The long awaited Taylor Review of Modern Working Practices was published on 11 July. The recommendations from the review throw some interesting questions into the mix. The general theme is the need for an adaptable, consistent and protected community in which employment and security of workers can prosper. It will be interesting to see how this will transpire in practice. Some of the main points from the review are mentioned below, but a further more detailed briefing will follow.
The Review calls for the retention of the three-tier approach to employment status, with further clarification of the definition of worker, which would be renamed “dependent contractor” . This should be outlined in legislation. The report recommends placing less emphasis on the requirement for personal service for the “worker” category and giving the “control” exercised by the company greater importance. The confirmation of the employment status would be a term included in the statement which must be given to employees under section 1 Employment Rights Act 1996 (ERA). The report also recommends extending the right to this written statement to dependent contractors and introducing a standalone right to bring a claim for compensation if the employer fails to do so, and a right to determine employment status at a tribunal before paying substantial tribunal fees. Another recommendation is that effort should be made to align employment status with tax status.
The ‘gig’ economy
The proposed change to the test for worker status would potentially bring many more individuals in the “gig” economy within worker status. Workers are entitled to the National Minimum Wage (NMW) and the report includes various proposals as to how the NMW should apply in these circumstances. For example, the Government could adapt the piece rate legislation to enable platforms to compensate workers based on output. However, this would also include a requirement for the company to provide information to the worker about the level of work they could expect to receive at that time.
Zero hours Workers and Agency Workers
In trying to balance the desire of some to retain flexibility with those who need certainty and more formalised employment, the report recommends introducing new rights for agency workers and those on zero hours contracts to formalise the reality of working arrangements. People engaged on zero hours contracts should have the right to request fixed hours with the starting level based on the average hours worked over the previous 12 months. Agency workers should have the right to request a direct contract of employment with the hirer if they have been placed with the same hirer for 12 months, with the hirer required to consider requests reasonably. The report also recommends that the Government must take steps to ensure that flexibility does not benefit the employer, at the unreasonable expense of the worker, and that flexibility is genuinely a mutually beneficial arrangement. It therefore suggests that the Low Pay Commission should consider the introduction of a higher rate of NMW payable for hours which are not guaranteed as part of the contract where a worker is on a zero hours contract, set at a level to incentivise employers to guarantee hours as far as possible. In addition, to make it easier for casual workers to qualify for statutory employment rights the report recommends increasing the maximum gap between work assignments which will not break continuity of employment from one week to one month.
The report recommends that individuals should have the choice to be paid rolled-up holiday pay (something currently not permitted), meaning that a dependent contractor could choose to receive a 12.07% premium on pay rather than being paid during holiday periods. However, a mechanism would have to be included to ensure that holiday was taken. The report also recommends increasing the reference period for the calculation of holiday pay to 52 weeks so that casual workers receive holiday pay based on their average earnings over the year rather than over a shorter period.
The report recommends that the Government should examine the effectiveness of the Information and Consultation Regulations, extend them to cover workers and reduce the threshold for employee requests from 10% to 2%.
In line with the increased requirement on employers to publish information, the report recommends that the Government should require companies of a certain size to publish information relating to their model of employment, including such matters as the number of requests received, and agreed to, from zero hours contract workers for fixed hours.
Whilst this report has been welcomed, significant work will be required to introduce the amendments to the current legislation. With the government’s plate full with the likes of Brexit negotiations, it will be interesting to see how this review is taken forward and recommendations are progressed.