Introduced as part of the reforms under the Good Work Plan, amendments to Section 1 of the UK’s Employment Rights Act 1996 will impose new obligations on employers in the provision of written statements of particulars of employment. Employers should review and update their standard employment contracts to ensure compliance with these new requirements.
The UK government published the Good Work Plan in December 2018. Adopting many of the recommendations set out in the Taylor Review of 2017, the Good Work Plan sets out the UK government’s vision for the future of the UK labour market, including how it will address the various challenges facing the 21st century workforce.
As part of its plan, the UK government has identified the importance of providing individuals with clarity and transparency about their employment and, in particular, their employment rights. With modern recruitment methods becoming increasingly complex, the Good Work Plan emphasised the importance of allowing individuals to make informed choices so that they can fully understand the terms they are signing up to. In order to achieve this goal, the Good Work Plan introduces reforms to Section 1 of the Employment Rights Act 1996 (ERA) that will take effect on 6 April 2020.
The current position under Section 1 of the ERA is that employees engaged for more than one month are entitled to a written statement setting out the key terms and conditions of their employment (Section 1 Statement). A Section 1 Statement should be provided within two months of commencement of employment.
The ERA distinguishes, however, between (i) information that must be provided in a single document (the “principal statement”), and (ii) information that can be provided in a supplementary statement (to which the principal statement refers), as follows:
Employees can bring an employment tribunal claim against their employer for a failure to provide a Section 1 Statement. Compensation is available (in certain circumstances) of between two and four weeks’ pay, subject to a statutory cap of £525 per week (as of March 2020).
Under the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 and Employment Rights (Miscellaneous Amendments) Regulations 2019, new rules governing what, how, and when employers must provide a Section 1 Statement will take effect from 6 April 2020 as follows:
Employees v. Workers
Extending the right to a Section 1 Statement to include workers as well as employees (and then imposing an obligation on employers to provide such statements on “day one”) will require employers to consider employment status during the recruitment process. More specifically, when determining whether a Section 1 Statement will be required for any given individual, employers should examine a wide range of factors when considering whether an individual has employment or worker (or self-employed) status.
Given the nature and complexity of assessments of employment status (as matters to be taken into account will vary depending on the particular circumstances), employers should look to implement an assessment process by which determinations can be made as to whether any given individual is entitled to a Section 1 Statement. It may be appropriate to instigate this process in tandem with assessments undertaken as part of the extension of the IR35 Off-Payroll Working Rules, which will also take effect on 6 April 2020. See our prior LawFlash on that topic.
Since employers will be under an obligation to provide workers with a Section 1 Statement by no later than the first day of their employment, those firms engaging new workers and/or employees will need to ensure that they have updated their employment contract templates by 6 April 2020.
The new rules on Section 1 Statements will not apply retrospectively, so employers will not be required to roll out amended contracts to their current workforce. However, the changes give existing workers the right to request a Section 1 Statement that contains the new additional information at any time up to three months after the end of their employment. Upon receipt of such a request, employers will have one month to provide a Section 1 Statement that complies with the new rules.
It remains to be seen whether many existing workers will take advantage of the option to request a Section 1 Statement unless (perhaps) an individual wants an updated employment contract in the context of broader litigation against their employer (e.g., if there was any uncertainty as to the terms of their employment). We expect take-up will be relatively low.
Employers should also note that, where a worker has not requested a Section 1 Statement after 6 April 2020, but the employer wishes to amend a term in a worker’s employment contract (including any of the additional terms now required), the employer must inform the employee in writing of the change. Based on current practice, it is likely that employers will be doing this in any event. However, employers should design and implement an internal procedure in order to deal with employee requests and changes to employment terms in a consistent and orderly manner.
Agency Workers and Independent Contractors
To the extent that an employer relies on agencies for the provision of staff, and such agencies employ individuals directly (and supply them to the employer), it will be the responsibility of the agency to replicate the new changes in their employment contracts going forward. Nonetheless, employers may wish to approach agencies to ensure they are taking action. In many instances, the relevant overarching supply agreement with the agency may contain a term requiring the agency to ensure they comply with applicable law as regards the people they supply.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers: