Recent months have seen a frenzy of activity in employment law, which will affect many consumer businesses. Most notably:
- the Government announced several employment law changes in its ‘Good Work Plan’ and in its response to the Director of Labour Market Enforcement’s (DLME) strategy on tackling worker exploitation;
- the Low Pay Commission released its recommendations to a proposed new rate of National Minimum Wage (NMW) for non-guaranteed hours of work; and
- the Court of Appeal agreed Uber’s drivers were workers and not self-employed, although an appeal to the Supreme Court is pending.
We look at the impact that these developments will have on retail, leisure and hospitality businesses, and what employers can do now to prepare.
Workers must receive statement of terms on day one of employment
The Governments Good Work Plan has set out that businesses must provide all workers with a statement of terms on or before their first day of employment, from 6 April 2020.
Currently, it is only employees who must receive a statement of mandatory terms within the first two months of their employment, this is usually set out in the employment contract.
Now employers must provide all workers with a statement of terms on day one of employment. There are also additional terms relating to probationary periods, variable working patterns and training which must also be included.
Consumer businesses should:
- revisit standard statements / contracts to ensure the mandatory terms are included;
- ensure that all workers receive the statement (for example, casual workers or zero hours workers); and
- that it is provided to all workers on or before the first day of employment.
Employers who don’t comply face the prospect of an Employment Tribunal claim with a maximum penalty of 4 weeks’ pay per affected worker.
Casual workers will be able to request a guaranteed hours contract
Casual workers (those with non-guaranteed hours) will soon be entitled to ask employers to switch them to a guaranteed hours contract. It is important to note that the right is to make a request, and businesses can reject the request in certain circumstances (yet to be determined).
The system is looking to be similar to the right to make a flexible working request, which has been criticised in the past for the ease with which employers can reject the request. It’s therefore questionable what benefit this change will bring to affected workers. Arguably, many casual workers will not make a request. When McDonalds trialled a similar scheme in 2016, only 20 per cent of casual workers made a request for a guaranteed hours contract.
If your business regularly uses casual workers, then it is important to be prepared for the change by:
- creating a clear and communicated policy setting out the rules for making requests; and
- setting up HR / management training to embed the request process lawfully.
Government body to enforce holiday pay
The DLME estimates that business fail to pay £2bn of holiday pay each year. To tackle this, the DLME recommended the state should enforce holiday pay for the most vulnerable workers.
The Government has accepted this recommendation but has not confirmed which body will enforce it. Employment agencies are believed to be the main culprit for withholding holiday pay, so it may fall on the Employment Agencies Standards Inspectorate (EAS) to enforce. HMRC are the other likely candidate as they are already responsible for enforcing NMW.
Failing to pay holiday pay will lead to financial penalties similar to those applied by the NMW enforcement regime. Holiday pay is a complex area and it is currently unclear what aspects will be state enforced.
The complexities of HMRC’s NMW enforcement regime has caught some employers out. Consumer businesses should start reviewing holiday pay procedures now to ensure compliance and avoid being caught out.
How is holiday pay calculated?
For workers with irregular hours, holiday pay is calculated using the average weekly hours worked over the previous 12 weeks.
From 6 April 2020, that reference period will increase to 52 weeks so that workers are not penalised for taking holiday at times when on average they are working less.
Businesses will need to look at their HR and payroll systems to ensure they can be updated to reflect this calculation change.
Staff tip deductions to be banned
The Government has previously raised the issue of tip deductions and has now confirmed that new legislation will ensure that workers receive all the tips left for them by customers.
Many restaurants, bars and leisure operators already comply with the proposed legislation but those that don’t will need to prepare for the change and ensure that receipt of all tips by staff can be evidenced.
Consultation launched on supply chain management to prevent worker exploitation
The DLME has suggested the Government make recognised brands jointly responsible for worker exploitation found in their supply chains. However, the Government will instead consult on a softer approach, where the recognised brand would be notified privately so that they could work with the supplier to rectify the issue.
For the textile industry, tackling worker exploitation is a big issue. Industry partners, including the British Retail Consortium and UK Fashion have signed the Apparel and General Merchandise Public and Private Protocol in a commitment to eradicate slavery and exploitation in textile supply chains.
The Government has also confirmed it will audit businesses who are required to publish a Modern Slavery statement by March 2019, naming and shaming those who have failed to comply.
Retailers should review their working practices, those of their supply chain, and where possible ensure compliance with local labour laws. A modern slavery audit and statement should also be undertaken if the relevant threshold is met.
A failure to do so may lead to brand and reputational damage and possibly enforcement by the Government. You can find details on the Modern Slavery Act 2015 including a short summary of obligations and who must comply here.
No NMW premium rate for non-guaranteed work
Some good news for consumer businesses who use casual workers - the Government has decided not to introduce a premium rate of NMW for workers working non-guaranteed hours. We discuss this in further detail and other changes to the current NMW enforcement regime in this article.
Uber drivers are workers
It’s no surprise that Uber drivers have yet again been deemed to be workers and not self-employed. Uber were given permission to appeal to the Supreme Court so have one last chance to reverse the decision. Employers operating similar gig economy or on-demand models, and wish to continue to do so, may choose to wait until the Supreme Court’s decision before making any changes.