Some of the highlights of the Taylor Review (“Review”) have been appearing in the press over the last few months. Now the full Review is here, it is clear that many of the key proposals seem aspirational and will require a substantial amount of work and legislative change, if they are ever to come to pass. It is not clear whether the Government will have the appetite (or support) for this whilst focusing on Brexit negotiations. The Review seeks to tackle exploitation and the potential for exploitation at work; increase clarity in the law and help people understand their rights. Few would argue with the principle of “fair and decent” work and the Review tries to balance the need to preserve flexibility that many individuals enjoy in the new work platforms with access to employment protections and rights. We highlight some of the key recommendations below:
The proposal is to retain the three current categories of employee, worker and independent contractor; but that the “worker” category is renamed as “dependent contractor” and the definition should be recast. Case law principles should be codified in legislation for the definitions of both employee and dependent contractor, but the dependent contractor test should have less emphasis on personal service and greater importance on control than is currently the case for assessing a “worker”. The new category of dependent contractor would enjoy paid holiday, SSP, National Minimum Wage (“”NMW”) and pension rights similar to those that “workers” are currently entitled to. Clearly there is a danger that this will simply create a new raft of case law rather than the clarity hoped for, but in any event this will require significant changes to legislation and implementation will be some way off, if it happens at all.
Premium NMW rates
In an attempt to provide more certainty for workers by deterring employers from only guaranteeing minimal/ no hours, the Review proposes that the Low Pay Commission looks at increasing the NMW rates for non-guaranteed hours so that workers receive one rate for their guaranteed hours and a premium rate for additional hours worked.
The return of rolled up holiday pay?
The issue of calculating holiday pay for casual staff has been problematic for a number of years. The Review is suggesting that dependent contractors be given the opportunity to receive rolled up holiday pay. This would be welcomed by many employers as it is administratively simpler than the current calculations that have to be made, but would breach the Working Time Directive. So, as long as the Government is pledging not to erode worker rights following Brexit, then this cannot be a solution as, without certain mechanisms, it would enable dependent contractors to work 52 weeks a year without holiday. This would undermine the health and safety aims of the WTD.
Tribunal fees and the burden of proof
The Review proposes that individuals should be able to get an assessment of employment status from a Tribunal at an expedited Preliminary Hearing without having to pay a fee. This would clearly provide greater access to the tribunals but will require a mechanism to present a ‘status’ claim. The Review also proposes that the burden should be on the employer to show that the individual is not an employee/dependent contractor - reversal of the current burden of proof. There will undoubtedly be concern from some employers that these two proposals combined will encourage some dubious and speculative claims.
The hidden economy
HMRC lose considerable sums in unpaid tax due to the “hidden economy” of cash paid workers. The Review proposes a move towards cashless transactions, with a range of payment platforms that will help individuals pay the correct tax. It is a laudable aim, but will need a lot of detail to create a workable system that actually achieves this and, even then, doubts will remain as to whether it can be policed.
All in all, many employment lawyers feel that the Report is slightly bathetic and something of an anti-climax. Before the Report most would not have quarrelled with the principle that clarification of the categories of employment status was urgently required. However, at 115 pages long, to mainly re-state this principle and effectively propose a rebadging of worker status with “dependent contractor” seems like a missed opportunity. Of course, in Canada the term “dependent contractor” has been around since 1936 and as an intermediate category of worker between the employed and self-employed allows those with this status longer periods of notice akin to employees. To borrow this archaic terminology and offer it with “bells on” in part as a solution to the ills of modern working practices seems rather hollow. How much of the Review makes it onto the statute book remains to be seen. Teresa May has made it clear that the Government has no intention of “turning the clock back”. We await with interest the White Paper promised in the Autumn.