Businesses employing flexible and short-term workers will need to comply with new rules protecting workers' rights, under a package of reforms announced by the Government.

Under the new legislation, employers will need to provide workers with a written statement of their rights on their first day, including details about their eligibility for sick leave and pay.

Other reforms include closing a loophole that currently allows agency workers to be paid on cheaper rates, and extending the reference period for holiday pay from 12 to 52 weeks.

The maximum tribunal fine for employers found to be showing malice, spite or gross oversight will be increased from £5,000 to £20,000.

Business secretary Greg Clark called the reforms the "largest upgrade in workers' rights in over a generation".

A study by Zurich in 2017 found that around 26% of SMEs had employed gig economy workers - those with one or more short-term contracts or doing freelance work - in the last 12 months.

Most of those employers (70%) said gig workers were important to their company's profitability.

Claire Walker, co-executive director of policy and campaigns at the British Chambers of Commerce, warned that small businesses will need additional support to manage the reforms.

She said:

"SMEs often lack specialist HR expertise and sometimes mistakes can happen.

"It's therefore important that firms have timely information and guidance on any changes, and that penalties are proportionate."

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