A new focus on employment practices

20 / 12 / 2016

The Prime Minister commissioned the Independent Review of Employment Practices in the Modern Economy on 1 October 2016. This followed the investigation into the working practices at Sports Direct which gave rise to concerns about protection of low paid workers.

The goal of the review is to ascertain whether employment practices need to change in order to keep pace with modern business models.

Whilst the review does not solely concern pensions, they will certainly be an important feature.  Overall the review will address six key themes:

  • Security, pay and rights
  • Progression and training
  • The balance of rights and responsibilities
  • Representation
  • Opportunities for under-represented groups
  • New business models

The scope of the review asks several specific questions, the one most relevant to pensions is:

“To what extent does the growth in non-standard forms of employment undermine the reach of policies like the National Living Wage, maternity and paternity rights, pensions auto-enrolment, sick pay and holiday pay?”

Looking purely at the pensions part of this question – the auto-enrolment requirements are fairly broad and apply in respect of the majority of workers in the UK.  However, certain individuals are not covered by the auto-enrolment regulations, such as self-employed people or people who do not hit the earnings threshold.  Indeed, the Prime Minister has identified that there is a “growing army of people working in new ways” and, according to the Chair of the review, Matthew Taylor, she is keen to ensure their interests are prioritised.

The objective is honourable – big businesses, in particular, are likely to be required to be more accountable for the way they treat their workers, resulting in Britain becoming a fairer place to work.

Those companies which make use of non-standard employment arrangements may well face a significant rise in the costs relating to such individuals if the review results in a more even playing field for such workers.