The rapidly changing face of modern business has highlighted the gaps in employment protection faced by many of those engaged in it, with the recent cases involving operations such as Uber and Pimlico Plumbers providing evidence that the current system simply isn’t working. The legal principles used to determine employment and self-employment status have not changed a great deal from the time when the employment relationship was defined as that of “master and servant”. So it is not surprising that they are no longer fit for purpose and are being uncomfortably contorted by these new cases.
The Government is taking steps to address the issue, but change is unlikely to be simple or quick. The recent Department of Work and Pension report describes the current ways of categorising workers as “creaking under the weight of a changing economy” and it is hard to find fault with this assessment.
In October last year, the Government commissioned an independent review of Employment Practices in the Modern Economy, which has been chaired by Matthew Taylor. The report is expected in June, although clearly this may get delayed by the election. In any event, Matthew Taylor has given insights (in a Robert Peston interview and other media broadcasts) into what he is likely to propose. He has made clear that he will be recommending changes to the rights of self-employed workers. He has commented, quite rightly, that there has been a blurring of boundaries between the self-employed, who get few employment rights, and employees, who have full rights. His recommendation is likely to focus on control of the individual. He has stated that if a company wants to control the work done, the basis on which the work is done and the content then the flip side of this is that the individual should have employment rights and entitlements.
Such a change would involve the re-casting of the definition of “employee”, bringing into the scope of its protection many who are currently in the middle ground of protection as “workers” as well as some currently viewed as self-employed. Whilst sensible in many ways, it will not be welcomed by all. Many businesses will see it as an interference with their right to operate as they choose, as well as a financial burden that many will be unable to meet without a change to their current pricing methods.
Additionally, it would be wrong to assume that all workers engaged in the “gig” economy are unhappy - some find the freedom to work as self-employed enables them to market their skills to their advantage. So, whilst a key driver for businesses adopting the working practise of the gig economy is the flexibility and lower costs the working model delivers, many workers also enjoy the flexibility it brings. A further driver for change is one of taxation. With lower NIC payments from the self-employed a widening of the scope of “employee” would bring fiscal benefits for the next Government.
It seems likely that the Taylor recommendations will be bold. The Conservatives have indicated in their election manifesto that there will be new protections for people in the gig economy. We await the detail of these proposals and will keep you bang up to date with developments.