Making Work Pay: Consultation Responses

The Government’s plan to make work pay is a core part of our mission to grow the economy, raise living standards across the country and create opportunities for all. It will tackle the low pay, poor working conditions and poor job security that has been holding our economy back. The landmark Employment Rights Bill (ERB) will benefit more than 10 million workers in every corner of the country.

We are committed to working with all stakeholders on how to best put these measures into practice. In October the Deputy Prime Minister, the Secretary of State for Work and Pensions and I launched an initial package of four consultations, with the potential to inform amendments to the ERB. We greatly appreciated the many detailed responses we received. The insights we have gained from businesses, trade unions, representative organisations, civil society, and others have been invaluable in developing proportionate and effective policy.

Today we are publishing the Government’s response to each consultation on gov.uk, including our next steps, as well as the Government’s response to a consultation undertaken by the previous Government on tackling non-compliance in the umbrella company market. I will also be tabling a number of amendments to the Employment Rights Bill today for consideration at Report stage, reflecting the outcomes of these consultations.

The Government are committed to continuing with this approach through full and comprehensive consultation on the implementation of Make Work Pay to ensure that the changes we are making work for both workers and businesses of all sizes.

The Government believe that every worker should be able to access a contract which reflects the hours they regularly work. We believe this should extend to agency workers, not only to offer them greater certainty of hours and security of income, but to ensure that agency work does not become a loophole in the plans to end exploitative zero hours contracts. We also recognise the important role that the temporary work sector plays in both the public and private sector, and the need for employers to retain flexibility in their workforces. This consultation sought views on how to apply zero hours contract measures to agency workers, receiving 629 responses from a broad range of stakeholders.

Based on the consultation responses and further stakeholder engagement, we will table amendments to the Employment Rights Bill which would allow the Government to implement the zero hours contracts rights for agency workers. We believe it is important to narrow the broad power currently in the Bill so that end hirers, agencies and agency workers are clear where responsibilities will sit in relation to the new rights. The obligation to provide a guaranteed hours offer will rest with the end hirer, but legislation will maintain flexibility to place the obligation on agencies or other intermediaries instead, in certain scenarios, which will be set out in secondary legislation. Both the end hirer and agency will be responsible for providing an agency worker with reasonable notice of shifts, shift cancellations and changes to shifts. Agencies will be responsible for making payments to workers which result from short notice cancellations, movements or curtailments of a shift. Agencies and hirers will remain free to negotiate terms which may allow these costs to be recouped from the hirer where the hirer was in fact responsible for the change. In the case of pre-existing contracts, legislation will allow agencies to recoup these costs to the extent the hirer was responsible.

Significant details of the legislation will be set in regulations. We will take the necessary time to consult on the regulations, to ensure clear, detailed and workable provisions. We will continue to engage with employer organisations, the recruitment sector and trade unions to identify the best way to achieve the policy objective of extending rights for agency workers without causing unintended consequences to employment agencies and end hirers.

This consultation sought views on proposals to update the legislative framework in which trade unions operate to align it with modern work practices, removing unnecessary restrictions on trade union activity and ensuring industrial relations are underpinned by collaboration, proportionality, accountability, and a system that balances the interests of workers, businesses and the wider public. This consultation received 165 responses from a range of stakeholders.

We will table amendments to improve the process and transparency around trade union recognition and access, including streamlining the trade union recognition process and strengthening protections against unfair practices. This includes addressing unfair practices to prevent mass recruitment designed to influence the bargaining unit and prevent recognition being granted; a new fixed timeline for employers and trade unions to agree access arrangements for recognition purposes; removing the requirement to prove that an unfair practice influenced voting behaviour; extending the code of practice on access and unfair practices from the point the CAC accept a recognition application; and extending the unfair practice complaint timeframe from 24 hours to five days. We will also amend the Bill so that independent unions can apply for recognition where an employer has voluntarily recognised a non-independent union following receipt of a formal request for voluntary recognition by the independent union.

We will also table amendments to extend the trade union access provisions to cover digital access, in line with modern-day workplaces, while also introducing a fast-track route for achieving an “off-the-shelf" access agreement where certain conditions are met, alongside a mechanism to ensure there are robust penalties in place for non-compliance.

As part of our efforts to remove unnecessary bureaucratic hurdles, and deliver a balance between allowing for effective industrial action, while also ensuring that employers are able to reasonably prepare, we will amend the ERB to abolish the 10-year requirement for unions to ballot members on political fund maintenance, simplify the information requirements for industrial action ballots and notice to employers, extend the expiry of mandate for industrial action from six to 12 months, and ensure that trade unions provide a 10-day notice period for industrial action.

The Government also want to ensure that trade unions have a meaningful mandate to support relationships and negotiation with employers and deliver effective dispute resolution. That is why we are committed to making balloting more accessible by delivering e-balloting, which we anticipate will increase participation in statutory ballots and demonstrate clear mandates. We will launch a working group with trade unions and businesses imminently. While we continue to engage on how to ensure that trade unions are able to secure a meaningful mandate for industrial action, and as the other reforms to trade union legislation come into force, the Government will table an amendment to the ERB specifying that the repeal of the 50% industrial action ballot turnout threshold will be subject to commencement on a date to be specified in regulations. The intention behind this approach is to align as closely as possible the removal of thresholds with the introduction of e-balloting. This will ensure that industrial action mandates will have demonstrably broad support.

This consultation sought views on increasing the maximum period of the protective award for failing to adhere to collective consultation requirements, and on applying interim relief to fire and rehire and collective redundancy scenarios. We received 195 responses, from a range of stakeholders.

We will table an amendment to increase the maximum period of the protective award to 180 days (up from the current maximum of 90 days). Increasing the maximum value of the award means an employment tribunal will be able to grant larger awards to employees for an employer’s failure to meet consultation requirements.

The Government want to enhance the deterrent against employers deliberately ignoring their collective consultation obligations and ensure it is not financially beneficial to do so. The Government are not proposing to bring forward the proposals to make interim relief available for either collective redundancy or fire and rehire scenarios. The most overarching and prominent theme from the responses on this section of the consultation is that it would be difficult to implement interim relief in practice, and the complexities for the employee in bringing a claim would outweigh any benefits in doing so. We will keep the area under review though and if it is found that further measures are needed, we will look to introduce them.

Through the Employment Rights Bill, we are removing the waiting period so that SSP is paid from the first day of sickness absence and extending eligibility to those earning below the lower earnings limit.

We are introducing a new rate for statutory sick pay which will be paid to the lowest earners, including all those earning below the lower earnings limit. An employee will be entitled to the flat rate or a percentage of their earnings, whichever is lower. We consulted on what this percentage rate of earnings should be.

Following this consultation, and together with the Secretary of State for Work and Pensions, I am today tabling an amendment to set the percentage rate of statutory sick pay that will be paid up to the flat rate of SSP at 80% of an employee’s normal weekly earnings. This percentage rate provides a fair earnings replacement and strikes the right balance between providing financial security to employees who are unable to work due to sickness, while also limiting additional costs to businesses.

The Secretary of State for Work and Pensions will also publish the full Government response to the consultation on statutory sick pay, which sets out the findings and rationale in more detail, and will submit the Government’s response to the Work and Pensions Select Committee report on statutory sick pay.

In 2023 the previous Government consulted on proposals to regulate umbrella companies and options to tackle tax non-compliance in the umbrella company market, but no action was taken to address this. This means that many workers are unaware of who is responsible for providing their employment rights, or whether they are entitled to any employment rights at all. Many have reported a lack of pay-related transparency and mishandling of pay (typically, non-transparent deduction from wages). Yet the Employment Agency Standards Inspectorate is currently unable to take action against non-compliant umbrella companies, as they do not fall within scope of the legislation covering employment agencies and employment businesses.

We will therefore table an amendment to the Employment Rights Bill to expand the scope of the Employment Agencies Act 1973, allowing umbrella companies to be regulated for the purposes of employment rights. We will set out the detail in regulations following further consultation, aiming to ensure that workers have comparable rights and protections when working through an umbrella company as when taken on directly by an employment business.

This package represents the first phase of formal public consultations on how best to put our plans into practice. We have committed to full consultation on the implementation of this legislation, and expect this to begin this year, ensuring reforms work for employers and workers alike.

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