Matthew Taylor’s review of modern working practices has been published

July 19, 2017

In it, Taylor considers the impact of new models of work, such as the ‘gig-economy’, on worker rights and employer responsibilities. Taylor was tasked with developing proposals which will inform the Government’s industrial strategy and which could help shape some of the Government’s employment law priorities going forward. As such, it is a potentially important document.

Some of the key recommendations are that:

  • The three-tier distinction between categories of individuals who provide services should remain, but he suggests that workers should be redefined as ‘dependent contractors’, in order to reflect the flexible relationships found in the modern workforce.
  • The law should be modernised and updated to reflect the tests relied on by tribunals and courts when determining employment status.
  • The definition of employee under any future legislation should continue to require the individual to perform services personally, but ‘dependent contractors’ should not be so required, and genuine substitution clauses should not be able to defeat a claim by an individual trying to prove ‘dependent contractor’ status. The fact of who controls the relationship should be a much more relevant factor and this should be made clear in the legislation.
  • The National Minimum Wage laws should be amended to protect businesses and take into account new methods of work, including the gig-economy, where such workers are allocated jobs (or ‘gigs’) through an app.  Such workers should be considered as undertaking a form of ‘output work’ and therefore not eligible to receive a National Minimum Wage simply because they are logged into an app. No individual should expect to be paid just because they are logged in – the relevant factor is whether or not they are actively seeking to work at that time.
  • The Government should aim for the legal definition of ‘self-employed’ and ‘employed’ to be consistent under both employment and tax laws.
  • The right to receive a written statement of terms should be extended to ‘dependent contractors’ and the right should be available to them, as well as employees, from day 1 of their job. Such statements should set out what the individuals are entitled to by law and any relevant calculations. Taylor encourages the Government to consider introducing a standalone right to compensation if the ‘employer’ neglects to provide a written statement.
  • The Government should ask the Low Pay Commission to introduce a higher National Minimum Wage for hours that are not guaranteed by contract.
  • The difficulties faced by individuals who have flexible working patterns but wish to establish continuity of service can be combatted by increasing the length of time they are allowed to not be actively working, but still retain their continuity of service, from one week to one month.
  • The pay reference period for calculating holiday pay for casual workers should be increased from 12 weeks to 52 weeks to take account of nuanced arrangements, such as seasonal work. Taylor goes onto say that such workers should be allowed greater flexibility over how their holiday pay is paid and that the Government should consider allowing them to be paid on a ‘rolled up’ basis, although safeguards should be put in place to ensure that no one works for 52 weeks in a year.
  • Individuals on zero-hour contracts should have the right to request a fixed hours contract after 12 months, and agency workers should have the right to request a direct contract after 12 months with the same hirer.
  • The ‘Swedish Derogation’ which excludes workers who have a contract that provides for a minimum level of pay between assignments from the right to the same pay as permanent employees, should be abolished.
  • Statutory Sick Pay should be a basic employment right for ‘dependant contractors’, in the same way that that the National Minimum Wage is, but it should be accrued in line with an individual’s length of service.
  • There should be a presumption of employment or worker status, depending on what the individual is claiming, and the burden of proof should be shifted to the employer to prove status. Taylor also suggests that tribunals should be allowed to impose penalties on employers who have had individuals bring claims against them and their legal status has been confirmed, but the employer fails to take steps to apply the initial court/tribunal ruling to other individuals on similar contracts within the business. Taylor says that it is unjust and impractical to expect every individual in large organisations to bring a claim against their employer to prove their status.

It remains to be seen how many of the recommendations from the Taylor Review will actually be introduced by the Government. We will alert clients of any changes announced or introduced if and when they happen.

If you have any questions in the meantime, please contact a member of the employment team.

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