Since our last Employment Bulletin, the Taylor review into modern working practices has been published. The review, commission by the Government in late 2016, was headed up by Matthew Taylor, Chief Executive of the Royal Society of Arts.
The resulting "Good Work Report” considers the development of modern ways of working and emerging business models, including flexible and platform-based or "gig economy" working and considers the employment law implications of such models.
The publication of the report is likely to place working practices and company disclosures under greater scrutiny, particularly given the recent spate of high profile cases relating to employment status involving the likes of Uber, Addison Lee and Deliveroo.
Key Recommendations of the Report
The report raises important issues and makes many recommendations to improve the UK job and employment market. A significant number of these recommendations call for existing employment legislation and practices to be reviewed and changes considered.
The report runs to 116 pages. Here’s a summary of the key points HR professionals should take note of:
- Employment Status:
To many employers, this is an important and uncertain area of law that has been made more prolific due to the ‘gig economy’. The report recommends that the legislation in this area needs to be clearer. It proposes keeping the three distinct employment statuses – employee, worker and self-employed - but replacing the concept of ‘worker’ for that of ‘dependent contractor’ in an attempt to distinguish more clearly between those who are genuinely self-employed and those who are not.
In developing the 'dependent contractor' test, the report proposes that there should be a clear definition which better reflects the reality of modern working arrangements, with more emphasis on the question of control and the removal of the requirement for the individual to perform work personally. It also proposes that dependent contactors should be granted additional employment rights including, for example, the right to sick pay and holiday pay.
- Better Governance, Good Management and Strong Employment Relations:
Rather than more national regulation, the report calls for responsible corporate governance, better management and stronger employment relations, stressing that companies should strive to be open about their practices and make sure all their workers are engaged and feel heard.
Changes to the Employment Tribunal System:
The report recommends several changes to the Employment Tribunal system. These include:
- the introduction of a mechanism where people can have their employment status determined without having to pay tribunal fees and with the burden of proof reversed (i.e. the employer to prove that the individual is not the status they are claiming to be).
- the ability for businesses that don’t pay awards from tribunal rulings within a reasonable timeframe to be named and shamed; and
- penalties for businesses that fail to change the status of their staff after a tribunal ruling and end up back in the tribunal for an employment status case on broadly comparable facts.
- National Minimum Wage:
There are several proposals relating to the national minimum wage, including a higher rate for hours that are not guaranteed as part of the contract so that businesses can continue to use zero-hours contracts but be required to pay for their flexibility, and greater enforcement action to be taken by HMRC.
- Aligning Tax and Employment Law:
The report highlights the disparity in the tax system between those who are employed and those who are self-employed and calls for it to be addressed. In particular, it suggests that the level of National Insurance Contributions paid by employees and the self-employed should be moved closer to parity.
In addition, the report recommends that the definition of self-employment for employment law and tax purposes be aligned and that tax and employment tribunal rulings on employment status should apply across both tribunals.
- Zero-hours Workers Given the Right to Request Fixed Hours:
The report proposes that those who have worked on a zero-hours contract for 12 months or more should be granted the right to request guaranteed fixed hours from their employer that better reflect the hours they have actually been working.
- The Right for Agency Workers to Request Direct Contracts of Employment:
Much like the proposal for zero-hours’ workers to be given the right to request fixed hours, the report proposes that agency workers who have been placed with the same hirer for at least 12 months should be given the right to request a direct contract of employment with the hirer, and there be an obligation on the hirer to consider such requests reasonably.
The report also proposes abolishing the “Swedish derogation” from the Agency Workers Regulations 2010. At present, if an agency engages an agency worker on terms which provide for payment between assignments, the agency worker is not entitled to be paid at the same rate as a permanent member of staff doing the same job after 12 weeks.
It is important to note that this review consists simply of recommendations at this stage. Whilst Theresa May has announced that the Government will review the report in full and respond in detail later this year, given the current political climate it seems unlikely that we will see any sudden or radical changes in the near future.