A framework for modern employment Contents

Committees’ draft Bill

1 Employment and worker status: definitions

(1) Section 230 of the Employment Rights Act 1996 is amended as follows.
(2) Omit subsection (3) and insert:

“
(3) For the purpose of subsections (1) and (2) a tribunal or court may have regard to the following factors, for example:
(a) whether the contract places an obligation on the individual to perform work personally;
(b)whether the other party to the contract retains the potential to control to a substantial degree how the individual’s work will be carried out in relation factors such as:

(i) disciplining the individual;
(ii) the activities to be carried out;
(iii) the order in which activities are to be carried out;
(iv) the equipment or products to be used in carrying out the activities;
(v) the rate of pay for the activities;
(vi) where the work will be carried out;
(vii) how the activities will be carried out; and
(viii) the hours during which the work is to be carried out.

(c) whether the individual is integrated into the other party to the contract’s business;
(d) whether the other party to the contract provides tools or equipment;
(e) the degree of financial risk undertaken by the individual; and
(f) whether the individual is prohibited from working for others during the contract.

(3A) In this Act “worker” (except in the phrases “shop worker” and “betting worker”) means an individual who —

(a) has a contract of employment; or
(b) has entered into or works under any other contract, whether express or implied and (if it express) whether oral or in writing whereby the individual undertakes to do or perform any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.

(3B) For the purpose of subsection (3A)(b) a tribunal or court may have regard to the following factors, for example:

(a) those mentioned in subsections (3)(b)-(f) above;
(b) whether the worker was engaged in marketing their business before the contract came into existence; and
(c) whether any substitution clause is capable of being freely exercised by the individual in practice (but the fact an individual has a contractual right to appoint a substitute under the contract shall not of itself prevent that individual from being a worker).

(3C) In this Act an individual is “an independent contractor” if he is neither an employee nor worker.

(3D) For the purpose of subsection (3C) a tribunal or court may have regard to the following factors, for example —

(a) whether the individual assumes responsibility for the success or failure of his business;
(b) whether the individual can hire others at their own expense;
(c) whether the individual has the ability to determine the manner in which the services are carried out;
(d) whether the individual actively markets their services;
(e) whether the individual can negotiate and set the price for their services; or
(f) whether the individual is responsible for their own indemnity cover or public liability insurance”.

[Harmonising amending provisions need to be made in:

– section 296 Trade Union and Labour Relations (Consolidation) Act 1992;
– section 54 of the National Minimum Wage Act 1996;
– regulation 2 Working Time Regulations 1998
– regulation 1 Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000
– section 83(2) Equality Act 2010]

2 Worker by default

(3) Before section 1 of the Employment Rights Act 1996, insert:

“1ZA Statement of status
(1) Where an individual begins working for another party, that party shall give to the individual a written statement of status not later than seven days after the beginning of the work.
(2) The statement must contain —

(a) a clear statement of status, specifying whether the individual is -

(i) an employee; or
(ii) a worker

according to the definitions in subsections (1) to (3B) of section 230;
(b) details of the rights and entitlements of the individual by virtue of their status.

(3) The Secretary of State may make regulations requiring companies to publish information in relation to statements of employment and worker status.
1ZB Worker status by default unless evidence of self-employment
Where in any complaint made to an employment tribunal any question arises as to whether an individual is a worker, it shall be presumed that the individual is a worker unless the contrary is established”.

3 Pilot for non-guaranteed hours

(4) After section 51(8) of the National Minimum Wage Act 1998, insert:
“

(9) The regulations may make provision for pilot schemes for matters such as the payment of different rates for hours which are not guaranteed by the employer. Such pilot schemes may apply only to some sectors or some employers, and subsection (8) shall not apply to them accordingly.
(10) Any regulations to which this subsection applies may be made so as to have effect for a specified period not exceeding 24 months.
(11) The Low Pay Commission shall be consulted with over the draft of any orders made under this subsection, and in particular over:

(a) the rate at which the premium should be set;
(b) the potential impact on marginal hours of employment; and
(c) the potential impact on compliance”.

4 Collective proceedings

(5) After section 15 of the Employment Tribunals Act 1996, insert:
“15A Collective proceedings

(1) Subject to the provisions of this Act and the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013, proceedings may be brought before the Employment Tribunal combining two or more claims under the following legislation:

(a) Part II of the Employment Rights Act 1996;
(b) The Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994;
(c) any complaint made to an employment tribunal having dispute about employment or worker status under section 230 Employment Rights Act 1996 being determined as a preliminary issue; or
(d) Claims under regulation 30 of the Working Time Regulations 1998 (“collective proceedings”).

(2) Collective proceedings must be commenced by a person who proposes to be the representative in those proceedings.
(3) The following points apply in relation to claims in collective proceedings—

(a) it is not a requirement that all of the claims should be against all of the respondents to the proceedings;
(b) the proceedings may combine claims which have been made in proceedings under legislation in subsection 1 above and claims which have not; and
(c) a claim which has been made in proceedings under the legislation set out subsection 1 above may be continued in collective proceedings only with the consent of the person who made that claim.

(4) Collective proceedings may be continued only if the Tribunal makes a collective proceedings order.
(5) The Tribunal may make a collective proceedings order only—

(1) if it considers that the person who brought the proceedings is a person who, if the order were made, the Tribunal could authorise to act as the representative in those proceedings in accordance with subsection 8; and
(2) in respect of claims which are eligible for inclusion in collective proceedings.

(6) Claims are eligible for inclusion in collective proceedings only if the Tribunal considers that they raise the same, similar or related issues of fact or law and are suitable to be brought in collective proceedings.
(7) A collective proceedings order must include the following matters—

(a) authorisation of the person who brought the proceedings to act as the representative in those proceedings;
(b) description of a class of persons whose claims are eligible for inclusion in the proceedings; and
(c) specification of the proceedings as opt-in collective proceedings or opt-out collective proceedings (see subsections 10 and 11).

(8) The Tribunal may authorise a person to act as the representative in collective proceedings—

(a) whether or not that person is a person falling within the class of persons described in the collective proceedings order for those proceedings (a “class member”), but
(b) only if the Tribunal considers that it is just and reasonable for that person to act as a representative in those proceedings.

(9) The Tribunal may vary or revoke a collective proceedings order at any time.
(10) “Opt-in collective proceedings” are collective proceedings which are brought on behalf of each class member who opts in by notifying the representative, in a manner and by a time specified, that the claim should be included in the collective proceedings.
(11) “Opt-out collective proceedings” are collective proceedings which are brought on behalf of each class member except—

(a) any class member who opts out by notifying the representative, in a manner and by a time specified, that the claim should not be included in the collective proceedings; and,
(b) any class member who—

(i) is not domiciled in the United Kingdom at a time specified; and
(ii) does not, in a manner and by a time specified, opt in by notifying the representative that the claim should be included in the collective proceedings.

(12) Where the Tribunal gives a judgment or makes an order in collective proceedings, the judgment or order is binding on all class members, except as otherwise specified.
(13) The right to make a claim in collective proceedings does not affect the right to bring any other proceedings in respect of the claim.
(14) In this Part, “specified” means specified in a direction or Presidential Guidance made by the Tribunal”.

[Secondary legislation would also be required in respect of the Employment Tribunal Rules of Procedure.]

5 Continuous service

(6) Substitute “a month” for “a week” in section 210(4) Employment Rights Act 1996.

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17 November 2017