Written by Brabners LLP
On 7 February 2018, the Government published its response to the Taylor Review of Modern Working Practices from July 2017 (Taylor Review). The Taylor Review recommended, amongst other proposals, changes to the status definition of a worker, changes to the national minimum wage and increased rights and flexibility for workers. The Government’s response sets out proposals to increase workers’ rights and awareness of their rights. The proposals include day-one rights for all workers (including casual and zero hour workers), such as itemised payslips and the right to request a “more stable contract”. Other proposals include the need to provide clearer financial information to agency workers, the extension of the qualifying period for continuous service beyond one week and the development of an online tool to determine employment status. Whilst this signals change ahead, it is unclear what form this will take for employers and individuals working in the gig economy. As of now, there are no proposals about changes to the law on employment status and the employment status definitions. Instead, the Government has opted for further consultations to decide on how to proceed. Four separate consultations have been announced on:
- Enforcement of employment rights;
- Agency workers;
- Measures to increase transparency in the UK labour market; and
- Employment status.
Agency Workers – the Consultation
One of the proposed consultations is a review relating to agency workers. The Taylor Review made recommendations on improving working conditions of casual workers and individuals working within the gig economy, including changes to the way businesses operate and how agency workers are treated. In the consultation, the Government is obtaining views on the following recommendations:
- Amending legislation to improve transparency for agency workers.
The Government is seeking responses on improving transparency for agency workers in relation to their contracts and pay. The Taylor Review highlighted the lack of transparency with agency worker contracts, including pay rates and the use of umbrella companies who charge an administration fee for paying wages and making deductions.
The Government is proposing that there is a key facts document contained within any contract between a work-seeker and employment business and that this must be provided at the time the work-seeker registers with the employment business. The document will go further than what is currently necessary and must include information on: (i) who is responsible for employing the work-seeker; (ii) how much the work-seeker will be paid by the umbrella company (including any fees payable); (iii) what statutory deductions will be made to their pay; and (iv) any additional benefits of the work-seeker.
The consultation seeks responses to questions on how any key facts document could work in practice and how to ensure that information within it is understood by work-seekers.
- Increased regulation of umbrella companies
The Government is also proposing to bring the activities of umbrella companies within the remit of the Employment Agency Standards Inspectorate (EAS), which enforces the Employment Agencies Act 1973 and the accompanying Conduct Regulations. The EAS also carries out inspections of, and investigates complaints about the conduct of, employment agencies and businesses. This could see a huge regulatory change to the way umbrella companies are managed, with a view to better protecting work-seekers. The consultation seeks opinions on the merits of this proposal, how it can be achieved and the proposal for legislation which could require umbrella companies to meet a set of minimum standards already required by employment agencies and businesses.
- Abolition of the Swedish Derogation
Regulation 10 of the Agency Workers Regulations 2010 (AWR) is commonly known as “the Swedish derogation”. The Swedish derogation provides an exemption to the right to equal treatment with regard to pay (as defined) in the AWR, provided that certain conditions are met. Part of the conditions include the need to give the agency worker a permanent contract of employment with certain provisions in it and that the employer must pay a certain sum between assignments where certain requirements are met.
The Taylor Review raised concerns in relation to the abuse of this exemption and workers being paid less than permanent workers for the same work. The Taylor Review recommended the abolition of the Swedish derogation, but the Government has included a review of the exemption as part of its consultations. In particular, the Government is seeking feedback on how widespread any abuse of the Swedish derogation is, and whether it would be best challenged through extending the remit of the EAS to cover the AWR or through complete abolition of the exemption.
At this point, it is worth keeping in mind that the Government’s response to the Taylor Review has not actually made any changes to recruitment and employment laws. However, it is clear that the Government is now seeking input with a view to making changes in the future. For those who employ agency workers, changes could be widespread and include legislative and practical changes for businesses. The agency worker consultation is open until 9 May 2018 and responses can be made either by email to firstname.lastname@example.org or online. Businesses and individuals working in the recruitment sector will need to speak up to ensure that their views heard.
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