Employment and Immigration | UK Regulatory Outlook June 2023

Legislation providing for carers' leave, neonatal leave and pay and enhanced rights on redundancy passed

The government has passed three private members' bills providing for the introduction of the following new workplace rights: a week's unpaid carers' leave in a 12-month period, up to 12 weeks neo-natal leave and pay, and providing for those who are pregnant or returning from maternity or another period of statutory family leave to receive the same statutory protection on redundancy as is currently afforded to those who are on maternity.

In all cases we now await implementing regulations, which will provide further detail on eligibility and how the new rights will operate in practice. Expectations are that carers' leave is unlikely to come into force before April 2024 and neonatal leave and pay is unlikely to be implemented before 2025.

UK government launches new consultation and responds to call for evidence on 'umbrellas'

On 6 June the government issued a summary of responses to the November 2021 call for evidence about "umbrella" arrangements in the UK and a new consultation setting out three options for new legislation. Some key points from the summary of evidence can be found in our Insight. 

Potentially far-reaching Platform Workers Directive agreed at EU ministerial level

It increasingly looks like Platform Workers Directive (PWD) will be adopted later this year following agreement at EU ministerial level in June. This may affect the costs of staffing platforms (including, potentially, taxi apps and temp bank arrangements) and the costs generally of using gig workers or any other volume-based resourcing of labour where recruitment or payment rate-setting processes are increasingly being automated. It may in some cases affect use and supply of contract workers and freelancers across the EU, including US and UK staffing companies which deploy contract workers into the EU.

Key features are as follows:

• There is a very wide definition of "platform" – it might include any organisation which automates matching or which automates matching or uses tech to determine payment rates. Feasibly this could include many traditional staffing companies especially where higher volumes are involved.
• There will be a rebuttable presumption of employment status. In other words, unless the "platform" can prove the worker is not employed, they are employees. This will put up costs (holiday pay, national minimum wage) and have huge indirect tax impacts (VAT and employment taxes and pension costs) further putting up the cost of using platform workers who, after PWD, will be deemed to be employees of the platform (save to the extent VAT exemptions may apply)
• Companies will be considered employers if they meet three out of seven criteria (the European Parliament just wanted a general presumption of employment status so this is an improvement from the perspective of the platforms). In other words, the presumption can be rebutted if you can show five of the seven criteria do not apply. The criteria are:
  
  i. supervising the performance of workers through electronic means,
  ii. restricting their ability to choose their working hours,
  iii. restricting their tasks,
  iv. preventing them from working for third parties,
  v. setting an upper limit on pay,
  vi. setting rules on their appearance or conduct and
  vii. restricting their ability to use subcontractors or substitutes.

• Use of algorithms must be transparent.
• It will come into force in a country once locally implemented in that country (usually within two years of the directive being adopted) – many EU countries already have laws reflecting some of the PWD principles so partly it will be a levelling up exercise within the EU.

Issues for UK-based platforms and suppliers and users of "platform workers" (which could include any staffing company with automated processes, which will increasingly be the case in higher volume arrangements) include:

• Will UK companies supplying/using traditional contract workers across the EU be affected – to what extent will their use of technology make the supplier a "platform"?
• Will chain liability apply (passing liabilities to business users of gig workers) where the platform faces a claim but has no assets? What will stop cynical players from setting up temporary platforms which disappear once claims are made?
• What will the current UK government do – will there be a mirroring? (Probably not.)
• Will a new UK government in 18 months try to mirror the PWD? (Possibly, but the seven criteria are not yet sufficiently clear and there would need to be lobbying and clear guidance to make the regime function effectively.)
• The very wide definition of platform might include any organisation which automates matching and that could push up costs for users of bank arrangements, like the NHS.

UK companies which may be affected in light of their EU operations would be wise to get involved with a view to getting clear and helpful guidance at EU level. Those with no EU operations may be wise to get involved as well to pre-empt the UK deciding to adopt the same regime as part of a rapprochement with the EU after the next election (at which point it may be hard to change the underlying rules of the regime).