The UK government claims that millions of flexible workers will receive new rights under major government reforms as part of its “Good Work Plan.” These reforms are in response to the independent review of modern working practices, chaired by Matthew Taylor, which published its recommendations last summer.

The government claims that the UK will be one of the first countries to address the challenges of the changing world of work in the modern economy. It is important that any reforms are flexible enough to ensure that the law keeps pace with future advances in technology and changing models of the way in which the work of the future is performed.

The government intends to act on all but one of Taylor’s 53 recommendations; it rejected his proposals to reduce the difference between the National Insurance contributions of employees and the self-employed and state they have no plans to revisit the issue.

To this end, the UK government seeks input from businesses, employers, trade unions, experts, and individuals to ensure that any changes support their goal of delivering an economy that works for everyone. As such, it has published four consultations requesting feedback on various aspects of the reform:

Consultation on agency workers (responses by May 9). The recommendations made by the review that are in scope for this consultation are:

  • Government should amend the legislation to improve the transparency of information which must be provided to work seekers both in terms of rates of pay and those responsible for paying them;
  • The Director of Labour Market Enforcement should consider whether the remit of the government’s Employment Agency Standards Inspectorate ought to be extended to cover policing umbrella companies and other intermediaries (e.g., MSP in the supply chain);
  • The government should repeal the Swedish Derogation within the Agency Workers Regulations that allows employers to opt out of equal pay entitlements by issuing workers with “pay between assignments” contracts; and
  • The government should consider extending the remit of Employment Agency Standards Inspectorate to include compliance with the Agency Workers Regulations, including the use of the Swedish Derogation.

Consultation on enforcement of employment rights recommendations (responses by May 16). This consultation sets out the government’s intention to enforce a wider range of basic employment rights on behalf of vulnerable workers. The review recommended that HM Revenue & Customs should take responsibility for enforcing the basic set of core pay rights that apply to all workers. HM Revenue & Customs currently enforces the payment of the National Minimum Wage, but workers who have not received their statutory entitlement to sick pay and holiday pay must initiate a claim through the employment tribunal.

Consultation on measures to increase transparency in the UK labour market (responses by May 23). The review recommended greater transparency around the employment law framework to help ensure that legal rights and responsibilities are not misunderstood or exploited. While employers must provide a written statement of the particulars of employment to employees within two months of starting work, there is currently no requirement to do the same for workers who are not employees or agency workers.

This consultation also addresses the review’s recommendation that the government should extend, to one month from one week, the period of a break in service for the calculation of continuous employment and clarify the situations where cessations of work could be justified.

Some employment rights only apply after a qualifying period of continuous service, such as a right to notice, unfair dismissal and redundancy compensation. Flexible work leads to regular breaks in employment with the same employer, so there is good reason for reviewing the law on this, but the government is seeking views on the appropriate length for a break in service.

Another recommendation for which the government seeks information is the suggestion of a right to request a direct contract of employment for agency workers who have been placed with the same hirer for 12 months, and a right for zero hours workers, after the same period, to request a contract with guaranteed hours that better reflects the hours worked.

Consultation on employment status (responses by June 1). Finally, the government seeks views on whether the employment status tests developed by the courts should be codified in primary legislation, with guidance provided by secondary legislation.

Employment status determines an individual’s entitlement to statutory employment rights and the tax regime that applies to their income. Currently, where an individual’s employment status is in dispute it can only be resolved by a court, while legislation establishes the rights and obligations that flow from a determination. This approach allows the courts to be flexible and adapt to changes in the labor market but it is costly, and lacks clarity for employers and workers.

The consultation paper argues that with the emergence of the gig economy, where digitalization is used to allocate work, employment status is not straightforward to determine because doing so requires the application of decades-old tests to be applied to these new arrangements. Tax status can also differ from employment status.

One of the established tests is to determine the level of control that an employer exerts over an individual performing work for them. In the past this has focused on elements of supervision, but with remote working, day-to-day supervision is often absent. Instead, the courts look at whether the employer has a right of control over the worker, even if it is not exercised. This involves an interrogation of the facts of the relationship which can differ from case to case.

An alternative approach is to develop a more precise test based around objective criteria, such as length of engagement, percentage of income earned from a single employer, or performing work that is not related to the core activity of the business or not located at the company’s place of business.

One concern with creating a simplistic test is it may create “perverse incentives for businesses to restructure their workforces in order to achieve specific outcomes from the test. It could also create cliff edges around the boundaries, increasing incentives to use some business models and reducing the attractiveness of others.”