The Taylor Review of Modern Working Practices12 Jul 2017
Yesterday, the Government published the eagerly awaited Taylor Review of Modern Practices, or the “Good Work” Report as it is now called, which runs to 116 pages. Set up by the Government 9 months ago, and following extensive consultation with the business community, workers, lawyers and unions to name but a few, the review has put forward a number of proposals which the authors believe should be implemented to help shape and improve Britain’s future work economy, making work fairer and of a higher quality and striking a better balance of power between business and workers.
The review makes it clear from the outset that the “British Way” works – Britain is good at creating work, and a flexible work model has contributed largely to this. However, it does acknowledge that improvements can be made to increase its relatively poor productivity levels compared to other developed countries, and the review recommends the following proposals to address this.
Employment law – bringing clarity to employment status and employment rights
- Retain the current three-tier approach to employment status: employee, self-employed and worker (albeit rename worker to dependent contractor, therefore avoiding ambiguity).
- Add clarity to the law defining workers and employees by incorporating the vast amount of case law principles and tests into legislation, thus letting the legislation do the work of defining these sometimes tricky distinctions, and to free up the courts.
- Shift the focus of the test for worker and self-employed placing more emphasis on control by the employer and less emphasis on the requirement for the individual to perform work personally.
- Ensure that workers in the gig economy are able to earn the National Minimum Wage (NMW) – subject to conditions such as a requirement to log on to apps (such as Uber) to seek work only during times of high demand – the review argues that such platforms have the technology and data to alert workers when they would earn at least the NMW.
- Bring in line the tests for self-employed status for tax and employment status purposes – currently the two frameworks means an individual may be a worker for employment law purposes, but self-employed for tax purposes, which only adds to the uncertainty surrounding an individual’s employment status.
- To improve transparency of rights by extending the requirement to provide a written statement of employment terms to workers (as well as employees) and make this a requirement from day one (rather than the current 2 months), and introduce a standalone right to compensation if this is not provided. Also proposed is a new online tool to allow employers and individuals to establish employment status and understand the rights they have.
Reducing one-sided flexibility (i.e. requiring the individual to be flexible but accept all the risk)
- Encourage employers to consider higher guaranteed hours (as opposed to zero hours contracts) by increasing the NMW rate for all hours worked in excess of the guaranteed hours. Presumably, this means workers on zero hours contracts will attract a higher NMW rate for every hour they work.
- Increase the current period that would break continuity of employment from one week to one month, thus making it easier (or fairer) for individuals to acquire employment rights which require a qualifying period of unbroken employment.
- Improve the information that must be given to agency workers, such as information on holiday pay and how it is calculated.
- Increase the pay reference period for calculating holiday pay from 12 to 52 weeks to take better account of seasonal variations in work (for example, fruit pickers).
- Allow agency workers to request a direct contract with the end user after 12 months on a placement.
- Allow zero-hours workers to request guaranteed hours which better reflect the reality of their working hours if they have been on a zero hours contract for 12 months.
Improve workplace consultation
- Make it easier for employees and workers to implement the legislation that requires employers to improve engagement with the workforce and take their views into account.
- Require companies (dependent on their size) to publish information about their employment models, their use of agency staff, and any request for guaranteed hours by zero hours contractors. This reporting would be akin to the requirements under Gender Pay Gap Reporting (see our article), where it is presumably hoped that businesses will improve such publically disapproved of practices if there is a risk of damage to their reputation.
Fairer enforcement of rights
- Give HMRC enforcement rights in relation to claims for NMW, sick and holiday pay.
- Create a presumption of employment or worker status in tribunal claims, shifting the burden of proof away from the individual to prove he is a worker or employee to the employer to prove that he is not.
- Give the Department for Business, Energy and Industrial Strategy the power to enforce employment tribunal awards and not just recover the penalty notice for non-payment, which is the current situation. This would mean more claimants receive their rewards (currently only 66% of awards in England are paid). To encourage employers to pay, the Government should introduce a ‘name and shame’ scheme for those that do not.
- Deter employers from unreasonably defending claims (a tactic that has been employed to ramp up costs and deter claimants) by introducing penalties and uplifts in compensation where previously an employer has lost a case on broadly comparable facts.
Flexibility in the workplace and extension of rights
- Extend the right to work flexibly to cover temporary changes to contracts, not just permanent changes, as is currently the case.
- Extend the Statuary Sick Pay legislations to apply to all workers.
- Give individuals the right to have their jobs protected for a period of time following long term sickness, similar to the position with maternity leave.
Whilst the above proposals appear to be reasonable from a legal perspective, and would certainly provide clarity to the employment law minefield, there is concern among some commentators that they do not go far enough to address the exploitation (perceived or real) of workers in Britain’s modern day gig economy. However, the review acknowledges that there must be a balance, and in the complex system of the work economy, not all parties can be pleased all of the time. It would appear that the proposals do go some way to address the balance of power while not stifling the flexibility and innovation which makes the UK’s unemployment rate one of the lowest in the developed world.
If you are concerned about any of the topics raised by this article, please contact us or call our employment team on 0161 838 7849.