The long-awaited report by Matthew Taylor, Chief Executive of the RSA, on the impact of modern working practices and the so-called "gig economy" on businesses and the rights of individuals engaged by them was published on 11 July 2017.  The report is available here.

The report sets out a recommended policy direction, advocating a focus on "good work", rather than simply on the quantity of available work.  It proposes that there should be stronger incentives for employers to treat those who work for them fairly and transparently.  It also recommends that there should be greater opportunity for people to improve their skills and career prospects, rather than staying for extended periods on the National Minimum Wage.  Employers should also be encouraged to be more proactive about promoting workplace health and to take more steps to facilitate an employee's return to work after ill health.

The new mode of online "platform" working, where, for example, a taxi driver or courier logs onto an online app and is connected with customers, is accepted as having a role in modern society.  This is often referred to as part of the "gig economy".  However, the report recommends that steps are taken to protect the rights of those working for such platforms.

The report recommends that workers who do not qualify as employees should be renamed "dependent contractors" and should receive workers' rights such as holiday pay and NMW.  The extent to which an individual is controlled by a business should be key to determining whether someone is a dependent contractor and this consideration should be more important in tribunal than whether the individual has to provide the service personally.

A number of recommended changes designed to make determining and enforcing employment rights more stream-lined are set out in the report.  Among these are:

  • To abolish the hearing fee for preliminary hearings to determine employment status and to fast-track such hearings.  The burden of proof in these hearings should be on the employer to show that the individual is not entitled to the rights claimed.
  • HMRC to enforce rights such as holiday pay, NMW, sick pay and unlawful deductions from wages on behalf of the lowest paid workers.
  • Decisions on employment status to be applied across both tax law and employment law regimes.
  • To establish a free online employment status tool to assist individuals and businesses.
  • To adapt the NMW “output work” rules for those working for online platforms.
  • NMW to be paid at a higher rate for any hours worked which are not guaranteed by the contract.  This would incentivise employers to make contractual hours reflect the reality of the number of hours actually worked.
  • Workers on a zero hours contract to have a right to request guaranteed hours after 12 months.  Businesses above a certain size to be required to report how many requests they have received and how many requests have been agreed to.
  • Continuity of employment not to be broken for casual worker contracts unless there is a gap of at least one month (rather than the current period of a week).
  • The pay reference period for calculating average pay (in holiday pay calculations) to be 52 weeks (rather than 12 weeks).
  • Workers to have the right to request rolled up holiday pay but safeguards to be in place to ensure that people actually take their holiday leave.
  • Statutory sick pay rights to accrue in the same way as holiday entitlement (rather than being a right based on National Insurance Contributions (NICs) and earnings-based eligibility).
  • Agency workers to have the right to request a direct employment contract with the end user after 12 months of engagement.  Larger businesses to be required to report the number of requests received and how many have been agreed.
  • Employee engagement and consultation to be strengthened.  For example, the Information and Consultation of Employees Regulations 2004 to be amended so that they protect both employees and workers and so that employer obligations are triggered if 2% (rather than 10%) of the workforce make the request.
  • Increase NICs for the self-employed and allow the self-employed to have the same state benefits as employees and workers.
  • Extend the opportunity for auto-enrolment in a pension to the self-employed.
  • Use digital payment systems to eliminate cash-in-hand payments and illegal working.

The report has had a mixed reception from business, labour and academics.  Some commentators consider the idea of a new kind of "worker" (to be known as a "dependent contractor") just adds another unnecessary layer of complexity.  TUC General Secretary Frances O'Grady said: "It's no secret that we wanted this review to be bolder.  This is not the game-changer needed to end insecurity at work"