On 11 July 2017, almost a year after it was announced, the Taylor Review into modern working practices was published. The review considers the implications of new forms of work on worker rights and responsibilities, as well as on employer freedoms and obligations.
The review was conducted by Matthew Taylor, the chief executive of the Royal Society of Arts. The report focuses on the relationship between employers and the people who work for them – with a stated single aim of good work for all. It sets out 7 key recommendations to address the challenges facing the UK labour market.
The 7 key recommendations relate to:-
1. Employment Status
2. National Minimum Wage
5. Developing skills
6. Holiday pay
7. Work and health
In this report we will will deal with the following three recommendations which we feel are key.
● The report wants to retain “worker” status, believing that it is helpful to have an intermediate category, covering casual, independent relationships with a more limited set of employment rights.
● It suggests a clearer distinction, and legislation backed by detailed guidance to definitively state the tests for employment status i.e. employees, workers and the self-employed. There might have to be a re-examination of the different definitions of workers across different legislation.
● It considers that the definitions of employee and worker are very similar and it envisages a new definition of worker “which better reflects the reality of modern working arrangements.” The report suggests that there would be no change to the test for ‘employee’ status, for which the need to do work personally would continue to apply.
● To place more emphasis on control in the definition of worker status, with less emphasis on personal service (so individuals could send a substitute, rather than work personally, without losing their worker status).
● To rename workers who are not employees as “dependent contractors.”
● ‘Dependent contractors’ will be eligible for some worker rights, such as sick pay, but they would not be employees, nor would they be genuinely self-employed.
● A free online tool should provide individuals and employers with an indication of employment status.
● If an individual brings an employment tribunal claim, alleging that they are a worker or employee, the burden of proving that they are not should rest with the employer.
National Minimum Wage (NMW)
● Platform workers for such as Uber and Deliveroo, who log in to an app to access work, should continue to enjoy flexibility but also earn the NMW. However, they may not be able to log in at any time, including times when they know there is little work available, and expect to receive the minimum wage. Platforms could be required to provide real time data with information on how much an individual can expect to earn if they log in at a particular time.
● Employers should be incentivised to schedule guaranteed hours, but businesses should still be able to offer short-hour contracts.
● The Low Pay Commission should advise on the impact of a higher NMW for hours which are not guaranteed in a contract. Therefore, a person working a 5 hour per week contract would be entitled to the NMW for the first 5 hours worked, but any hours beyond that should be on a new higher rate. This does not mean all zero-hours workers would get a higher rate for non-guaranteed hours, just those paid the NMW level.
● The Government should clarify the circumstances in which an intern should be classified as a worker and entitled to NMW. Enforcement action should be taken by HMRC.
● The Low Pay Commission should undertake reviews in sectors where a significant proportion of the workforce is on, or close to, the minimum wage e.g. retail.
● The report requires written statements to be given on day one of employment rather than within two months of starting work.
● Workers should be granted a new right to a written statement outlining certain terms of their employment at the start of their engagement including details of their statutory rights (presently only employees have that right).
● The Government should specify a standard format for written statements, so they are easily understood.
● Workers and employees should have a standalone right to compensation for failure to provide a written statement. Currently, compensation is only available in limited circumstances.
● The review found that too many employers and businesses are relying on zero-hours, short-hours or agency contracts.
● Zero-hours and short-hours workers should be entitled to request a contract that guarantees hours which better reflect their actual hours if they have been in post for 12 months.
● Agency workers should be given the right to request a direct contract of employment after 12 months with the same hirer, and the hirer would need to consider this reasonably.
● Abolish the “Swedish derogation” which allows workers with a contract that provides for a minimum level of pay between assignments to be excluded from the right to equal pay with permanent employees.
The Review say it aims to achieve consistency in the workplace and to improve the employment market in the UK. Its purpose is to keep up with the changes in the workplace. It is important to note that this review consists simply of recommendations at this stage and is yet to be a policy document adopted by the Government.
We believe that the more radical but appropriate approach to take would be to move to one employee status for all workers versus self-employed status for those that are truly self-employed. Unfortunately, it’s unlikely that our proposed approach would get support of the current Government, not least given Taylor’s recommendations.