Labour’s election, and their stated commitment to making worker-centric changes to employment legislation, will undoubtedly have wide ranging impacts on employers within the gig economy, including those in the hospitality industry. There were numerous employment law proposals announced in the recent King’s Speech, which will impact employers of “casual” staff.
Labour proposes to introduce a new Employment Rights Bill in the next parliamentary session, signifying a shake-up to workers’ rights and changes to existing law. But what does this really mean for businesses engaging gig economy workers?
Currently, many of those engaged in the gig economy are “workers”, the intermediary status between being a full employee, and being self-employed. Workers do not enjoy all the rights of an employee (e.g. claiming unfair dismissal or maternity pay). Labour has indicated that employment rights should apply to all workers and a re-classification of employee/worker status is also anticipated. This will have a significant impact on the gig economy, as casual workers within the sector are soon likely to benefit from a far wider range of employment rights. Also impacted will be the businesses engaging them – both financially and in terms of an additional administrative burden.
Some of the key proposals from the King’s Speech which will impact the gig economy are as follows:
Banning "exploitative zero-hours contracts"
Intended to give workers a right to a contract which reflects their average working hours, reasonable notice of shift changes, and adequate compensation for cancelled or curtailed shifts. These reforms go much further than those set out in legislation proposed by the previous government, which is now likely to be substituted with the greater protection for workers promised under Labour’s proposals.
"Fire and re-hire remedies"
The government is working to provide “effective remedies” for those workers who are subjected to the practice of “fire and re-hire”.This is the practice whereby employers who cannot agree changes to contractual terms with workers seek to dismiss them and immediately seek to re-engage them on new terms. Labour’s goal is to strengthen the recently introduced statutory code on dismissal and re-engagement to make this practice much more difficult and so carry far more legal risk.
Day 1 rights
These proposals mean workers may be entitled to more employment rights from their first day – most of which are currently only available to employees.
Among these changes, workers could get the right to bring claims for unfair dismissal from day one, a big step away from the current position that employees must (subject to a few exceptions) have at least 2 years’ service to be able to bring a claim. Similarly, big changes have been proposed for Statutory Sick Pay (SSP). Currently SSP is only available to those earning over the lower earnings limit, and even then, is only payable from the fourth day of absence. Proposals remove this limit, allowing SSP from the first day of absence.This will have a huge impact on workers and employers alike, though it’s yet to be seen how the proposals will impact sickness absence for those working for multiple employers, with no set hours or days of work.
Flexible working requests are more unusual in the gig economy, given the already flexible nature of working arrangements. However, depending on the details of the new proposals, we could see an increase from gig economy workers. Currently employers may only refuse a request to work flexibly for a limited number of reasons. The new proposal is for employers to accommodate flexible working “as far as reasonable” (though it remains unclear how far this extends existing obligations).
Important changes to Parental Leave policies have been proposed, but it’s unclear whether the government are referring to changes to the statutory right to take unpaid parental leave, or if they’re referring to parental leave as a collective term, to capture, for example, paternity leave and shared parental leave (currently both requiring 26 weeks’ service before the relevant qualifying week). It remains to be seen whether the government has considered the impact on businesses which engage workers on short term bases.
Dismissal following maternity leave return
The government has indicated it intends to make it unlawful to dismiss a woman within six months of her returning from maternity leave “except in specific circumstances”. The law already protects such women (including very recently granting them priority in relation to suitable alternative employment in a redundancy situation), so it will be interesting to see how the government intends to implement greater protections in this area.
A new single enforcement body with "real teeth"
The government has trailered the establishment of a “Fair Work Agency” that will have “real teeth”. With powers including the ability to prosecute and fine companies that breach employment law, this goes far further than the previous government dared, with the goal of strengthening enforcement of workplace rights through a coordinated approach across agencies.
Removing restrictions on trade union activity
Labour wants to ensure industrial relations are based around good faith negotiation and bargaining, as well as simplifying the process of statutory recognition and granting a reasonable right to access a union within workplaces. We could therefore see more trade union activity within the gig economy.
Equal pay for ethnic minorities and disabled people
Potentially giving the full right to equal pay for ethnic minorities and disabled people, and introducing mandatory ethnicity and disability pay reporting. Voluntary ethnicity and disability pay gap reporting is already encouraged, but mandatory reporting was not introduced due to a lack of adequate data collection and the challenge of categorising different ethnic groups and disabilities. These are still issues that the new government will need to address.
After initial uncertainty, the Employment (Allocation of Tips) Act 2023 and the accompanying code of practice will come into force on 1 October 2024. This will mean businesses are required to pass on tips in full to workers within one month of receipt, allocate tips in a fair and transparent way and, where tips are left more than occasionally, businesses must have a tipping policy in place.
The future for employment rights in the gig economy is still unclear, but we can expect to see a paradigm shift in favour of workers. Whether the intermediate employment status of “worker” will remain is still uncertain. Even if it does continue, it’s likely that workers are to enjoy more employment rights than they currently do, which may impact the commercial viability of some gig economy arrangements.
This article was first published in CLH Digital and can be accessed here.
Rebecca Berry
Philippa Crook