One of the focus points of the much anticipated Taylor Review is the need for clarity in the law on employment status, particular in relation to identifying “workers”. The report determines that though the current three tiered system of employment status should remain it is important that “the legislation does more of the work and the courts less”. However, is the solution as simple as this after all? From Natalie Razeen is an associate solicitor in the employment team at Russell-Cooke
The Taylor Review notes that there is a need for employment statuses to be “distinct”. The report says that though recent case law indicates that the courts have applied legislation in a manner which keeps pace with the UK’s labour market changes, particularly in relation to the gig economy, it is difficult to comprehend if you are a lay person.
The current definition of worker is of particular concern to the Review. Under 230(3) of the Employment Rights Act 1996 a worker can be an individual working under a contract of employment or: any other contract…whereby the individual undertakes to do or perform any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking”
It was intended that such workers receive an intermediate class protection. The Review felt that is would be appropriate to rebrand this category as “dependent contractor”. In order to be a worker the individual has to provide personal service. The panel responsible for producing the Review considered that it was unfair that an individual could be subject to a high level of control but not be a worker because a genuine right of substitution exists. As a result the Review recommends that the concept of “control” should be of greater importance when determining dependent contractor status.
Recent cases on employment status have considered the issue of control in connection with analysing the second part of the limb b test; whether the individual is carrying out a business undertaking. In the case of Pimlico Plumbers v Gary Smith the Court of Appeal found that the Tribunal was entitled to conclude that “the degree of control exercised by Pimlico Plumbers, was also inconsistent with [Pimlico Plumbers] being a customer or client of the business”. One interpretation is that the Taylor Review is attempting to codify this consideration.
However the Review has been criticised, by unions in particular, for lacking boldness. The IWGB has stated that it is against moving “from a multifactorial test…towards a focus on control”. It believes that the issue is not so much one of clarity as a failure of employers to “obey the law” given that there is “virtually no government enforcement of employment law” and the monetary consequences for employers who wrongly treat workers as independent contractors are relatively minor. For its part the Review does consider the question of enforcement to an extent and makes recommendations. The IWGB appears largely unimpressed by these.
Writing for the Guardian the deputy director of policy at IPSE, an organisation which represents the self-employed, states that it is “too simplistic” for control to be the matrix with worker rights being afforded to those who would fall into the grey area between employee and self-employed contractor on the scoring system. Though rather prescriptive, this mechanism does at least take into account the holistic approach the Tribunal takes when making such determinations. In addition, it could feasibly assist HR professionals in making an initial determination as to employment status through a scoring exercise.
The Review unsurprisingly does not represent an overhaul of the system. It is possible that highlighting the issue of control may cause more employers to consider the status of the individuals in their workforce more carefully. However, it would have perhaps been helpful for the Review to have at least provided draft definition of a worker as a starting point. It appears that this area of law will remain complex and rather uncertain for the foreseeable future.