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Government unveils biggest overhaul of the gig economy

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Workers on zero-hour contracts, agency workers or “gig economy” workers are to be better protected by a package of workplace reforms, according to a new legislation today.

Changes include employers being banned from taking a proportion of tips left to workers for good service. Business secretary, Greg Clark, rejected suggestions by unions that the new rules do not go far enough.

Commenting on the ‘Good Work Plan’, Phil Pepper, employment law partner at Shakespeare Martineau, said: “This is a major plan to reform employment laws. The Government claims this is the biggest reform of employment law in 20 years. The proposals seek to clarify the rights of low-paid workers, as well as workers in atypical or flexible roles, such as interns, agency workers and those on zero-hours contracts. We await the draft legislation together with dates and commitments for these to come into force from the Government.

“Many employers in the hospitality and retail industries will be relieved to hear that zero-hours contracts have not been outlawed, as these currently allow them to use workers in a more flexible way, to meet peaks and troughs in demand. However, the Government is proposing a right to request a fixed working pattern for those individuals who do not have one after 26 weeks of any non-fixed working pattern. A vast majority of workers on zero-hours contracts enjoy the flexibility they bring – particularly students who prefer to flex their hours around their studies and mature workers who might need flexible employment to fit around other responsibilities such as caring for relatives. The right to request fixed working should not affect those who prefer a non-fixed working pattern. The proposal is a right to request fixed working, not a mandatory right.

“For those in the hospitality sector, it is proposed that there would be a ban on making deductions from staff tips.

“Employers will have to set out the pay and entitlement of individual workers, in writing, on day one of their employment. This will take the pressure of uncertainty off workers in these positions and help to ensure they get fair treatment.

“The Government is also proposing to increase the rarely-used penalty against employers for aggravating conduct. The penalty will be increased from £5,000 to £20,000.  This penalty is very rarely awarded by Tribunals, so the impact of this increase may be minimal.

“Another key area of fairness that has been addressed is pay. Agency workers and other staff in atypical roles, including interns for example, must now be paid the same amount as their permanent counterparts. This is going to represent a significant cost for some larger businesses, particularly those using a high volume of interns. Earlier this year we saw how gender pay reporting ruffled some feathers by highlighting areas of inequality and this legislation will require businesses to treat everyone’s pay more openly and transparently. The Government is proposing to abolish the Swedish derogation which gives employers the ability to pay agency workers less than their own permanent workers and removes some of the restrictions set out in the agency workers regulations.  This could have a significant impact on employers who rely on agency workers.

“All in all, these proposals do look wide ranging and will shake up employment rights for many individuals.  Some of these proposals may not be entirely welcomed by employers in the current economic climate.  We are yet to see any draft legislation and dates for implementation, so we may see more details in due course.”




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