Preliminary response to Taylor Review report
There have been calls for a simplification of employment status, to protect rights and ensure that business owners do not fall foul of legislation due to ignorance, confusion or bad business advice. So what can we expect and hope for in the Taylor Review? From Gemma Tumelty, Managing Director – The HR Dept.
We have witnessed the blatant circumnavigation of proper payment and treatment of people, as new technologies and platforms enter the market. So we are glad to see Mr Taylor recommending fair treatment of all ‘gig workers’, suggesting the same benefits as workers under the new ‘dependent contractor’ status. This is especially important for those who have had no real choice as to their employment status and where they are not running their own business.
We are concerned about how the addition of yet another employment classification will impact smaller businesses. Confusion is already rife and while the new definitions may solve the ‘gig economy’ problem, an unintentional result could be further lack of clarity for small business owners, with more loopholes and grey areas for the unscrupulous to exploit. We have several initial concerns over the parts of the report currently available to the public, in particular if these topics are not covered by the fuller version when it is released. Firstly, what will be different in practice by the new employment status? We have had worker status for many years, so what will make employers decide to offer dependent contractor status if it requires increased National Insurance contributions, holiday pay and so on? How will this new status be enforced?
Secondly, there needs to be some consideration for those who actively choose to be self-employed. Many freelancers, for example, currently don’t have a right to substitute and under existing law wouldn’t count as self-employed – yet it suits them to be so. What will happen to them – will they become dependent contractors or remain self-employed? What, legally, will differentiate the new dependent contractor status and that of self-employment? Will the three key tests of control, mutuality of obligation and substitution remain relevant? What will happen to those forced into self-employment – those who are regularly providing service to a company but not typically through mobile apps? Cleaners, for example.
Finally, will the status of worker remain? If so, how does it compare to dependent contractor status? We would be concerned that this whole exercise may simply be a rebrand of the status quo if there is not significant progress made. At the recent Parliamentary Inquiry into the Future of the World of Work, we recommended abolition of worker status as a way of simplifying definitions of businesses and protecting the rights of all employees. Indeed, the Inquiry’s scope seemed to be broader than this Review set by Number 10 and we are hopeful that the new Business, Energy and Industrial Strategy Select Committee pick this work back up when it reconvenes to add to Mr Taylor’s conclusions and be considered by Government for action. If Mr Taylor’s findings are focused purely on gig workers then significant concerns remain about the wider issues, such as the sham of false self-employment, where people are forced into a certain status and subsequently exploited. Similarly, the new definition could mean that those who may choose to be self-employed freelancers could be caught up in dependent contractor status against their will.
Whatever the final report recommends and whatever action is taken by Theresa May, there is going to have to be very clear guidance, communication and education for business owners, especially those in the SME sector, if the recommendations are implemented. Change is needed to employment status and the current situation is not fit for purpose. But it will be the large scale implementation of change, alongside education of business owners and their ‘trusted advisers’ such as accountants and bank managers, that will be critical. Otherwise we will end up with even more confusion and ignorance than we have now. We await the full report eagerly and will be digesting what this means for SMEs and ensuring their voices don’t get lost in the rush to solve a problem for the ‘gig economy’ big businesses.