The Taylor review – tailored to the gig economy?
The long-anticipated Taylor review of modern employment practices was published on 11 July 2017. The review, led by Matthew Taylor (chief executive of the Royal Society for the encouragement of Arts, Manufactures and Commerce), calls for a “significant shift in the quality of work in the UK economy” and has made many recommendations for changes to the law to facilitate this.
The review does make some points related to the gig economy, which was a focus, but also identifies some changes to the broader employment law landscape.
Some of the main recommendations made in the review are summarised below:
1. The review states that the law should set out what the legal tests are for the different types of worker status (i.e. is the person an employee, worker, or self-employed individual?), rather than relying on the Employment Tribunals to identify this in case law. This would certainly be helpful to individuals and employers, as currently it can be a bit of a lottery with case law, with Employment Tribunals sometimes coming to different decisions on cases with similar facts. The gig economy is generating a lot of case law currently on this very question (cases have been brought against some companies such as Uber, CitySprint, and Pimlico Plumbers), so this would be a welcome change.
The review also says that the working status of an individual should be determined without them needing to resort to an Employment Tribunal hearing, nor should they pay any fee for a hearing if one is required (the Supreme Court has since ruled the Tribunal fees are unlawful - see our article here). In addition, the review says that the ‘burden of proof’ should be on the employer, so it will be employer who will have to present evidence about the working status of the individual in question.
The report also mentions that employment status definitions should be the same for both employment rights and tax purposes. Therefore, if someone is deemed by tax tribunal to be an employee, that decision should also be binding for employment law purposes.
2. The term “worker” should become “dependent contractor”. My thought on this recommendation is ‘whatever’ (accompanied by a shrug of my shoulders in Kevin the teenager style!) and most commentators agree this seems a bit of a waste of time. I am going to carry on using the term worker in this article for convenience.
3. An online tool should be developed to provide individuals with an indication of their employment status. As we know, projects involving IT and the government never move fast, so do not expect this to be set up imminently although it may useful when it is.
National Insurance Contributions
4. The review recommends increasing class 4 national insurance contributions for self-employed individuals, to be more on parity with employed individuals. This was originally announced in the Spring 2017 budget, but was subsequently abandoned following heavy criticism. However, the review also says that self-employed individuals should have increased pension provisions and family rights.
5. The review says zero hours workers should have a right to request a contract that guarantees their hours after twelve months in the job. This seems to be a sensible proposition, and there is no call for zero hours working to be banned despite speculation about this. There has been quite an attack on zero hours employment over the past few years, but whilst there are some employers that abuse this system, many do not. There are many employees/workers on such contracts who need or actively choose the flexibility of zero hours arrangements.
6. There is a call for a new level of national minimum wage to be set out for workers who do not have guaranteed hours. This is likely to be quite controversial if such a change is made, and it is not yet clear how this would work in practice.
7. The review calls for legislation to adapt for platform working (i.e. where an individual logs on to an app to indicate they are available to work, with Uber being one of the largest companies operating in this manner). In particular, there should be a requirement for individuals to be given information about their potential earnings when they log on. It is difficult to see how there could be legislation created for something so specific to a small number of employers, so this may be something the government would seek to agree as best practice with companies.
Written statement of employment particulars
8. There is a recommendation that both employees and workers receive a written statement of employment particulars on day one of their job, and should be able to claim compensation when there is a failure to provide this. Currently, the obligation under the Employment Rights Act 1996 is for a statement of employment particulars (which includes only some basic information such as salary, holiday, etc) to be given to an employee within the first two months of employment. Claims for failure to do so can only be tagged onto other claims and compensation is limited to two weeks’ pay (capped at the statutory cap, which is currently £489 per week).
A requirement for employment particulars to be provided from day one would be unlikely to have an impact on the vast majority of employers who tend to issue contracts prior to individuals starting work. That said, there are still many who do not have procedures in place to issue employment contracts within a short period, or in some cases at all! This would certainly have a greater impact for those who fall into on the latter category.
9. The reviews says that the current 12 week reference period under the Working Time Regulations 1998 for calculating holiday pay should be made fairer for those who experience dips and highs in work levels. The suggestion is for the reference period to be extended to 52 weeks. However there would of course need to be rules about how to apply this for those with less than one year's service.
There is also a recognition that individuals should be able to receive ‘rolled up’ holiday pay (where a worker receives a premium on their pay to account for holiday pay). Although rolled up holiday pay is strictly speaking unlawful, it is fairly widely used in practice, so the review simply seems to be endorsing this as a legitimate way to pay individuals. It is recognised that safeguards should be in place to ensure that individuals do use their holiday entitlement.
10. In terms of casual work contracts, it should be easier for the worker to be able to demonstrate continuous service to be eligible for employment rights (such as the right to request flexible working after 26 weeks’ service). Legally, technically only a week is necessary to break continuity, but the review recommends that this is increased to a month.
Statutory Sick Pay
11. An interesting proposition is that Statutory Sick Pay (SSP) should be available to all workers, but also that it should accrue with length of service. The panel who conducted the review said it is “perverse” that an employer is liable to pay up to 28 weeks’ SSP for an employee who has only worked for them for a short period of time. I think this suggestion would be very popular with employers if it is implemented!
Naming and shaming employers who fail to pay Tribunal awards
12. Finally, there is a proposal for a naming and shaming scheme for employers who fail to pay Employment Tribunal awards. Employment Tribunals should also be obliged to consider additional penalties for those who continually flout the law.
There is a lot covered in the review (more than I can cover in this article), but whether the government adopts any of the recommendations remains to be seen, especially with Brexit being their priority right now. For that reason, there is likely to be a drip feed of the changes, but it is not clear as yet which ones the government will implement and which they will not. Do keep an eye on our ebulletin, as we will keep you up-to-date!
If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or firstname.lastname@example.org).