The Government has published its response to the Taylor Review of Modern Working Practices.

The Taylor Review, which was published last July, included 53 recommendations and the Government has responded to each one. It has also responded to the recommendations made by the Work and Pensions and Business, Energy and Industrial Strategy Committees.

The Government agrees that steps should be taken to increase workers' rights and their awareness of those rights and that action should be taken against employers who breach workers' rights. One of the key principles is that equal importance must be placed on the quality of work and the quantity of work.

However, the Government has concluded that many of the proposals in the Taylor Review require further consultation before it can decide how best to proceed. Accordingly, on the same day as the response, it launched four consultations on: the enforcement of employment rights; agency workers; measures to increase transparency in the UK labour market; and employment status. The consultations close on various dates in May and June 2018.

We look at the four key areas covered by the consultation documents.

Employment status

  • It should be easier to determine whether someone is an employee, a worker or self-employed. The consultation therefore includes consideration of how to improve clarity in this area in the light of changes in the way people work, how the existing tests work in the modern labour market, whether legislative reform might be required and whether a new test is needed. The Government also intends to introduce an online tool to help determine status.
  • The consultation also covers the recommendation for greater alignment between the employment status for both employment rights and tax.
  • The Government considers that the three-tier system for rights remains appropriate and has therefore not considered making "dependent contractor" an additional status. The consultation does, however, seek views on whether a "worker" should be renamed a "dependent contractor".
  • The definition of working time should be considered in the light of the gig economy so that workers can be clear about how the national minimum wage applies.
  • Views are also sought on how best to avoid sham self-employment.

Agency workers

  • There should be greater transparency for agency workers over how and what they will be paid when taking up assignments. The consultation covers what changes need to be made to the current regulations to effect this.
  • Detailed evidence should be sought to determine the extent of abuse of the Swedish derogation (where agency workers receive pay between assignments) as a way of circumventing equal pay entitlements of agency workers and whether state intervention is required or the derogation should be repealed.
  • Views are sought as to how the regulation of umbrella companies and other intermediaries by the Employment Agency Standards Inspectorate would improve working conditions for work seekers.

Increasing transparency in the labour market

  • The right to written particulars should be extended to all workers and the consultation covers how best to achieve this and what information the statement should include.
  • All workers (not just those on zero hours contracts or agency workers) should have a right to request a contract with more predictable and secure working conditions and the consultation seeks views on whether stakeholders agree.
  • It should be easier for those in atypical employment to establish continuity of service, on which many key employment rights depend, by increasing the period that would qualify as a break in service from one week. The consultation asks for views on how long the extended period should be.
  • The holiday pay reference period should be increased to 52 weeks so that atypical workers receive the holiday pay to which they are entitled (although the consultation seeks views on whether it should be so extended). A campaign will also be launched to increase awareness of holiday pay entitlements.
  • The response states that the Government will shortly legislate to provide a right to an itemised payslip for all workers and to require payslips to state the hours being paid for time-paid workers.
  • Consideration should be given to making it easier for workers to trigger formal consultation processes with their employer, which may include reducing the threshold required for the establishment of information and consultation arrangements under the Information and Consultation of Employees Regulations.
  • Further clarifying guidance on maternity and pregnancy rights at work for individuals and employers should be issued. The Government will continue to work with Acas and other bodies to improve advice and guidance and will update the pregnancy and maternity discrimination pages on gov.uk by summer 2018. The Government will also continue to promote rights, including shared parental leave.
  • The Government will review the impact of the corporate governance reforms announced in August 2017 and will work with the Financial Reporting Council to consider revised guidance to encourage a fuller explanation of the workforce model and practices. If necessary, a "People Report" may be required from employers to provide additional specific metrics relating to workforce structure.
  • The Low Pay Commission will be asked to consider the potential impact of a higher national minimum wage/national living wage rate for hours that are not guaranteed as part of the contract and investigate alternative options for tackling one-sided flexibility.

Enforcement of employment rights

  • A wider range of basic employment rights (national minimum wage, sick pay and holiday pay) should be enforced by the Government on behalf of the most vulnerable workers. Detailed evidence is to be gathered of the scale and distribution of non-compliance before the appropriate enforcement activity is determined. On a separate note, a consultation on SSP is to be brought forward to consider, for example, whether eligibility should be extended and a right to return to work should be introduced.
  • The enforcement process for employment tribunal (ET) awards should be simplified and HMCTS are already undertaking a reform of the process for dealing with unpaid awards across the courts and tribunals system.
  • A naming scheme for those employers who do not pay ET awards within a reasonable period of time should be introduced.
  • Employment judges should be obliged to consider stronger punishments for employers who ignore previous ET judgments and views will be sought on how best to implement this.
  • The maximum penalty for aggravated breach will be increased from £5,000 to at least £20,000 as soon as practicable.
  • New guidance and increased targeted enforcement will be introduced to eradicate illegal and exploitative unpaid internships. If this does not work, further action will be considered.

Recommendations that are not being adopted

The Government has decided not to take forward a number of the Review’s proposals, including those concerning:

  • Expedited hearings without a fee in employment status cases, as fees are not currently being charged following the Supreme Court judgment in the challenge brought by Unison. If fees are reintroduced, the Government would consider at that stage whether a fee should be payable for employment status claims.
  • A reversal of the burden of proof in employment status cases (which would require employers to prove that the individual was not entitled to the relevant employment rights). This will be revisited once decisions have been reached about whether employment legislation will be amended and when an online tool has been developed.
  • Rolled-up holiday pay, as the European Court of Justice has held this to be unlawful. Instead, consultation will explore what alternative action could be taken.
  • Further expanding the role of the Low Pay Commission. Instead of giving the LPC all the functions the Review recommended, the proposal is that BEIS and other sector teams will work with various stakeholders to improve the quality of work across all regions and sectors and use "Sector Deals" to promote good work.

The Government has also decided not to take any further action in respect of the separate call for evidence in May 2015 about non-compete clauses in employment contracts, as the consensus view was that these were a valuable and necessary tool and did not unfairly impact on the ability to find work, and the existing common law arrangements were felt to work well. It has also rejected a proposal to reduce the difference between the National Insurance contributions of employees and the self-employed.

Although the response addresses each of the Taylor Review's recommendations, many of the responses relate to the provision of additional guidance or the encouragement of greater collaboration, rather than legislative change.

Many of the recommendations have also been absorbed into the consultations. We will therefore need to wait and see what changes (if any) result from this process. In the light of other matters occupying the Government's time, it may be some time before any of the proposed changes are implemented.

As ever, if the proposed changes are implemented, the details will be important; not least in respect of the right to request more predictable working conditions, where details such as the circumstances in which such a request can be refused, whether there will be any exclusions and what amounts to "more predictable and secure working conditions", will all impact on the scope of such a right.

Finally, as regards employment status, this area - as acknowledged in the response - is complex. Previous tools have been developed that purported to provide guidance on employment status, even before the complexities of the gig economy, and so it will be interesting to see whether the new intended tool would meet the stated aim of reducing ambiguity.