Employers Face Stricter Rules Amid Boost to Workers’ Rights

An overhaul of employment rights announced by the government could herald transformative changes to working practices in the gig economy, in a move that has been termed “the biggest shake-up of employment law in generations” by the Institute of Directors.

Under the new Good Work plan, the government will adopt nearly all of the changes recommended in last year’s Taylor Review, which identified ways in which employment regulations should adapt to cater to modern work patterns.

Matthew Taylor, the leader of the original review, welcomed the Good Work plan as being a “substantive and comprehensive” response to his report’s findings.

One of the most significant new measures will see gig workers given rights to holiday and sick pay, with the benefits being enforced for the first time by HM Revenue & Customs. Meanwhile, flexible workers who get work via apps or online will also benefit from clearly defined “working time,” to ensure they are aware of when they should be getting paid.

More than one million workers now in gig economy

The gig economy now accounts for 1.1m workers in Britain, dividing into 28% in accountancy, legal advice and consultancy, 18% in plumbing, building and other skilled manual work, 17% in cleaning and other household services, and 9% in delivery or courier services.

The plans will clamp down on employers who breach workers’ contracts or mistreat staff, with higher penalties and maximum fines being quadrupled for some offences. Employers found to show malice, spite or gross oversight in dealings with employees, for example, will now be liable to pay up to £20,000 at employment tribunals.

Business Secretary Greg Clark said that the government would be “enforcing the rights that people have and are entitled to” and he said he hopes to supplement the stricter enforcement measures with a clarification of existing laws, making sure that workers in less stable jobs are made aware of the rights to sick pay and holiday pay to which they are already entitled, and are sure of how to enforce them.

The government is also to ask the Low Pay Commission to rule that employers must pay a higher minimum wage to workers on zero-hours contracts. Meanwhile, agencies may be banned from employing workers on cheaper rates, as is currently allowed under a loophole termed ‘Swedish Derogation’.

Call for more action on self-employment

The government’s announcements have faced criticism from those who say the plans do not go far enough, by pledging to legally define self-employment status but putting forward no specific new policy changes for self-employed workers in areas like National Insurance.

Disappointment has been expressed by workers, trade unions and the Labour party. Unions have underlined that the new plans still leave 1.8 million workers without major rights, with one trade union secretary terming the plans “light on substance.”

Stephen Martin, director general of the Institute of Directors, also expressed disappointment that the government’s plans did not go any further.

Urging the need for reform of National Insurance in order to equalise contributions for the self-employed with those of the regularly employed, he said the “lack of action on tax reform” a “wasted opportunity”.

Mr Martin said: “The different tax treatment of the employed and self-employed has been a driving force behind the rise in self-employment in recent years, but tax treatment should not determine a person’s choice of employment status.”

Shadow Business Secretary Rebecca Long-Bailey sharply criticised the lack of decisive action, saying:

“launching four consultations and merely ‘considering’ proposals is just not good enough. Like so much from this Government, today’s response is just more words, with no real action to improve the lives of the millions of people in insecure work.”

Government ’embraces new ways of working’

The government takes a very different view, however, saying it has already gone beyond the recommendations made by the Taylor Review, with measures such as enforcing holiday and sick pay entitlements, giving all workers the right to demand a payslip, and allowing flexible workers to demand more stable contracts.

Business Secretary Greg Clark has defended the pioneering nature of the announced measures: “We want to embrace new ways of working, and to do so we will be one of the first countries to prepare our employment rules to reflect the new challenges,” he said.

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