Loophole that allowed agency workers to be paid less than permanent staff closed

17 December 2018 by
Loophole that allowed agency workers to be paid less than permanent staff closed

The government has outlined a raft of reforms set to protect ‘gig economy workers', including the closure of a loophole that allows agency staff to be employed on cheaper rates than permanent employees and the banning of taking deductions from tips.

The reforms follow the conclusions of the Taylor report into employment practices, with 51 of the 53 recommendations made by author Matthew Taylor taken forward.

Business secretary Greg Clark has outlined the new measures which include:

  • Closing a loophole which allows agency workers to be employed on cheaper rates than permanent counterparts
  • Introducing legislation that will ban employers from making deductions from tips
  • Staff to be given details of their rights, including eligibility for sick leave, maternity and paternity leave on their first day of employment
  • An increase in maximum employment tribunal fines for employers who are demonstrated to have shown malice, spite or gross oversight from £5,000 to £20,000
  • Companies must calculate holiday pay based on a 52-week period rather than a 12-week period to ensure seasonal workers get their full entitlement
  • The introduction of a right for all workers to request a more predictable and stable contract.

Clark said: "Today's largest upgrade in workers' rights in over a generation is a key part of building a labour market that continues to reward people for hard work, that celebrates good employers and is boosting productivity and earning potential across the UK."

But, UKHospitality chief executive Kate Nicholls has said businesses need more clarity about the government's intentions.

She said: "These measures strike a balance between protecting workers' rights and ensuring the highly-valued flexibility that exists in the UK. As ever, we need to see clear and unambiguous guidance from the Government to support businesses and ensure there are no accidental breaches to any new measures. The Government must also recognise that new measures will increase bureaucracy for businesses."

Nicholls added: "The Government's package contains some pragmatic measures, but we are still concerned about plans to tackle ‘one-sided flexibility' in the workplace. It is vital that guidance is clear so as to not undermine employer-employee relations regarding flexible working"

Plans for tipping legislation, first announced in October, were outlined in the government's Good Work Plan, which states: "We are pleased that most employers already pass on tips to the staff who earn them.

"However, we are aware that a minority of employers exploit their staff by retaining the tips they earn. This is contrary to basic fairness at work."

The reforms will not see the banning of zero hours contracts after Taylor said that such a move would harm more people than it helped.

The government has also today responded to the Labour Market Strategy set out by Sir David Metcalf, the director of Labour Market Enforcement, with plans to tackle exploitation of low paid workers.

Proposals will be bought forward early in 2019 for a single enforcement agency to protect vulnerable workers. New powers will also be granted to impose harsher penalties on employers who breach legislation, for example by non-payment of wages.

Metcalf added: "I am pleased that the vast majority of my 37 recommendations have been accepted, including my recommendations regarding a shift to more proactive enforcement and improving joint working between the three enforcement bodies under my remit and wider organisations within labour market enforcement."

Government reveals plans for holiday and sick pay entitlement for casual workers>>

Petition calls for government action to protect rights of gig workers>>

Get The Caterer every week on your smartphone, tablet, or even in good old-fashioned hard copy (or all three!).

The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.


Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking