March 23, 2018
The Government response to the Taylor Review of modern working practices: what does it mean for your business?
The Taylor Review of modern working practices and employment law was based on the premise that all work must be “fair and decent”. Fine words, indeed – but what do they mean in the real world? And what does the Government’s recent response via its Good Work Plan mean for employers?
The Taylor Review is both lengthy and complex and we recommend obtaining advice from an employment solicitor. In response, the Government has intimated that it will seek to implement new ways of working, suitable for the rapidly evolving modern-day employment sphere. It has announced certain key measures that it intends to legislate for:
- “Day one rights”, intended to clarify workers’ entitlements to pay and employment rights
- Enforcing rights to holiday and sick pay for vulnerable workers
- The right for all workers to request a more stable contract
- The right to a payslip for all workers, including those on zero-hour contracts and casual staff
- Ensuring unpaid interns are not used as substitutes for salaried workers
- Quadrupling employment tribunal fines for employers who show “malice, spite or gross oversight”
- Naming and shaming employers who fail to pay employment tribunal awards
The Government has also announced four consultations to examine the Review’s proposals in more depth. These consultations cover:
- Employment status
- Agency workers
- Labour market transparency
- Employment rights and their enforcement
Some of the issues that have prompted the consultations are discussed in more detail below.
The Taylor Review rejected representations to scrap the current three employment status classifications (employed, workers and self-employed) and replace them with only two (employed and self-employed). Instead, it suggests definitive tests for employment status – a notoriously tricky area – and a new definition of “worker”. It also proposes renaming “workers” as “dependent contractors”. Taking matters further, it holds out the possibility of employers having the burden of proving an individual’s employment status in the event of that individual bringing an Employment Tribunal claim. Clearly, these proposals were drawn up with the “gig economy” and cases such as the ongoing Uber litigation very much in mind.
Tax law already does not recognise worker status, and the Taylor Review follows this approach inasmuch as it proposes that all workers should be employees for tax purposes. The Review also latches on to the incentive offered by the current National Insurance Contribution’s regime for as many people as possible to classify themselves as self-employed (due to the lower NICs paid by the self-employed). Consequently, it is little surprise that the Review recommends equalising the NICs rate for the employed and the self-employed.
Despite periodic rises, the minimum wage remains a concern for many. The Taylor Review of employment practices acknowledges this and suggests the need for the Low Pay Commission to undertake pay reviews in specific sectors, such as hospitality and social care, where it is usual for pay not to exceed the national minimum wage.
With respect to so-called platform workers, such as Uber drivers, the Taylor Review is clear that such individuals must expect to benefit from the national minimum wage. Set against this is an understanding that individuals cannot presume to log into their work platform at any time of day or night, regardless of customer need, and still receive national minimum wage. The Taylor Review recommends dealing with this issue by amending the piece rate provisions already contained in the national minimum wage legislation.
The contentious issue of zero-hours workers is unlikely to be resolved to everyone’s satisfaction. The Taylor Review’s approach is to permit the continuance of zero-hours contracts while also incentivising employers to guarantee a certain number of minimum hours. In its Good Work Plan, the Government has now indicated that it will consider a higher minimum wage for workers on zero-hours contracts.
Written statements of terms and conditions of employment
The Government has already pledged to adopt the Taylor Review’s recommendation that the current right to receive written terms and conditions of employment within two months should be a right from the first day of employment.
If you would like to discuss how the Taylor Review and the Good Work Plan might affect your business, please contact Amy Orchard.