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Jennifer Smith
Partner
JMW

INTERIM INSIGHT: New Year, New Rules, how the ‘Good Work’ Plan affects contractors

At the end of last year and in response to the Taylor review, the Government published The Good Work Plan. The plan sets out a number of proposals for UK employment reform and is considered the “latest upgrade in workers’ rights for a generation”. Many of these rights will have an effect on those in the contract market

So what has been proposed? Jennifer Smith, Partner at leading law firm JMW explains:

Repeal of Swedish Derogation

As a general rule, agency workers must not receive less favourable treatment than their employed counterparts, including in relation to pay. However, under Swedish Derogation, employment agencies can opt out of equal pay rights if their workers enter into a contract which would guarantee the workers’ pay between assignments. This was originally designed to give reassurance to workers that they would continue to earn during periods where there are gaps in their work.

However, there is evidence that Swedish Derogation is being abused and workers are in fact not actually benefiting from this opt out. Therefore, new regulations are going to come into force on 6 April 2020, to ensure agency workers benefit from equal pay rights.

Key Facts Sheet

Another change that will affect agencies is the requirement for employment businesses to provide workers with a Key Facts Page from the first day of their engagement. This should set out the basic terms of the relationship and provide specification information on the type of contract, pay, and deductions.

Umbrella Companies

Some employment agencies devise schemes in order to keep their tax exposure to a minimum by using umbrella companies to employ workers. In an aim to improve transparency of employment terms for agency workers, the Government is proposing to expand the remit of the Employment Agencies Inspectorate, to investigate complaints involving the use of umbrella companies. The Government will also look at increasing enforcement action against umbrella companies and other payment intermediaries, where workers have not received adequate pay. As such, employment businesses are advised to carry out appropriate due diligence on the payroll providers in their supply chain.

Continuity of employment

As a result of modern working practices, individuals are now working more flexibly and intermittently for multiple employers. It is therefore difficult for employees to accrue employment rights. Currently, a break in service of over 1 week will break the continuity of employment. The Government has proposed to increase this to 4 weeks, however, no date for the implementation of this has been proposed.

Although none of the changes mentioned above are coming into force immediately, with the earliest being April 2020, agencies should start to consider the potential impact of the changes.

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