A combined report from two House of Commons Select Committees has been published, recommending changes in legislation to "take forward the best of the Taylor Report recommendations".

The facts 

A combined report from two House of Commons Select Committees has been published. It pulls together various strands from the Taylor Review in July and the earlier enquiries by the Work & Pensions Committee into "self-employment and the gig economy". The report also has some interesting insights and input from the Director of Labour Market Enforcement. We are still waiting for the government's response to the Taylor report, which we had expected this year. However, a budget announcement stated that a discussion paper would be published, exploring the case and options for reform. The headline recommendations of the combined report (many of which adopt Taylor's recommendations) are:

  • Clearer statutory definitions of "employer" and "worker" plus a new definition of "independent contractor", each of which will also have a list of key factors to which the courts should refer when deciding status cases.

  • Worker status 'by default' in employment status cases involving companies with a contractor workforce over a certain size (not yet articulated).

  • Non-guaranteed hours: a proposed scheme to be run with the Low Pay Commission to pilot the payment of a premium over NMW/NLW for workers who work non-contracted hours.

  • Continuity: an increased gap to break statutory continuity of service – 1 month rather than 1 week.

  • Statement of terms and conditions extended to workers, to confirm in plain English their status and entitlements from day one; to be provided within 7 days of starting work.

  • Worker voice: to count workers as well as employees in the fifty plus people threshold for the Information and Consultation of Employees Regulations 2004 to apply. Also, to reduce the level of support required to implement an Information and Consultation of Employees body, from 10% of the workforce to 2%.

  • Swedish derogation: (the "Swedish derogation" is the exemption from the right to equal treatment with regards to pay for agency workers with a permanent contract of employment with minimum requirements, where the agency worker is paid the minimum amount between assignments. Abolition in parallel with increased power and resource to the Employment Agency Standards Inspectorate to enforce the remainder of the Agency Worker Regulations.

  • Enforcement & deterrence: to consider higher, more punitive fines and costs orders if an employer has already lost a similar worker status or pay claim, or for repeated/serious breaches of employment legislation plus expansion of 'naming & shaming' for non-compliant business and their supply chains. Also, to consider broader use of 'class actions' in disputes over wages, status and working time.

What does this mean for employers?

As the final recommendations are unlikely to be produced until 2018, employers should await the final report.