BRACHER RAWLINS | Proposed employment law changes in the Taylor Review

Much of the publicity surrounding the Taylor Review into working practices published last week has centred around its proposals concerning the so-called ‘gig economy’. We will write about this in a separate blog but in this Eploy we look at some of the specific proposals relating to employment law set out in the report.

The Taylor Review of Modern Working Practices (“the Review”) sets out proposals that it believes will lead towards “fair and decent work” for all workers. These are the Review’s main recommendations and they have generated plenty of newsprint in the past few days, in particular those that relate to the gig economy.

The report runs to 116 pages and as well as these headline proposals the report contains a number of specific recommendations relating to employment law.

We have summarised a number of these below:

Gig economy workers and dependent contractors

The Review proposes that the law retains the distinction between employees and workers and adds a third category for ‘gig economy’ workers, which it calls ‘dependent contractors’.

Its specific proposals on dependent contractors are:

Develop legislation and guidance that sets out the tests that need to be met to establish employee or dependent contractor status. This should retain the best elements of case law and better reflect the reality of modern day casual work in terms of the control exercised by employers over their staff
To reflect the realities of platform work, ensure that in developing legislation, legitimate business models that allow maximum flexibility to their dependent contractors are not prevented from operating by updating National Minimum Wage (NMW) legislation.
Provide maximum clarity on status and rights for all individuals by extending the right to written particulars to all in employment and developing an online tool providing a clear steer on what rights an individual has.
In developing the test for the new ‘dependent contractor’ status, control should be of greater importance, with less emphasis placed on the requirement to perform work personally.

National Minimum Wage

There are a number of proposals relating to the NMW and these are summarised below:

The government should consider the introduction of a higher NMW rate for hours that are not guaranteed as part of the contract.
The government should extend, from one week to one month, the consideration of the relevant break in service for the calculation of the qualifying period for continuous service and clarify the situations where cessations of work could be justified.
The government should do more to promote awareness of holiday pay entitlements by increasing the pay reference period to 52 weeks to take account of seasonal variations and give dependent contractors the opportunity to receive rolled-up holiday pay.
The government should introduce a right to request a direct contract of employment for agency workers who have been placed with the same hirer for 12 months, and an obligation on the hirer to consider the request in a reasonable manner.
The government should act to create a right to request a contract that guarantees hours which better reflect the actual hours worked, for those on zero hour contracts who have been in post for 12 months.

Responsible business

At its heart, the review is about the relationship between employers and the people who work for them. The review wants employers to give renewed focus to good employment engagement. To this end, it recommends:

The government should examine the effectiveness of the Information and Consultation Regulations in improving employee engagement in the workplace. In particular it should extend the Regulation to include employees and workers and reduce the threshold for implementation from 10% to 2% of the workforce making the request.
The government should work with Investors in People, Acas, Trade Unions and others with extensive expertise in this area to promote further the development of better employee engagement and workforce relations, especially in sectors with significant levels of casual employment.
The government should require companies beyond a certain size to (a) make public their model of employment and use of agency services beyond a certain threshold, (b) report on how many requests they have received (and number agreed to) from zero hours contract workers for fixed hours after a certain period, (c) report on how many requests they have received (and number agreed) from agency workers for permanent positions with a hirer after a certain period.

Fairer enforcement

The review states that removing incentives, clarifying the legal framework and addressing unfair risk transfer to vulnerable workers are all important steps to ensuring fair and decent work. However, this will not have the necessary impact unless people are able to enforce their rights when things go wrong.

It therefore recommends:

The government should repeal the legislation that allows agency workers to opt out of equal pay entitlements (ie abolish the ‘Swedish Derogation’).
HMRC should take responsibility for enforcing the basic set of core pay rights that apply to all workers – NMW, sick pay and holiday pay for the lowest paid workers.
The government should ensure individuals are able to get an authoritative determination of their employment status without paying any tribunal fee at an expedited preliminary hearing.
Reverse the burden of proof in employment tribunal hearings where status is in dispute so that the employer has to prove that the individual is not entitled to the relevant employment rights (subject to certain safeguards to discourage vexatious claims).
The government should establish a naming and shaming scheme for those employers who do not settle employment tribunal awards within a reasonable time.
The government should create an obligation on employment tribunals to consider the use of aggravated breach penalties and costs orders if an employer has already lost an employment status case on broadly comparable facts – punishing those employers who believe they can ignore the law.

Flexibility

The review believes that genuine flexibility is a key strength of the UK labour market and that we should be bolder in paving the way for flexible working. It recommends:

The government should consider how further to promote genuine flexibility in the workplace. For example, it should consider whether temporary changes to contracts might be allowed, to accommodate flexibility needed for a particular caring requirement.
The government should reform Statutory Sick Pay so that it is a basic employment right, comparable to the NMW, for which all workers are eligible regardless of income from day one.
Those individuals with the relevant qualifying period are already entitled to have their job protected for a period of time when they are away from work for perfectly reasonable reasons, for instance, having a child. Give people the right to return to work after a period of prolonged ill health.

The Review certainly provides food for thought and contains plenty of sensible proposals. Which, if any, of these proposals will come into force remains to be seen.

You can download a full copy of the Taylor Review here.

If you have any queries about your status as a gig economy worker, or if you have any other employment law issue, please contact Lee Gabbie at lee.gabbie@bracherrawlins.co.uk or Lisa Rice at Lisa.rice@bracherrawlins.co.uk