21 May 2019

The long awaited reform of employment law, following the Taylor Review and Good Work Report, is set out in the government's Good Work Plan. Although the detail for many of the reforms is sparse, businesses will want to start preparing for the changes, the majority of which are due to come into force on 6 April 2020.

The key proposals are:

Fair and decent work

The government recognises that at the heart of Matthew Taylor’s recommendations is the overarching ambition of fair and decent work for all workers. The government has stated that it is committed to tackling what Matthew Taylor termed 'the one-sided flexibility' of some employers, improving the rights of intermittent and atypical workers and increasing employee voice in organisations. In order to achieve this, the government plans to introduce:

  • A new right for employees and workers working variable hours to request a more predictable and stable contract after 26 weeks of continuous service. This right is expected to operate in a similar way to the current right to request flexible working.
  • An increase from one week to four weeks in the period between assignments that will constitute a break in continuous service. This is intended to allow more workers working intermittently for the same employer to build up the necessary service required for a number of employment rights (whereas currently a gap of one week can break continuity).
  • A prohibition on deductions from staff tips.
  • A reduction in the threshold required for a request to set up collective information and consultation arrangements from 10 per cent to two per cent of the workforce, although the 15 employee minimum threshold for initiation of proceedings will remain in place.

Employment status

The broad remit of the Taylor Review was to look at ways to ensure that the regulatory framework surrounding employment, and the support provided to businesses and workers, was keeping pace with changes in the labour market and the economy. The question of employment status, particularly in the context of the gig economy, was one of the areas that the Taylor Review determined as being unnecessarily complicated and that greater clarity would be desirable. The government accepts that having separate frameworks for determining employment rights and tax is confusing and agrees with many of the recommendations made by Matthew Taylor in relation to employment status. In particular the government states that it will:

  • legislate to improve the clarity of the employment status tests, reflecting the reality of modern working relationships
  • align the tests for determining status for employment purposes and tax purposes and shift the emphasis to the level of control rather than focusing on personal service and the right of substitution
  • improve the guidance and online tools available to help individuals understand their status.

The devil will of course be in the detail and it remains to be seen exactly how the government will seek to address and resolve these issues.

The government has separately begun consultation on its plans to extend the off-payroll working regime, which is currently in place in the public sector, to the private sector. In short, these new rules will shift the responsibility for determining whether IR35 applies from the contractor to the private sector end user client. In the event that the new rules apply, the client, or if agencies are involved, the fee-payer will then be responsible for deducting tax and other payments at source. The legislation will not come into effect for private companies until April 2020, but businesses will need to consider the impact and plan accordingly.

Given these forthcoming changes, employers should undertake a close analysis of their existing contractual arrangements and working practices to help identify any risk areas, any changes that may be appropriate and any unforeseen costs that are likely to be incurred.

Clarity of information

In addition to improving clarity around employment status, the government believes that all workers should be entitled to have written details of their terms and conditions so they have a better understanding of their rights and obligations. Therefore, new legislation will come into force on 6 April 2020, extending the right to receive a written statement of terms and conditions to workers and requiring employers to give the written statement of terms to workers and employees on the first day of work (currently it is within two months and only applies to employees).

The information to be included in the written statement from day one is also being expanded. In addition to the current information that must be provided, from April 2020 the statement should also include:

  • how long a job is expected to last, or the end date of a fixed-term contract
  • how much notice the employer and worker are required to give to terminate the agreement
  • details of eligibility for sick leave and pay
  • details of other types of paid leave e.g. maternity leave and paternity leave
  • the duration and conditions of any probationary period
  • all remuneration (not just pay) – contributions in cash or kind e.g. vouchers and lunch
  • the normal working hours, the days of the week the worker is required to work, and whether or not such hours or days may be variable, and if they may be how they vary or how that variation is to be determined
  • any training entitlement provided by the employer, any part of that training entitlement which the employer requires the worker to complete, and any other training which the employer requires the worker to complete and which the employer will not bear the cost.

Employers will need to review their current contracts and recruitment processes to ensure that all the required information is included in their contracts and procedures are in place to ensure the documentation is issued on or before the first day of work.

In addition, in order to improve the clarity of information given to workers in payslips, the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 came into force in April 2019. For payslips issued in relation to pay periods on or after 6 April 2019 employers are now required to:

  • show the number of hours worked on payslips where the worker’s pay varies
  • issue payslips to all workers, not just employees.

Holiday pay

Another area that Matthew Taylor identified that could benefit from greater transparency was holiday pay entitlement and so the government intends to:

  • launch an awareness campaign, targeted at both individuals and employers, to boost awareness and understanding of holiday pay entitlements
  • introduce new guidance and a new holiday pay calculator
  • extend the reference period for calculating holiday pay from 12 weeks to 52 weeks, in order to better reflect the seasonal nature of some work.

Agency workers

The government also plans to tackle the lack of transparency for agency workers. It proposes to:

  • Introduce new legislation to require employment businesses/agencies to provide agency workers with a key facts page at the start of any assignment and the Employment Agency Standards Inspectorate will have powers of enforcement in situations where the key facts page has not been provided. The key facts page will set out certain required information, including:
    • the type of contract the worker is employed under
    • the minimum rate of pay that they can expect
    • how they are to be paid, if they are paid through an intermediary company, any deductions or fees that will be taken, and an estimate or an example of what this means for their take home pay.
  • Repeal the 'Swedish derogation' and give agency workers the right to the same pay as comparable employees after 12 weeks in the role. This change is due to come into force on 6 April 2020.


The maximum penalty for 'aggravated breaches' of employment rights increased from £5,000 to £20,000 for breaches of workers’ rights that took place on or after 6 April 2019. The government also plans to improve enforcement of employment rights by:

  • naming and shaming employers who fail to pay employment tribunal awards
  • requiring employment tribunals to impose sanctions on employers for repeated breaches of employment rights
  • introducing legislation to enable state enforcement of vulnerable workers’ holiday pay rights to allow vulnerable workers who have not received their holiday pay entitlement to raise a complaint and the state enforcement body to pursue payment of arrears on the worker’s behalf, backed up by financial penalties
  • introducing a single labour market enforcement agency and ensuring vulnerable workers are more aware of their rights.

How can Burges Salmon help?

  • Tailored advice and strategic reviews: we can provide specific advice on the impact of the new requirements on your business and help you to develop an appropriate employment strategy moving forwards.
  • Contractual implications: we can review existing contractual arrangements and advise on termination and/or renegotiation options, as well as drafting any new contractual documentation if required.
  • Employment status review: we can advise you on general employment status issues as well as carrying out a review of the structure of intermediaries and employment status for tax purposes. Advise you on whether those arrangements would be caught by the new off-payroll working regime and on the pros and cons of changing your working arrangements including the employment law implications.
  • Our ‘readiness’ review and advice service offers an audit of your existing intermediary arrangements, a review and risk analysis and advice to help identify the right resourcing strategy for your organisation.
  • Information requirements: we can review contractual arrangements to ensure that they enable the company to collect the information needed to determine whether the off-payroll working rules should apply and whether a robust process is in place to advise the intermediary or agency of the outcome.

This article was written by Deborah Bulman, Senior Associate and Luke Bowery, Partner.

Key contact

Luke Bowery

Luke Bowery Partner

  • Employment
  • Restructuring and Redundancy
  • Equality, Diversity and Discrimination

Subscribe to news and insight

Burges Salmon careers

We work hard to make sure Burges Salmon is a great place to work.
Find out more