The UK on Monday enacted a sweeping series of reforms to its labor laws, raising fines on employers for deliberately harming their workers and obliging them to give employees details of their legal rights from their first day on the job, among other changes. Based on the findings issued last year by the Independent Review of Employment Practices in the Modern Economy, led by Matthew Taylor, a former advisor to Tony Blair, the reforms are intended to strengthen the rights of agency workers and those participating in the gig economy, as well as to step up enforcement of existing labor protections. According to Personnel Today, the new legislation will:
- repeal the Swedish derogation, which allows organisations to pay agency workers on cheaper rates than permanent staff;
- extend the right to a written statement of rights from a person’s first day in their job to workers, going further to confirm their eligibility for sick leave and pay, as well as other types of paid leave including maternity, paternity and shared parental leave;
- quadrupling the maximum fines handed out at employment tribunals to employers that have shown malice, spite or gross oversight from £5,000 to £20,000;
- extending the holiday pay reference period from 12 to 52 weeks to ensure that those in seasonal roles are able to take the time off they are entitled to; and
- lowering the threshold required for a request to set up information and consultation arrangements from 10% of employees to 2%.
In a report called the “Good Work Plan,” the government also pledged to enact further legislation so that employment classification tests “reflect the reality of the modern working relationships.” The Taylor Review had recommended that the employment status currently known as “worker” be renamed “dependent contractor” and that workers in this category be entitled to employment protections like the minimum wage, sick leave, and holiday pay. It also recommended enacting legislation to clarify the legal tests for different employment classifications, rather than relying on case law as the UK currently does.
The government’s reform package did not, however, ban the controversial practice of zero-hour contracts. Taylor had concluded that abolishing these contracts would do more harm than good, though his review also recommended that workers in zero-hour arrangements be entitled to request guaranteed hours after working for their employer for 12 months. The government of Ireland, in contrast, has said it plans to end most zero-hour contracts with a bill expected to pass the legislature in the spring. Whitehall’s decision not to ban zero-hour contracts drew criticism from unions, the Guardian reported on Sunday, with Trades Union Congress general secretary Frances O’Grady saying the government had missed an opportunity to strengthen the rights of a vulnerable segment of the workforce:
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The UK government will propose legislation next month that will require companies to publish the ratio between the compensation of their CEO and that of their median employee, the Financial Times reported on Sunday. The rule is expected to come as part of a package of corporate governance reforms meant to address inequality by reining in executive compensation practices widely seen as excessive, which will also require boards of directors to demonstrate that they have acted in the interests of their companies’ employees, customers, and other stakeholders, rather than just the interests of investors. Large companies will also be required to certify compliance with a corporate governance code.
The writing has been on the wall for UK companies for some time now. The government first announced plans to institute a pay ratio reporting requirement last August, as well as to “name and shame” companies whose investors object to their executive pay packages. Recently, several large British companies have faced drubbings from investors and the media over the millions of pounds in bonuses they paid out to their top executives this year
At the beginning of this year, a report from the CIPD and the High Pay Centre revealed that the average FTSE 100 CEO earned £3.45m last year, or 120 times the £28,758 earned by the average British worker. At an average hourly rate of £898 per hour, the top CEOs earned more than the average employee by the third working day of the year, which campaigners quickly dubbed “Fat Cat Thursday.”
The UK government on Wednesday announced a series of planned labor market reforms to improve the working conditions and protect the rights of the millions of Britons employed in the gig economy and other flexible or contingent models of work, based on the findings of the Independent Review of Employment Practices in the Modern Economy, led by Matthew Taylor, which were published last July. The government says is intends to adopt almost all of the Taylor Review’s recommendations, the BBC reports:
The changes include stricter enforcement of holiday and sick pay rights, and higher fines for firms that breach contracts or mistreat staff. … The government says it is going further than the Review’s recommendations by:
- Enforcing holiday and sick pay entitlements
- Giving all workers the right to demand a payslip
- Allowing flexible workers to demand more stable contracts
The quantity and quality of jobs in the gig economy will be monitored and steps will be taken to make sure flexible workers are aware of their rights. The government is also asking the Low Pay Commission to consider a higher minimum wage for workers on zero-hour contracts, and says it may also repeal laws that allow agencies to employ workers on cheaper rates.
The reforms have not yet been fleshed out in much detail, while some of the plans announced on Wednesday involve not changing laws or regulations, but rather more strictly enforcing those already on the books. “The government’s plan will make sure that everyone knows what they’re entitled to when they start working for a company and the rules will now be enforced by HMRC, so people actually get what they’re owed,” BBC Business Correspondent Theo Leggett explains.
A member of the Scottish National Party plans to urge his fellow MPs to support a bill in the UK parliament that would ban the use of zero-hours contracts, Emily Burt reports at People Management:
Chris Stephens, MP for Glasgow South West, has urged fellow parliamentarians to back his Workers (Definition and Rights) Bill 2017-19, which will receive its second reading in the House of Commons on 19 January. The SNP MP said his bill would ban zero-hours contracts, boost employment rights for gig economy workers and protect younger workers in an increasingly uncertain economy. …
Under the draft bill, a worker could only be employed on zero-hours terms where there was a specific agreement with their trade union. This goes further than recommendations made in Matthew Taylor’s Good Work: The Taylor Review of Modern Working Practices, made earlier this year, which held back from endorsing a ban on zero-hours contracts, which it said would damage both employers and workers.
Instead, the Taylor Review had suggested introducing a higher minimum wage for employees on zero-hours and other flexible contracts. Stephens’s bill targets the issue of income stability among the UK workforce, but also comes in response to anxieties over the future of employment law in the UK after Brexit:
The Work and Pensions and Business Committees in the UK Parliament have unveiled a bill meant to close what its supporters call loopholes in current law that let employers misclassify employees as self-employed as a means of saving labor costs and evading their legal responsibilities to those workers, Sky News reports:
It says personnel should be classed as a “worker by default” to ensure access to basic rights such as sick pay because hundreds of thousands are currently being “burdened” by risks associated with flexible working. …
Labour’s Frank Field, who chairs the Work and Pensions Committee, said: “The two committees are today presenting the Prime Minister with an opportunity to fulfil the promise she made on the steps of Downing Street on her first day in office.” He said the draft Bill “would end the mass exploitation of ordinary, hard-working people in the gig economy.”
Opponents of the bill, such as the Confederation of British Industry, say it is shortsightedly cracking down on all forms of flexible employment. As the CBI’s managing director for people and infrastructure Neil Carberry put it to Sky News: “Based on a very limited review of the evidence, the committees have brought forward proposals that close off flexibility for firms to grow and create jobs, when the issues that have been raised can be addressed by more effective enforcement action and more targeted changes to the law.”
Over at Personnel Today, Jo Faragher digs deeper into the bill, which also recommends:
Only about half of the companies eligible to use funds from the UK’s apprentice levy, which came into effect this April, to pay for training programs have taken advantage of this option, the latest official figures show. And this is raising concerns that businesses may be “writing off the apprenticeship levy as a tax,” Emily Burt writes for People Management:
Just 10,500 apprenticeship service accounts were registered on the system at the end of August, according to the official figures, falling short of the estimated 19,150 levy-paying companies eligible to use the service. …
Elizabeth Crowley, skills adviser at the CIPD, said the government must do more to make sure employers were actively engaging with the levy: “In our view the government needs to be doing more work to ensure employers are making a choice in not using the levy, instead of being unaware of it. It is equally important that if there is an underspend, the funds are ring-fenced and used for supporting employer training, as there is a danger it could simply go back into the government’s coffer, and not be used to increase skills training and investment in the UK economy.”
Among those organizations that are using apprenticeship levy funds, many are using them in unexpected ways.
London Taxi Protest Against Uber in 2016 (Dinendra Haria/Shutterstock.com)
In a bombshell decision last October, a UK employment tribunal ruled that Uber drivers were employees of the ride-sharing platform, not independent contractors as Uber contends, and as such had the right to paid vacation and a minimum wage. Uber immediately appealed the ruling. On Wednesday, less than a week after losing its license to operate in London, the company was back in court to plead its case for why the court’s understanding of its labor model is misguided, Reuters reports:
At the two-day appeal hearing starting on Wednesday, Uber said its drivers were self-employed and worked the same way as those at long-established local taxi firms. The self-employed are entitled to only basic protections such as health and safety, but workers receive benefits such as the minimum wage, paid holidays and rest breaks. This would add to Uber’s costs and bureaucracy across Britain.
“The position of drivers who use the App is materially identical to the (familiar and long-established) position of self-employed private hire drivers who operate under the auspices of traditional minicab firms,” Uber said in its court submission. Minicabs, or private hire vehicles, sprung up in Britain more than 50 years ago. Minicabs cannot be hailed in the street like traditional taxis, but can be booked for specific times and places via a registered office with a call or via the internet.
The comparison to minicab companies is not going over well with Uber’s UK critics, Bloomberg’s Jeremy Hodges notes, as the company had previously argued before the tribunal that it was a technology company, not a transportation company, and played no role in the transport business beyond connecting its self-employed drivers to customers: