HR · 17 December 2018

What the government’s new workplace rights reforms mean for small businesses

workplace rights
Reforms have been designed to protect workers on flexible contracts

The government has today announced a line of measures to protect flexible workers as part of a new workplace rights agenda.

Among the proposed reforms are protections for workers on zero-hour contracts, agency employees and those in the gig economy.

The legislation follows publication earlier this year of employment tsar Matthew Taylor’s Good Work Plan, commissioned by prime minister Theresa May as a roadmap for modern employment. Today’s reforms implement 51 of Taylor’s 53 recommendations.

Read our interview with Matthew Taylor

According to the Department for Business, Energy and Industrial Strategy (BEIS), the legislation will ensure workers are handed a “statement of rights” on the first day of their employment, clarifying rights such as sick pay and maternity/paternity leave, as well as giving them the right to request more predictable hours.

Other measures include:

  • Closing an existing loophole that allows agency staff to be paid less than full-time employees.
  • Increasing the maximum fine for businesses at employment tribunals from £5,000 to £20,000 if the employer is found to have shown “malice, spite or gross oversight”.
  • Force employers to calculate holiday pay based on a 52-week year (rather than 12 weeks) to ensure workers in seasonal positions receive fair entitlement.

Business secretary Greg Clark championed the reforms as the “largest upgrade in workers’ rights in over a generation”.

“(The reforms are) 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,” Clark said in a statement.

Read more about UK employment law:

However, the responses from the business community and trade unions were mixed.

Don’t over-regulate self-employment

Freelancer body IPSE said it was “cautiously supportive” the government’s changes to workplace rights, urging the government to not over-regulate self-employment.

Andy Chamberlain, IPSE deputy policy director, said the reforms appeared to preserve flexibility while protecting the entrepreneurial spirit of those seeking self-employment.

“The overwhelming majority of people actively choose to be self-employed because they value the flexibility of being their own boss,” he said.

“The devil, of course, will be in the detail, and the government must ensure it doesn’t legislate people out of self-employment against their will.

“IPSE will strongly resist any attempt to push all gig workers into the worker category, as this deprives people of the flexibility of being their own boss.

“IPSE also doesn’t want the government to align tax and employment tests, especially if it turns out to be a tax grab dressed up as giving people more rights they don’t necessarily want.” 

Don’t muddy already murky IR35 waters

Contractor tax specialist Qdos broadly welcomed the reforms, but echoed IPSE’s warnings of impeding the wishes of the willing self-employed.

Seb Maley, Qdos CEO, said: “The government is right to recognise that gig economy workers need greater protection, but it’s imperative the extension of rights does not impact those who do not want them.

“It’s also important these reforms do not muddy the already murky waters around IR35 status and what constitutes as a self-employed individual, a gig economy worker and an employee.”

“There’s a difference between those who need protection and those who don’t. For example, when operating outside IR35, contractors, by and large, do not want employment rights.

“That said, when working inside IR35 and paying similar taxes to an employee they expect to be offered rights. With further IR35 reform on the horizon, this is something the government must consider.”

“No more leverage than Oliver Twist”

Meanwhile, Trade Union Congress (TUC) general secretary, Frances O’Grady, slammed the reforms for failing to offer real protections to workers.

“The right to request guaranteed working hours is no right all,” O’Grady said, before warning that zero-hours contracts would never allow room for employment rights.

“Zero-hours contract workers will have no more leverage than Oliver Twist,” she added.

“Unless unions get the right to organise and bargain for workers in places like Uber and Amazon, too many working people will continue to be treated like disposable labour.”

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ABOUT THE EXPERT

Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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