- Paul McGrath
In late 2016, Matthew Taylor, the Chief Executive of the Royal Society of Arts, was commissioned by the Prime Minister to undertake an independent review of employment practices in the UK.
A key focus of the review was to identify how those employment practices in the modern economy might need to change to keep pace with modern business models such as those utilised in the gig economy.
The upshot was Good Work: The Taylor Review of Modern Working Practices (commonly referred to as the Taylor Review) published this summer.
The Taylor Review has made several recommendations for how employment laws could be reformed, some of the key ones being:
- Retaining the current three-tier approach to employments rights and status (being, employees, self-employed/independent contractors – and a renamed intermediate category of ‘dependent contractor’ to refer to those workers who are neither employees nor truly self-employed).
- Making it easier for people to establish status as a ‘dependent contractor’ (and therefore entitlement to core rights, such as national minimum wage, paid holiday, and other working time rights), by placing a greater focus on the degree of control that a business exerts over them, rather than the extent to which they are required to perform work personally.
- Introducing additional protections for ‘dependent contractors’ and stronger incentives for organisations to treat those individuals fairly. For instance, written statements of core terms on day 1 (with a right to claim compensation where this is not provided) and, in the case of agency workers, a right to request a direct contract of employment where they have been placed with the same end-user for 12 months (with any such request to be considered in a reasonable manner by the end-user business).
- Establishing a Government online tool to help individuals and employers assess employment status themselves.
- Changing the Employment Tribunal system so that there will be expedited hearings on employment status, together with the onus being placed on businesses to prove that the individual does not have the rights claimed.
- Consistency of approach in determining status for both employment rights and tax purposes.
- A requirement for companies above a certain size to make public their model of employment and use of agency services beyond a certain threshold.
- Adapting the ‘piece rates’ legislation to ensure that those working in the gig economy are still able to enjoy maximum flexibility while earning the national minimum wage (subject to those individuals assuming an appropriate level of responsibility for choosing to work at times of low demand).
- A 52-week (rather than 12-week) reference period for calculating holiday pay for atypical workers and the ability to receive ‘rolled up’ holiday pay.
- Remove the ‘Swedish derogation’ provisions so that all agency workers would get pay parity with comparable employees after 12 weeks (even if those agency workers also received a guaranteed amount of pay in between assignments).
- Extending, from one week to one month, the period which will constitute a break in service for the purposes of calculating the continuous service qualifying period for statutory employment rights and clarifying the situations where cessations of work may be justified.
- Reforming Statutory Sick Pay to make it explicitly a basic employment right, comparable to the National Minimum Wage, for which all workers are eligible regardless of income from day 1 (paid for by the employer and accrued incrementally).
The overall thrust of the Taylor Review is that the adoption of these recommendations should form part of a national strategy for work explicitly aimed at achieving what it terms ‘good work for all’; with all workers benefiting from a baseline of protection, a fair balance of rights and responsibilities and routes for progression.
It is difficult to argue against the Taylor Review’s headline objectives and it certainly makes many sensible suggestions. As ever, however, the devil will be in the detail of any firm proposals brought about as a result. For the desired aims to be achieved and unintended consequences avoided, there is a significant amount of detail that will need to be fleshed out before any of these proposals can become law. For example, what degree of control will an organisation need to exert for an individual to be deemed a ‘dependent contractor’ and how will this be assessed? Ironing out these sorts of details may be no small task, particularly on an already Brexit-laden political agenda.
There is no immediate practical impact of the Taylor Review for business then. But, this is certainly a space worth watching. The Government is currently taking stock of the findings and recommendations made and a response is expected later in the year. While it by no means certain that all of the proposals will be adopted, or for those that are, in exactly what form, it seems that changes in this area are on the horizon.
Paul McGrath is Employment Partner at McDermott Will & Emery UK LLP, London