The long awaited report of Matthew Taylor's review into modern employment practices has finally been published.
As might have been predicted, the ‘Good Work’ review does not come up with all the answers to what most commentators agree is a very complex issue. It does however include some quite radical proposals which, if implemented, will have a significant impact on all employers, not only those in the ‘gig economy’. You can read the full report Good work: the Taylor review of modern working practices on the GOV.UK website.
The key points arising from the Taylor Review
- The review recommends retaining the existing tripartite classification of 'employee', ‘self-employed’ and the intermediate ‘worker' status, allowing for basic protections to be applied to less formal employment relationships.
- The classification of employment status should be set out in revised legislation to reflect the factors taken into account by the courts when determining employment status. The ‘high level’ criteria should be included in primary legislation, with the detail set out in secondary legislation and statutory guidance.
- The review recommends a greater emphasis on the principle of ‘control’, rather than the principle of personal service, as being central to establishing worker status. Firms with a “controlling and supervisory” relationship over individuals should be required to treat them as ‘workers’, but this existing category should be known instead as ‘dependent contractors’. Such individuals would be entitled to statutory paid holiday and statutory sick pay (accrued according to length of service), and firms would be liable for national insurance contributions.
- ‘Dependent contractors’ should have the right to be provided with a written statement of particulars at the start of their engagement, similar to the existing section 1 ERA statement of employment particulars for employees. This should be a ‘day one’ right for both employees and workers and should include a description of the applicable statutory rights. It should be backed up with a standalone right to compensation for failure to comply.
- Individuals should be able to have their employment status determined by a tribunal without having to pay the existing tribunal fee. In cases where employment status is in dispute, the burden of proof should be on the employer to prove that the claimant is not entitled to the rights claimed. Employment tribunals should be able to impose additional penalties (and costs awards) on employers who do not apply the findings of tribunal judgments to the wider workforce.
- The period necessary for breaking continuity of employment, when an employee does not carry out any work, should be extended from one week to one month, potentially making it easier for casual workers to accrue continuity.
- Where there is ‘genuine two-way flexibility’, of benefit to both workers and employers, this should be retained. For ‘platform workers’ (those providing services through apps and other digital systems), the rules that apply to 'output work' under the National Minimum Wage Regulations could be adapted, meaning that workers would not be entitled to be paid the NMW for every hour worked. Such workers should be provided with real-time information about what pay is available for any particular shift and be free to choose when to work.
- The definition of self-employment for employment law and tax purposes should be aligned, meaning that dependent contractors (workers) are taxed in the same way as employees. This would ultimately mean that if an individual is determined as being an ‘employee’ for tax purposes, the decision would also be binding for employment law purposes.
- The Government should ask the Low Pay Commission to consider the impact of introducing a higher rate of the NMW for hours that are not guaranteed in a contract (eg for zero-hours workers)
- The pay reference period for the calculation of statutory holiday pay should be increased from 12 to 52 weeks, making the calculation fairer for seasonal, casual and zero-hours workers whose hours fluctuate throughout the year. Individuals should also have the choice to be paid ‘rolled-up’ holiday pay as a premium to their hourly rate, instead of taking time off (note, this would not be technically compliant with the requirements of the Working Time Directive, as interpreted by the ECJ).
- Agency workers should be given the right to request a direct contract of employment after 12 months with the same hirer, with the obligation for the hirer to give reasonable consideration to the request. Zero-hours workers should also be entitled to request a contract with guaranteed hours to reflect the pattern of actual hours worked, after 12 months.
- The current ‘Swedish derogation’ under the Agency Workers Regulations 2010, exempting certain agency workers from the right to equal pay if they are engaged under a contract with a minimum level of pay between assignments, should be abolished.
- The Information and Consultation of Employees Regulations 2004 should be extended to cover both employees and workers, and the threshold for a request for the establishment of workplace representatives reduced from 10% to 2% of the workforce.
Following publication of Good Work review, the Government has committed to engaging with stakeholders, including those representing both employers and employees, to understand their views before publishing a full response to the review later in the year.
Many of the proposals will require significant periods of consultation and it therefore remains to be seen how many of them will find their way into the Government’s legislative programme, when so much parliamentary time and resources are already devoted to the complexities of Brexit. The only thing we can say with any certainty is that none of the proposed reforms will take effect any time soon.