The long-awaited Taylor Review into modern ways of working brings a number of recommendations for workers, but will no doubt have a significant impact on the ‘gig economy’. From by Beverley Sunderland, Managing Director at Crossland Employment Solicitors.
The recommendation is that the current three-tier approach to employment status is retained but that the current ‘worker’ category is renamed as ‘dependent contractor’ with the element of control assuming greater importance and less emphasis placed on the requirement to perform work personally. In the report Matthew Taylor recommends that there should be a free initial assessment of employment status in the employment tribunal to try and cut down on time wasted and costs and that employees should not have to keep fighting the same cases ‘again and again’. He also believes there should be harsher penalties for employers who deny their staff the proper status.
This is a positive recommendation by the Taylor Review that reflects the practical reality of hundreds of ‘workers’ in the gig economy who are integrated into businesses, but without any real ‘control’ over their working relationship – previously designated as ‘self-employed contractors’ and denied holiday pay, statutory sick pay, pensions and a minimum wage. [The recommendation is that they move to a system already operated by a number of ‘gig economy’ employers so that workers can log on to view their ‘real time’ earnings potential to see what work is available, what they are likely to earn and decide whether to take it or not.]
Fixed hours won’t fix job security
While there are over 900,000 people on zero-hours contracts the Taylor Review has not followed labour’s calls to ban them altogether, quoting figures that 60-70% of those on zero hours contracts are happy to remain on them. Those who have worked for 12 months and have established a degree of permanence can request a guaranteed hours contract based on the average weekly hours worked over the prior year.
What next for businesses?
The recommendations are overall a significant step in the right direction in addressing the fast changing landscape of the modern labour market, while trying to find a balance between business and workers’ needs. However, creating a third type of employment category is likely to mean further litigation over exactly who qualifies as a dependent contractor and what the difference is between that and a worker.
Employers should now review their working arrangements with self-employed ‘independent contractors’ against the new proposed definition for ‘dependent workers’ to see if they fall within this new category of employment status. As and when legislation is passed to enact these changes, employers should issue new contracts to reflect this. Any employers who rely heavily on the use of zero-hours contracts will also need to review their requirements and consider offering these workers the opportunity to move to fixed hours.”
Further comment across the sector
Adam Hale, EVP of Sage People We welcome the results of Matthew Taylor’s report into modern working practices in the UK, and wholeheartedly agree that there needs to be a fundamental shift in the way that businesses approach managing today’s workforce. The existing system, predicated on a 9am-5pm structure, is archaic and does nothing to help the talent acquisition and retention that is so critical to business growth.
“Thanks to the rise of the gig-economy, we’re finally seeing this discussion on the front page and we must act – people-centered technology can help to integrate gig economy workers into teams and ensure they are properly protected. We’ve been talking for years about the “employee experience” when it comes to managing people, but we must now look at the wider “workforce experience”. After all, the dynamics between retained employees and gig economy contractors will dictate the nature of the future workforce.”
Self-Employed respond to the Taylor Review report
IPSE, the Association of Independent Professionals and the Self Employed has responded to the Matthew Taylor Review of Modern Working Practices by stating that a new ‘dependent contractor’ status doesn’t negate the need for a statutory definition of self-employment. Chris Bryce, IPSE chief executive said: “We welcome Matthew Taylor’s recommendations which protect the flexibility of self-employment, but any changes to employment status should bring clarity and not add to the confusion around how government treats the way people choose to work. Mr Taylor’s recommendation to align tax and employment status would be a clearly positive step, as this is an issue that currently causes a great deal of confusion. “When people talk about the gig economy, there is often the mistaken assumption that the services operating in it are all the same.
Each relationship has to be judged on its own particular merits, and it would have been a huge error to simply place everyone in the gig economy within the revised worker status. This is why it’s essential to enshrine what it means to be self-employed in law. “Renaming workers ‘dependent contractors’ might bring some benefits, but government will have to be absolutely clear who falls into this group. It will still be up to the courts to rule on employment status. We also have a serious concern that it is far too reductive to only look at direction and control as indicators of worker – or ‘dependent contractor’ – status. In reality, things are a lot more complicated than that. You should still also consider the ability to choose when and where you work, whether the role is project based and whether you have the right to send a substitute.”
Taylor Review has potential to change the future of work
Translating ambition into reality is the next big challenge, but regulation is not the silver bullet for workplace problems. Commenting on the publication of the Taylor Review into modern working practices, Peter Cheese, Chief Executive of the CIPD, the professional body for HR and people development.
“The Taylor Review has the potential to change how we look at the future of work, which is about quality of work and not simply quantity. Translating the ambition into practice has an added importance given some of the additional challenges we face in the UK, from access to skills to labour market regulation post Brexit.
“We have been calling for greater clarity over workers’ rights for a long time, and therefore welcome the main thrust of the recommendations to ensure fairer treatment for gig economy workers without losing the flexibility which we know many of them value. We also support the proposals to clarify people’s employment status and rights and back plans to require employers to provide details of terms and conditions of employment to workers as well as employees.
“While we welcome the proposals for a stronger test of supervisory relationships in order to ensure workers get the benefits they are entitled to, we need to ensure that the framework for enforcing this is practical, otherwise we risk discouraging employers from providing flexible roles and opportunities that many people benefit from.”
‘Changing regulation is not the silver bullet’
“However, changing regulation is not the silver bullet that will fix the problems with the world of work. Businesses need to take greater responsibility for the quality of work, opportunities for progression, and fair treatment of all their workers. The review rightly highlights the need for wider changes to boost the number of people in better paid, better quality work, such as enhancing the enforcement of existing standards, improving the quality of careers advice and guidance, boosting life-long learning and making the apprenticeship levy more flexible. We welcome plans to strengthen labour market oversight, including greater transparency and reporting, as well as a bigger role for the Low Pay Commission and joint working and co-ordination between institutions.”
’Right to request minimum hours for zero-hours workers will strengthen employee rights and maintain flexibility’
“The proposals to create new rights for agency workers to request contracts that guarantees hours which better reflect the actual hours worked are welcome. We also welcome the proposal to allow zero-hours workers to be able to request minimum hours if they have been with the same employer for 12 months, which will maintain flexibility while ensuring that people can move onto contracts that might suit them better.”
‘New National Minimum Wage should be treated with caution’
“However, the recommendation for a new higher NMW rate for non-guaranteed hours should be treated with caution. There is a risk that any changes do not result in a reduction of jobs or opportunities for the people that need it as employers react to concerns of the growing cost of labour. We also have reservations about the practicality of the proposal to introduce minimum piece work rates.”
‘Corporate governance best way to improve quality of work’
“Crucially, Taylor stresses that the best way to improve the quality of work is through effective corporate governance, good management and strong employment relations within organisations and flags the need to boost productivity and job quality through working more closely with low pay employers and sectors. It is vital the Government develops these ideas as part of industrial strategy to ensure that the Taylor Review has lasting impact on work quality in the UK.”