At the end of 2016 the government launched a review of the UK labour market to consider the implications of new forms of work on workers' rights and responsibilities, as well as on employers' freedoms and obligations. The Taylor report will be published on Tuesday 11 July. On the basis of the leaked executive summary pages of the report that we have seen, the main recommendations are as follows:
- The three status approach - employee, worker and independent contractor - is retained but with the intermediate 'worker' category re-designated as 'dependent contractor' and self-employed re-designated as 'zero hours' with a new simpler, clearer statutory delineation between the three categories to give a greater level of certainty and understanding of what employment status applies. The new category of 'dependent contractors' is intended to capture those where there is a more casual employment relationship and they would be entitled to basic protection (such as national minimum wage (NMW), and presumably holiday pay and other existing 'worker' rights).
- 'Dependent contractors' will have the right to earn the NMW if they choose to do so based on the 'output work' (piece rate) in the NMW legislation. However if they choose deliberately to work at a time of low demand they would lose that entitlement. It appears that the technology available via platform based apps will be used to tell the individual in advance what the demand is so they can make an informed choice whether or not to work, and so retain two-way flexibility.
- There will not be a ban on zero hours contracts but instead, after 12 months an individual will have the right to request a guaranteed hours contract. The starting point for the guaranteed hours would be the average weekly hours worked over the previous 12 months.
- Similarly, agency workers engaged by a hirer for 12 months will have the right to request a direct contract from the hirer which must consider that request in a reasonable manner.
- There should be greater enforcement action to prevent unpaid internships to stamp out abuse and improve social mobility.
- There should be steps to ensure that taxation is consistent across all forms of employment. Notably however, this should not include further employer costs (e.g. employer's NICs) but this would impact on dependent contractors.
- There shouldn't be an explicit extension of workplace consultation/representation but an acknowledgement that strong employee relations and responsible corporate governance are important in establishing 'better work'.
- There is a more pro-active approach to workplace health.
Nick Elwell-Sutton, Partner at Clyde & Co LLP, comments in relation to the employment status recommendation:
"The report rightly acknowledges the need for a simple and clear test so everybody knows where they stand, but then goes on to say it is up to the government to decide what that test is. Companies, individuals, lawyers and the judiciary have grappled with this for years and despite best efforts there is an abundance of often contradictory case law and a current situation where each case rests on its own unique facts. Were there to be a simple solution then it would be surprising the courts have not yet found it."
We will issue a full update on the recommendations once the Taylor report has been published.