Employment status and the gig economy. The proposals follow a string of cases in which 'self-employed' individuals have successfully claimed worker status. Businesses and individuals alike have complained that the current law is unclear, inconsistent and poorly-enforced. Unfortunately, the proposals are something of a mixed bag for businesses and individuals alike.
The proposals include:
- Workers will be entitled to a written statement of their rights on starting work (similar to the written statement of terms which employees are entitled to receive): this seems like a sensible reform to ensure greater awareness of basic legal rights.
- A break in service of up to 4 weeks will not break continuous service: this will ensure that employees with irregular working patterns are less likely to lose important statutory protections.
- All agency workers will now have the same rights under the Agency Worker Regulations, as the exception for agency workers who receive pay between assignments will be repealed: there was evidence that this exception was being misused and this reform will level the playing field.
- There will be a naming and shaming scheme for employers who fail to pay awards of compensation ordered by the Employment Tribunal, and more stringent costs and compensation rules for employers which are found by an Employment Tribunal to have breached employment status law repeatedly.
- Workers on zero hours or variable hours contracts will be given the right to request a 'stable' contract (i.e. one giving them regular working hours) after 26 weeks' service: unless there is an effective enforcement mechanism, this could end up being a purely procedural right which creates red tape for businesses without giving workers any substantive benefits.
- The rules on calculating holiday pay will be changed: for workers with variable pay or hours, pay will no longer be averaged over a 12 week period but over 52 weeks. Whatever the merits of this, it is a major change in an area which has created significant expense and uncertainty for employers over the last few years. Further change is likely to be unpopular with businesses, many of whom were forced to overhaul their payroll practices to reflect the evolving law in this area.
- The Government will introduce legislation setting out a more detailed definition of "worker" ( to be renamed "dependent contractor") and employee, and will align those definitions as far as possible with the tax position. While this is a sensible idea in theory, the courts have grappled with this issue for decades, with mixed results. It remains to be seen whether a new definition will clarify matters or (more likely, in our view) create further litigation.
- The Government has also pledged to introduce an online tool for checking employment status once the new definition is in place: HMRC's online status-checker has been heavily criticised for inaccuracy. If a more detailed legal definition is introduced, any online tool will need to be considerably more sophisticated than the current provision.
The timescale for the new legislation has not been announced (and may well be affected by Brexit and the wider political situation). We will keep you updated as and when there are further announcements.
The full proposals are here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/765128/good-work-plan.pdf