by GK Strategy 19th December, 2018
3 min read

Workforce management priorities in 2019

2019 will see major changes in the agenda for responsible workforce management. The Government has just announced significant changes to the labour market in its Good Work Plan following its consultations in the wake of the Taylor Review of Modern Working Practices. It is also due to announce further detail about its plans to revise the taxation of self-employed.

The changes announced on the 17th December are extensive and were announced as the “biggest package of workplace reforms for over 20 years”, taking forward 51 of the 53 recommendations made by the Taylor Review. These changes also address many of the concerns raised in a recent consultation on labour market enforcement.

Some of the key changes in workforce legislation include:
  • Closing a loophole that allows agency workers to be employed at cheaper rates than their permanent counterparts
  • Extending the right to a day one written statement of rights to workers – to include detailed information on rights such as eligibility for sick leave, pay, and parental leave
  • Quadrupling maximum employment tribunal fines from £5,000 to £20,000 for employers who are demonstrated to have shown malice, spite or gross oversight
  • Extending 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
  • Bringing forward proposals on how the frameworks for employment tax and rights could be aligned, with the aim of reducing confusion and increasing compliance
  • Bringing forward proposals for a single enforcement body to ensure vulnerable workers are better protected
  • Creating new powers to impose penalties for employers who breach employment agency legislation

But companies should not just wait to learn more of the Government’s plans, simply so they can revise their compliance regimes based on workforce regulations. They should also plan to address aspects of employment law that the Government’s plans may not do so completely.

Our ESG frame of analysis is that all companies have to comply with laws and regulations; good companies align with best practice and societal expectations; and great companies lead, by defining best practice and shaping expectations. (You can read more about how GK assess these three factors here.)

In the case of many workforces, compliance is far from sufficient to secure the rights of workers; often because – as in the UK – the compliance requirements are unclear. While these requirements should be made clearer under the Government’s plans, it is unlikely that this will resolve all issues with areas where employment law is currently unclear or inadequate in other ways

As the President of the Law Society, Christina Blacklaws, recently wrote: “[court] case after case highlights concerns about how the workplace rights of employees, workers and contractors are affected by a law not fit for purpose or not easily understood. The lack of certainty means people are having to go to court to clarify their rights” (2018 saw workforce related cases involving Addison Lee, Deliveroo and Uber, for example).

While employment law will be clarified in many respects, companies should make clear their arrangements with their workforce – whether employees, contractors or workers – wherever possible and where the announced proposals are unlikely to provide sufficient explanation.

This means making terms and conditions and other contractual terms and rights as clear as possible – and ensuring that recruitment agencies and other intermediaries do the same.

This is why our ESG due diligence is concerned with not only the substantive content of workplace policies but how clearly they are communicated in handbooks, contracts, inductions and training.

Workers – and the companies that employ or contract them – should be presented with clear choices, supported by law, to help them decide which option (direct employment vs contracting or freelancing, for example) is best for them and for them to understand the tax and other consequences of these options. Legal uncertainty and a lack of clarity in contracts, etc does not support that. Companies cannot do much about the former, except through the courts, but should strive to do so regarding the latter.

For more information on how GK approaches ESG in its due diligence and advisory services, please take a look at our ESG services page.

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