Employment law consultant Stuart Chamberlain looks at Good Work: The Taylor Review of Modern Working Practices.

Shortly after she became Prime Minister last year, Theresa May commissioned Matthew Taylor, a former aide to Tony Blair and Chief Executive of the Royal Society of Arts (RSA), to report on the changing world of employment. This was against a backdrop of changing patterns of work and of new ways of working in the “gig economy” — where workers supply their services through apps and other digital platforms. Also, at this time, individuals from Uber and Deliveroo were successfully arguing in the courts that they were not self-employed but workers with rights to the National Minimum Wage (NMW) and to sick and holiday pay.

Good Work: The Taylor Review of Modern Working Practices (“The Review”) was published on 11 July 2017. It runs to over 100 pages and contains recommendations on a wide range of topics. The Review states that its work is based on a single overriding ambition: that all work in the UK economy should be “fair and decent with realistic scope for development and fulfilment”. It focuses on the importance of quality work and career progression.

The Review has received a mixed press. For some, it goes too far; for others (notably the Labour Party and trade union movement, which criticised the Review for not recommending the abolition of zero-hours contacts), not far enough. Some of the recommendations are high on aspiration, but low on detail.

It is important to remember that the Taylor Review has simply made recommendations. Whether — and which of — the recommendations ultimately become law, and in what form, remains to be seen.

It is suggested that the most significant recommendations can be conveniently grouped under four headings, as follows.

  1. Employment status.

  2. Tax.

  3. Atypical workers — zero-hours and agency workers.

  4. Employment tribunals.

Stuart Chamberlain summarises these proposed reforms and evaluates the prospect for their future implementation.

Employment status

  • Retain the tri-partite system — employee, worker and self-employed — but replace the term “worker” with “dependent contractor”.

  • Clarify tests of employment status in primary legislation, setting out the key principles and with more emphasis on control and less on personal service — so that individuals would be able to send a substitute without losing worker status.

  • The Low Pay Commission should monitor the new framework, and make recommendations for change if necessary to keep pace with the changing labour market.

  • A free online tool should provide individuals and employers with an indication of employment status. This could be a first step for those seeking to enforce their rights, and could signpost their entitlements.

Tax

  • The Review recommends that all workers should be “employees” for tax purposes.

  • Self-employment should mean the same for tax and employment purposes — this is not presently the case.

  • Improve pension provision among self-employed.

  • Support move towards more cashless transactions — to improve transparency and tax collection from cash-in-hand businesses.

The “gig economy”

  • Workers here to be renamed “dependent contractors” with entitlements to minimum wage, sick and holiday pay. They should also attract National Insurance payments.

  • Adapt the “piece rate” provisions in the NMW legislation for gig economy.

  • Online platforms could be required to provide real-time data with information on how much an individual can expect to earn if they login at a particular time.

  • More specifically, firms like Uber and Deliveroo should classify their workers as “dependent contractors” (with entitlements), unless they change their business methods.

Atypical workers

Agency workers

  • Workers should have the right to request a direct contract of employment after 12 months with the same hirer. This would also apply to zero-hours contract workers (see below).

  • Repeal legislation (in Agency Workers Regulations) that allows employers and workers to opt out of equal pay entitlements (known as the “Swedish Derogation”).

Zero-hours contracts

  • Higher rate of minimum wage for those workers with “non-guaranteed” hours or overtime.

  • Continuity of employment: the minimum period of continuous employment needed to qualify for some employment rights for workers on these contracts should be increased from one week to one month.

  • Consider making rolled-up holiday pay lawful for these workers.

  • Reference period on holiday pay to be increased from 12 to 52 weeks to take account of seasonal variations.

Employment tribunals

  • Keep level of employment tribunal fees under review.

  • Ensure that individuals are able to obtain authoritative and expedited determination of their employment status without any fee.

  • Burden of proof in employment status cases in tribunal should switch to employer.

  • Enforcing tribunal awards: The Government has already established a penalty system for employers who fail to pay tribunal awards but, at present, the Government can only pursue the employer for payment of the penalty, not the original tribunal award. The Government should also be able to pursue the original award (on the claimant’s behalf). It should also consider a naming and shaming scheme for employers who don’t pay.

Other provisions

The Taylor Review made the following additional recommendations.

  • Written statements for all workers and employees from day 1 of job — Government to produce a standard format.

  • Increased penalties for flagrant breach: If an employer defends an employment status claim, in circumstances where it has already lost another claim based on similar facts, tribunals should routinely apply penalties (using powers already available to them); order that the employer pay all of the claimant’s costs; and have new power to award increased compensation to the claimant.

  • Sectoral strategies: The Low Pay Commission should undertake reviews in sectors where a significant proportion of the workforce is on, or close to, the minimum wage, such as retail, social care and hospitality.

  • Consider allowing flexible working requests to cover temporary as well as permanent changes to contracts.

  • Statutory Sick Pay (SSP) to be an employment right to all workers.

  • Individuals with a relevant qualifying period should be entitled to have their job protected for a period of time if they are on sick leave, with the right to return to the same or a similar job after a period of prolonged ill health.

  • Require employers to set up information and consultation arrangements when requested by 2% of the workforce (workers and employees) — at present requires 10% of the workforce.

  • Require larger employers to report on their overall workforce structure, including details of requests for regular hours from zero-hours workers.

  • Review apprenticeships and the Apprenticeship Levy.

  • Pregnancy and maternity legislation should be reviewed and consolidated.

Comment

Theresa May, the Prime Minister, has pledged to take seriously the recommendations of the Taylor Review and there could be a White Paper on these issues in the autumn.

However, it remains to be seen how much of the Review’s content actually makes it onto the statute book. The Conservative Party has no majority in the House of Commons and the PM’s plea for a cross-party consensus appears to have fallen on deaf ears. And, with the inevitable focus on the Brexit legislation (for example, the passage of the Great Repeal Bill — now officially known, more prosaically, as the European Union (Withdrawal) Bill), there has to be a question about whether the Government has the inclination — let alone the parliamentary time — to introduce further reform through primary legislation.

The advice to employers, therefore, is clear: it is far too early to consider any changes in working practices in the light of the Review. As they say, watch this space for any further developments.

Last reviewed 26 July 2017