News

Back in 2017, the Government heard 53 recommendations for how employment laws need to change in order to keep up with increasingly flexible working practices. Now, they’ve announced a package of reforms intended to boost protection and rights for all – although there’s no insight just yet into when any of these reforms will become law.

The recommendations came from Matthew Taylor – former political strategist and CEO of the Royal Society of Arts – who was charged with heading up an independent review of modern working practices. Following this, the Government has published its ‘Good Work Plan’, which confirms that they are accepting almost all of the recommendations and are part-way through consulting on the detail of how they will be implemented.

The reforms cover everything from banning employers from making deductions from staff tips to increasing the penalties that can be imposed by Employment Tribunals. However, there are some areas that are particularly interesting to UK recruiters and those are the changes I want to highlight here. I’ve also provided a little insight into how candidates employed by our umbrella company, Key Portfolio, could be affected.

Swedish derogation

Swedish derogation (or ‘pay between assignments’) contracts will be banned. Their reasoning is that these contracts are being used to avoid giving workers their AWR rights. We don’t employ any candidates on these contracts, but if you have candidates with other umbrella companies who do use them, be aware that this arrangement has a shelf-life.

Statement of particulars

Employees are already entitled to receive a statement setting out the main terms and conditions of their engagement. Soon, agency workers will be entitled to the same thing, and their agency will have to provide it – unless the candidate is employed by an intermediary (and is therefore already entitled to one as an employee). These statements will need to be given on day one (currently it’s within two months) and they must include some new information that existing law doesn’t ask for, such as sick pay eligibility. We already give our employees a statement of particulars on day one and will adapt them to include the new information. If you engage any of your workers directly, this is one to prepare yourself for.

Key Facts Page

Recruitment agencies will need to give a Key Facts Page to each of their candidates and make sure they receive it. This is intended to increase transparency and help candidates make informed choices about the work they accept. The Government is creating guidance on what format this document should take, but we know that it will need to include:

• The type of contract a worker is employed under
• The minimum rate of pay they can expect
• How they are to be paid
• Deductions or fees that will be taken by the umbrella company
• An estimate or example of what this means for their take-home pay

I have to say, we’re particularly interested in learning more about this one. At the moment it’s difficult to determine how practical the idea will prove to be. For example, how will it work in practice when (as is so often the case) it’s the candidate who chooses the umbrella company, not the recruiter? We hope the Government remembers the engaged, proactive contractor when considering how this reform is best translated into legislation.

We already make it clear to new employees that we are their employer, explain what deductions we will make from the daily/hourly rate the agency pays and provide customised salary illustrations on request. We’re right behind any attempts to increase transparency for candidates and are ready to support you with this requirement as soon as the detail becomes clear.

Protection against unclear deductions

If an agency worker has pay withheld or unclear deductions made by an umbrella company, they will have access to increased state enforcement protections. We take a transparent approach to umbrella employment and back any move that increases visibility across the board. We always explain what deductions we will make from the daily/hourly rate the agency pays, issue clear and easy-to-understand pay advice slips, and have no hidden charges.

Holiday pay

You can expect an awareness campaign to boost the public’s understanding of their holiday pay entitlement, alongside new guidance and online calculators. In addition, the state will take responsibility for enforcing holiday pay rights, with financial penalties for non-compliance. It’ll be similar to the way that the National Minimum Wage is enforced today.

Employment Agency Standards Inspectorate

You’ll be familiar with the Employment Agency Standards Inspectorate, the body who enforce agency workers’ rights in the UK. They’ll soon see their remit expand to cover umbrella companies too – and bring it on, we say. We welcome increased scrutiny of our industry and in fact have been calling for it for many years. We look forward to seeing how this can drive up standards among umbrellas.

Statutory Sick Pay

There will be a consultation next year on how Statutory Sick Pay can be improved. Matthew Taylor recommended that it becomes a ‘day one’ right for everyone regardless of income and that it be accrued on length of service – similar to how holiday pay works now. He also recommended that people should have the right to return to the same job after being ill. Whether these recommendations are accepted in full remains to be seen.

What next?

Remember, these changes aren’t yet law, nor do we have any timeline for when this may happen. At the moment the Government is simply sharing their vision for what they aim to achieve. Until they begin releasing draft legislation, there isn’t much any of us can do to prepare other than watch and wait for more details. We’ll certainly be doing that and will bring you updates as and when we have them.

If you want to talk about the Good Work Plan or anything else umbrella/payroll related, I’m always up for a chat. Drop me an email to gary.smith@key.co.com and I’ll reply right back.