The government has introduced a package of reforms to overhaul all workers’ rights – the biggest change seen in 20 years.

The package of new legislation and measures includes: introducing a day-one statement of rights for all workers setting out leave entitlements and pay – such as for sickness, maternity or paternity; bringing forward proposals for a new single labour market enforcement body to ensure workers’ rights are properly enforced; and, scrapping Swedish derogation rules that allow some firms to pay agency workers less than permanent staff.

Business Secretary Greg Clark, explained that the success of the UK’s labour market is underpinned by policies and employment law that strike an effective balance between flexibility and worker protections. However, the world of work is changing, which is why the government asked Matthew Taylor to carry out a review, to ensure the UK continues to lead the world in supporting innovative businesses while ensuring workers have the rights they deserve.

“Today’s largest upgrade in workers’ rights in over a generation is a key part of building a labour market that continues to reward people for hard work, that celebrates good employers and is boosting productivity and earning potential across the UK,” said Clark.

The announcement takes forward 51 of the 53 recommendations made by Taylor in his review of modern working practices, some of which have gone further than the review. The reforms aim to cement the UK’s status as a world leader in workers’ rights now and into the future, and address the opportunities and challenges of the gig economy.

The new legislation will also:

  • quadruple maximum employment tribunal fines for employers who are demonstrated to have shown malice, spite or gross oversight from £5,000 to £20,000
  • extend the holiday pay reference period from 12 to 52 weeks, ensuring those in seasonal or atypical roles get the paid time-off they are entitled to
  • lower the threshold required for a request to set up Information and Consultation arrangements from 10 per cent to two per cent.

The government has also committed to legislate to improve the clarity of the employment status tests to reflect the reality of modern working relationships.

As part of these reforms, the government has also responded to the Labour Market Strategy report written by Sir David Metcalf, the director of Labour Market Enforcement, to tackle the exploitation of low-paid workers. The reforms include:

  • bringing forward proposals in early 2019 for a single enforcement body to ensure vulnerable workers are better protected
  • providing more resource for the Employment Agency Standards Inspectorate
  • creating new powers to impose penalties for employers who breach employment agency legislation like non-payment of wages
  • consulting on Salaried Hours Work and Salary Sacrifice Schemes to ensure National Minimum Wage rules do not inadvertently penalise employers
  • bringing forward legislation to enforce holiday pay for vulnerable workers
  • consulting on the recommendations on non-compliance in supply chains.

Sir David Metcalf, said: “I am pleased that the vast majority of my 37 recommendations have been accepted, including my recommendations regarding a shift to more proactive enforcement and improving joint working between the three enforcement bodies under my remit and wider organisations within labour market enforcement.”

The provisions set out in the Good Work Plan, the government’s response to the independent Taylor review of the impact of modern working practices, and the response to the Director of Labour Market Enforcement’s Strategy, build on the government’s record of action to build a fairer economy for everyone and are part of the measures announced in the government’s modern Industrial Strategy.

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