The government is planning a series of measures to toughen workers’ rights as part of its ‘vision for the future of the UK labour market’. In what it claims are the biggest package of workplace reforms in twenty years, the government has pledged to boost the rights of workers in the gig economy, including flexibility and pay.
Unveiling the government’s Good Work Plan, Business Secretary Greg Clark is looking to take forward 51 of the 53 recommendations made in the 2017 Taylor Review, an evaluation of modern employment practices in the gig economy. The Taylor Review made recommendations on how to tackle exploitation at work, increase clarity in the law and help people know their rights.
The gig economy
The gig economy is characterised by zero-hour or short-term contracts or freelance work, rather than permanent jobs; workers, rather than receiving a regular wage, get paid for each of the ‘gigs’ they do, such as delivering food or driving a car journey. It’s currently estimated that 1.3 million people in the UK work in the gig economy.
Advocates of this type of work say that people can benefit from the flexibility it offers, allowing them to control how much they work and balancing it with the other priorities in their lives.
Opponents, however, argue that the gig economy takes advantage of workers, as they do not have all the rights of employees, such as protection against unfair dismissal and the right to redundancy payments.
Opponents also argue that gig economy work results in a power imbalance in the relationship between worker and employer, with benefits accruing to employers, as they only have to pay workers when the work is available and don’t incur additional staff costs when it’s not.
The government’s proposals
The Taylor Review was undertaken to see how some of these issues could be addressed. And while it found that owever, that banning gig economy work outright would have a negative impact on more people than it helped, it did also find that the flexibility of ‘gig working’ is not incompatible with ensuring access to employment and social security protections.
This view was accepted by the government, which said in its Good Work Plan that the gig economy offers opportunities for “genuine two-way flexibility”, as well as opportunities for those who may not be able to work in “more convenient ways”. However, while the government may have accepted that the gig economy has its benefits, it did also put forward key proposals that would provide “an effective balance between flexibility and worker protections”.
- introducing a right for all workers, not just zero-hour and agency, to request a more predictable and stable contract, providing more financial security for those on flexible contracts
- a day one statement of rights for all workers setting out leave entitlements and pay, and also including detail on rights such as eligibility for sick leave and pay; and details of other types of paid leave, such as maternity and paternity leave
- an extension to the holiday pay reference period from 12 to 52 weeks, to “ensure workers in seasonal or atypical roles get the paid time off they are entitled to”;
- enforcing vulnerable workers’ holiday pay for the first time
- plans to bring forward proposals for a new single labour market enforcement body to ensure workers’ rights are properly enforced; and more resource for the Employment Agency Standards (EAS) Inspectorate
- ensuring tips left for workers go to them in full; and
- an end to the legal loophole which enables some firms to pay agency workers less than permanent staff – also known as the ‘Swedish derogation’.
Impact of the changes of The Good Work Plan
The business community reacted to the proposals positively, with Matthew Fell, Chief UK Policy Director of the Confederation of British Industry (CBI) saying that “Companies support the Good Work agenda because there is a strong business case for it. Focusing on issues like employee engagement, fairness and inclusion boost productivity as well as being the right thing to do.”
However, unions have attacked the reforms as weak, saying that they don’t go far enough. The Trades Union Congress (TUC) was scathing in its response. In a statement published on their website, Kate Bell, Head of the Rights, International, Social and Economics Department stated that “…rather than the outright ban on zero-hours contracts we called for, the government is introducing a ‘right to request’ a more stable and predictable contract after six months in the job.
“The right to ask nicely is no right at all – it will give insecure workers as much power as Oliver Twist.
And rather than letting unions access workplaces like Amazon to bargain for workers, there are new rights to information and consultation. This is better than nothing, but the balance of power will remain firmly on the side of the employer.”
However, the TUC was more complimentary about other reforms championed by the Good Work Plan, with Bell determining that “Ending the so-called Swedish Derogation that let employers pay agency workers less than regular staff is a well-deserved victory for union campaigning. It’s also welcome that the Employment Agency Standards Inspectorate will be able to regulate umbrella companies, and that holiday pay – so often denied to workers – will be better enforced (though the government isn’t very clear how).”
Affect of the removal of Swedish derogation
The ‘Swedish derogation’ rule, described by the government as a ‘legal loophole’, is commonly used to employ agency workers, who are hired on permanent contracts but often don’t receive the same wage and employment benefits as other full-time members of staff. This could force many recruitment businesses and other umbrella companies to revisit their business models, triggering significant change for sectors that benefit from its use.
Responding to its end, Recruitment and Employment Confederation chief executive Neil Carberry said “Agencies have always been clear that the Swedish derogation should not be an excuse for poor treatment. We favoured reforming the rules to ensure those whom were being adversely affected by the model were protected.”
“Now that government has decided to remove Swedish derogation it is essential that ministers engage with the recruitment sector to ensure that the transition away from this model is smooth for workers agencies and clients.”
What about the courts…?
A recent court case has highlighted some of the issues the Good Work Plan aims to resolve.
The Court of Appeal ruled against Uber, an app used to hire private drivers on-demand and by location, by declaring that their drivers should be considered workers, rather than independent contractors. This decision means that Uber drivers will be entitled to sick pay, holiday pay and maternity leave. Uber intends to appeal the decisions in the Supreme Court.
This is just the latest development in a lengthy legal battle between Uber and its drivers, and one of a number of similar legal challenges other gig economies have faced. Deliveroo – a food-delivery app – won a case in November 2018, when judges ruled that their workers didn’t have the legal right to form a union. In the same month, a court ruled in favour of drivers working for ride-hailing app Addison Lee, finding they should be treated as workers (rather than self-employed contractors). All these legal challenges are part of a wider effort by gig economy workers to clarify their legal status.
Employment law currently appears to be lagging behind the new ways of working in the gig economy.
It’s hoped that the publishing of the Good Work Plan will provide more clarity for these workers over their rights.
If you have any questions about this blog and would like to speak to someone, please contact our Clarion Employment Team.
Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.