrained in their psyche that they can “hire labour on their own terms”, assign their own employment status and avoid “recruitment risks”.

More than a quarter (29%) surveyed said they’d be less inclined to hire agency workers who’ll have the right to comparable pay with permanent employees after 12 weeks of work while 22% will be less likely to hire casual/flexible workers who’ll have the right to request more ‘predictable and stable’ contracts in the future.

However, 28% said they’ll be more likely to hire agency workers and 32% more likely to hire casual/ flexible staff due to the changes.

“The GWP will affect every business in the country but clearly many aren’t ready for it because much of the talk has been about Brexit,” Gillian says.

“Consequently, they’ll need the right advice and information to ensure they meet their obligations, especially as the changes are coming in incrementally and the timetable is unclear.

“Although some businesses may be hostile to the GWP I believe it will bring benefits for employers and employees in the long run.”.

Citation’s Head of Employment Law, Gillian McAteer, is a qualified solicitor and has worked with Citation since 2003, prior to which she worked in private practice, specialising in commercial litigation and employment law.

This was posted in Bdaily's Members' News section by Olivia .