The Good Work Plan
February 08, 2018
The Government has announced their “Good Work Plan”, their long awaited response to the Taylor Review and the joint select committee report “A framework for modern employment”. This includes four consultation documents in which both employers and individuals alike have a vested interest.
The Good Work Plan fronted by Greg Clark MP considers 64 recommendations taken from those earlier publications. Aside of these there are a number of other publications such as “The characteristic of those in the gig economy” which will ultimately influence the topics of conversation over the next few months.
One of the key points coming out of the announcements is Government’s intention to use both penalties and naming and shaming to enforce worker rights.
The announcements come off the back of a recent focused campaign in Leicester targeted at ensuring compliance around the National Minimum Wage, Employment Agency and Gangmaster Regulations.
They also have a similar feel to those announcements made around National Minimum Wage compliance and enforcement three years ago where we had a consultation followed by changes to the regulations and a significant increase in the penalty regime (200% of underpayments from April 2016). It is clear Government feel this approach has had a significant and positive impact on NMW enforcement, which has also seen a fourfold increase in HMRC’s budget to enforce NMW rights.
Impact on employers and individuals
Ultimately the outcome of these changes is intended to drive more workers accessing worker entitlements and is likely to impact the way in which businesses and individuals engage with each other, something which has evolved dramatically over recent years with the advent of the gig economy.
Broadly this will lead to potentially more expense for businesses adopting certain models with a by-product being additional income and therefore income tax and NIC take for Government. We await the detail within the consultations but anticipate the implementation of these changes is not going to be simple, especially given the current position has been left to evolve through test cases and market forces with many layers of complexity. Employers are going to need to take careful note of the changes that are afoot to ensure they remain compliant and do not fall foul of penalties and naming and shaming.
One of the key points we find interesting and likely to have a significant impact on costs and the way in which individuals are engaged is the recommendation that those workers on flexible or zero hours contracts should be entitled to premium pay.
This is to take account of the flexibility they offer at the risk of not being offered regular work. This is likely to impact on many employers’ business models and ultimately require better workforce planning otherwise it could drive us back to a position where more individuals are engaged through agency type arrangements.
Related to this, it will be interesting to see the detail around what information will need to be provided by businesses to individuals who are engaged through agencies. Government have set out their intention that people engaged through agencies should be provided with specific details of who is their employer and their worker rights.
Consultations and the tax position
There will be four consultations addressing the following:
- enforcement of employment rights recommendations
- agency worker recommendations
- measures to increase transparency in the UK labour market
- employment status
The fact we have four separate consultations illustrates the breadth of the issues Government are addressing and we welcome the ability to make representations.
It’s interesting that from a tax and NIC perspective Government have been clear that they do not intend to revisit the difference between NIC of employees and self-employed. However, a first read of the employment status consultation raises one big question, does it or does it not rule out changes to tax rates or NICs for 'workers' who are not 'self employed'?
As we move into a world where it is more likely an individual is deemed to be a worker by default rather than needing to assert those rights through a tribunal, could it be that we are now on a path where for tax and NIC purposes we read worker to mean “employed”.
Other areas to be aware of
Almost all recommendations within the Taylor Report and Joint Select Committee draft bill are being addressed.
We are now likely to see a requirement for all employers to provide a summary of rights and entitlements on day one in order to ensure workers are aware of their entitlement to claim and receive rights such as holiday pay and sick pay.
There is likely to be a requirement for employers to provide a payslip to all workers (not just employees), something which will give rise to more administration for businesses engaging with off payroll workers.
The issue of interns is another area which will have additional focus. Following debates within the House of Lords a number of months ago Government are taking this opportunity to address their concern that businesses are using unpaid or low paid interns with few entitlements to perform work which should otherwise attract higher pay and worker rights.
Overall, we will be working hard in responding to these consultations over the next few weeks and discussing the key points with our clients.
What is clear is that this is a catalyst for change in the way on and off-payroll individuals engage to perform work and we’re likely to see an increase in compliance audits, penalties and naming and shaming in the coming years – the question is which Government departments will own and enforce the regulations coming out of these consultations. This may well be coupled with an increase in the number of employment tribunal claims on the enforcement of workers’ rights.