Consultation: Measures to increase transparency in the UK labour market

08 February 2018

Government has published its response to the Taylor review along with four consultations to address recommendations on the key aspects of;

  • Employment Status;
  • Increasing transparency in the labour market;
  • Agency Workers; and
  • Enforcement of employment rights

To view our previous article on the Taylor review click here

Some of the key recommendations made by the Taylor review have been accepted by the government (subject to consultation on the exact details) including;

  • the proposal to extend the right to receive a written statement to workers as well as employees;
  • the recommendation that the government should do more to promote awareness of holiday pay entitlements; and
  • increasing the holiday pay reference period from 12 weeks to 52 weeks.

The European Union is also proposing action to improve transparency and predictability of working conditions through the Working Conditions Directive which was published on 21 December 2017, replacing the 1991 Written Statement Directive.

Consultation Two: “Measures to increase transparency in the UK labour market” covers;

  • Increasing transparency within employment relationships in order to bring clarity to the rights and responsibilities of both parties with the aim of minimising misunderstandings and disputes
  • How the government will ensure that all workers have access to all of the relevant information in order to fully understand their engagement under their employment contract and the rights associated with that contract

The Review of Modern Working Practices made the assessment that we require greater transparency and clarity between workers and employers in the UK labour market. The review highlighted that flexibility is an advantage to many however, new employment methods and a rise in atypical working has resulted in a reduction of some workers ability to access to all of the information that they need to fully understand their employment contract and associated rights. 

Government has accepted various recommendations and identified the steps it will take to implement them in its consultation document which raises a total of 48 questions for consideration, split between 5 separate sections.

Section A – Written Statements

“The Government should build on and improve clarity, certainty and understanding of all working people by extending the right to a written statement to ‘dependent contractors’ as well as employees.”

Government recognises the merits of this recommendation and wants to explore the best way to implement the change through considering the issue of basic information about the employment relationship to all (including employees and workers) in a written statement at the outset of an engagement. It also raises the possibility of extending the right to receive a written statement from day one of an employment to improve clarity and understanding of the terms of engagement. 

“…the development of a standard format that can be easily adapted with specific information by the employer.”

In order to establish how to best implement the right to a written statement to all workers, the government has asked a range of different questions to establish how the statements are currently being used in practice.

Consideration will be given to whether the current mandatory list of information that must be included in the written statement is relevant and achieves the right balance between giving clarity to workers and not placing unnecessary burden on employers. It has been proposed that the mandatory elements of the principle written statement will be updated so that it only includes important and useful information (for both parties). The information would need to be provided as a stand-alone document and issued by the first day of work. Some of the additional elements which the government propose to introduce to the principle written statement are;

  • The end date of a fixed-term contract, or how long the temporary job is supposed to last
  • Notice periods
  • Sick leave and pay entitlement

This information is required currently but can be provided outside the scope of the principal written statement, i.e. in a handbook. The government’s proposal is to amalgamate all of the information into a single document.

Another key proposal under this recommendation was that, due to it being difficult to provide some information from the outset (i.e. pensions), the government will retain the scope in existing legislation for employers to provide this type of information in separate documents within the current timeframe of two months.

Section B – Continuous Service

“The government should extend the right, from one week to one month, the consideration of the relevant break in service for the calculation of the qualifying period for continuous service and clarify the situations where cessations of work could be justified.”

Currently, some employment rights apply from the outset and others apply only after a qualifying period, for example, in order to be protected from unfair dismissal (in most circumstances) an employee must have been continuously employed by the employer for two years. Due to this, individuals who work on a more casual basis and so, are likely to experience a break between assignments of more than one week, will experience a break in their continuity of employment and so, would potentially lose certain employment rights.

In order to tackle this, the government aims to extend the period counted as a break in continuous service beyond one week and has asked for opinions on what the extended period should be.

Section C – Holiday pay

“The government should do more to promote awareness of holiday pay entitlements, increasing the pay reference period to 52 weeks to take account of seasonal variations and give dependent contractors the opportunity to receive rolled-up holiday pay.”

There are three elements to this recommendation;

  • Increasing awareness of holiday pay entitlements

The government wants to promote awareness of employee entitlements further and so, will be considering the advantages of messaging channels and social media for communicating National Minimum Wage (“NMW”) and National Living Wage (“NLW”) rates as well as information about holiday pay entitlement.

  • Changing the reference period

Further consultation will discuss the approach of how to increase the holiday pay reference period from twelve weeks to fifty-two weeks in order to better reflect the seasonal nature of casual work.

  • Ensuring atypical workers receive their full holiday pay entitlement

“Rolled-up” holiday pay is considered to be unlawful under the Working Time Directive and so the Government has decided that consultation is necessary to assess whether there are any other alternatives which allow atypical workers to benefit from the flexibility of being paid their holiday entitlement as they wish but also, do not prevent the worker from receiving their full entitlement or deter them from taking annual leave.

Section D – Right to Request

“The government should introduce a right to request a direct contract of employment for agency workers who have been placed with the same hirer for 12 months, and an obligation on the hirer to consider the request in a reasonable manner.”

Government recognises that whilst agency workers play an important role, they actually make up a relatively small part (3.7%) of the UK labour market and therefore, it is not convinced that the issues highlighted in the Taylor review regarding zero-hour contracts are exclusive to agency workers. The aim is that all businesses have flexibility in their workforce to meet their business needs and that individuals have more choice in how they work.

The proposal for individuals to be able to request a more predictable and stable contract has been accepted and so, the consultation seeks to obtain the most practical way of implementing this.

Section E - Information and Consultation of Employees Regulations (2004) (ICE)

“The government should examine the effectiveness of the ICE in improving employee engagement in the workplace. In particular it should extend the Regulation to include employees and workers and reduce the threshold for implementation from 10% to 2% of the workforce making the request.”

Government will be considering the recommendations made in relation to the ICE Regulations and whether the current regulations could be amended.

See the full consultation here. The summary of the consultation questions is at page 34 – 46 of the consultation. Opinions on this consultation must be submitted by 23rd May 2018.

To see our news on the other consultations published by the government in response to the Taylor review, click here.

Aspire Comment

The recommendations made in relation to transparency of the UK labour market represent considerable change which will inevitably bring an expensive administrative burden for all employers.  Restriction in the adaptability of contracts could potentially see a move away from current zero-hours contracts to more temporary and agency contracts.

If implemented, employers will have to adapt, amend and potentially implement new contracts, handbooks and processes in relation to new starters, calculating holiday pay and understanding each individual’s continuity of service.

It is important that businesses respond to the consultation and have their say.   

If you wish to discuss the consultation, please email or call to discuss on 0121 445 6178.