What next for the Good Work Plan?

This month the Government published its response to the recommendations from the Taylor Review. The legislation is intended to deliver the greatest reform of workers’ rights in over 20 years, make workplaces fairer and ensure employers and workers equally benefit from a flexible labour market. Important changes have been made to the enforcement landscape that will improve the experiences of workers and employers. This includes the introduction of legislation to extend the right to receive a payslip to all workers, and to require that employers state the hours being paid for on the payslips of time-paid workers. This will make it significantly easier for such workers to understand how many hours they have been paid for and to challenge this when it is not the correct amount.

From the 43 recommendations, the Government has accepted 35, partially accepted 8 and rejected one.

Those of most interest to members are:

Understanding the impact of enforcement bodies’ actions on non-compliance (recommendation 2)

The government accepts the importance of understanding the effect of the current NMW penalty multiplier.

Improving awareness of workers’ rights (Recommendation 4)

 The Government has legislated to make the provision of a day one written statement of rights mandatory for all workers and a key information document must be given to all agency workers registering with an employment business. These changes both come into force in April 2020 and should improve clarity and awareness of employment rights and reduce the scope for non-compliance through misinformation.

 Improving guidance and educating employers (Recommendations 5 and 8)

 The government recognises that the majority of employers want to do the right thing and comply with the law. We understand that some areas of the law can be complex, and so it is important to support employers and to provide clear guidance so that they can understand how to comply with the relevant legislation.

A significant programme of work to review and update the enforcement bodies’ guidance is currently being undertaken. As part of this work the enforcement bodies will consider other good practice approaches and explore whether additional guidance resources are necessary.

The government is undertaking a comprehensive review of the existing public facing NMW guidance, with the aim of driving compliance with NMW legislation, as well as preventing non-compliance resulting from accidental breaches by more clearly communicating to employers their legal obligations. The government will improve NMW guidance available on gov.uk, making it more accessible and easier to navigate. These changes have been informed by stakeholder feedback and ongoing HMRC enforcement work.

The government partially accepts the recommendation to produce supplementary advice booklets. We will publish new thematic guides on topics where breaches are common, for example deductions including uniforms; apprentices; and unpaid working time.

 Sector naming and shaming

 The government partially accepts the recommendation to focus on sector specific NMW naming rounds coupled with an education campaign to maximise the impact of naming and to raise awareness. Sir David recommended undertaking a review into the effectiveness of the naming scheme in his 18/19 strategy, and so the naming scheme has been on hold while this review takes place. Having conducted this review, the government will resume naming in 2020. The government accepts the importance of maximising the impact of naming and will publish quarterly educational bulletins to encourage compliance. Sir David also recommended a threshold for naming, set at average arrears in excess of £500 per worker per employer in order to focus on more serious cases. The government agrees that a threshold is helpful to ensure a focus on the serious cases. The threshold will be set at arrears in excess of £500 per employer to focus on the most serious cases (repeat breachers will be subject to a lower threshold of more than £100 per employer), and we will aim to name more frequently than quarterly. We will continue to name a range of sectors in each round, rather than having sector-specific rounds, demonstrating that all employers and all sectors are responsible for NMW compliance. We will also publish more contextual information, such as the reason for each breach, to increase awareness.

 Reviewing NMW regulations (Recommendation 7)

 The government regularly review the NMW regulations to ensure they remain fit for purpose and accepts the recommendation to continue to do so.

The government partially accepts the recommendation to review record-keeping requirements. The regulations currently set out that employers must keep NMW records for 3 years. The government recognises that this is out of step with the period of liability for NMW, which is 6 years, and that this leaves firms vulnerable to being unable to prove their compliance for longer than the 3 years minimum. We will amend the regulations to extend the requirement to 6 years. The government will continue to monitor whether setting out minimum requirements for sufficient record-keeping is appropriate.

The government partially accepts the recommendation to review the regulations pertaining to deductions as we have already internally reviewed the regulations and are not minded to amend them. BEIS consulted on Salary Sacrifice schemes in 2019. The consultation responses indicated that changing the regulations could reduce worker protections. Although we will not be changing the legislation, the government recognises that this is an area where breaches are common, and so we will be providing additional support to employers who operate deduction or salary sacrifice schemes via a helpline. We will also waive financial penalties for employers for certain breaches of rules relating to salary sacrifice and pay deductions (subject to eligibility criteria). Under these limited circumstances, employers will also be exempt from the NMW Naming Scheme. Details of these exemptions are found in the NMW enforcement policy document.

The government accepts the recommendation to review the regulations on pay averaging. Through the consultation on Salaried Hours Work and Salary Sacrifice Schemes, BEIS has collected evidence on the circumstances under which employers can average pay. A response will be published shortly setting out any resulting changes to the NMW Regulations.

Following consultation, the government has also reviewed the regulations on salaried workers and will make a number of amendments to the NMW regulations to ensure fairness while minimising burdens on employers. We will amend the NMW regulations to increase the range of compatible payment cycles to salaried hours workers (such as payments every 2 weeks or 4 weeks – currently only weekly or monthly payment cycles are compatible). The amended regulations will also enable employers to specify the ‘calculation year’ for their salaried workers (the reference point to identify when in a year a worker’s basic hours are exceeded). Currently, the calculation year is individual to the worker’s start date, creating difficulty for employers to monitor when annual basic hours are exceeded. It will also make premium payments to salaried hours workers compatible (such as for working on bank holidays), including where a salaried hours worker’s contract specifies a premium pay arrangement. The existing rules do not allow for premium payment arrangements in respect of the worker’s basic hours.