Nicholas Robertson: The Taylor Review of Modern Working Practices

There are circa 1 million agency workers in the UK, temporary workers (including temporary agency workers) number 1.6 million, and more than 900,000 people work under zero hours contracts.  It is estimated that 1.3 million people work in the gig economy. Even allowing for overlap between those categories of worker, it is clear that non-standard working arrangements are of immense importance to the British economy and those that work in it.

Currently there are a number of factors that warp the job market and encourage the growth of gig work at the expense of permanent employment.  Gig economy workers may have limited  statutory rights.  Enforcement of statutory rights is done on a individual basis with very limited means of bringing a class action. Tribunal fees are a deterrent, especially for low paid individuals. There is limited formal trade union presence in the sector and  the tax regime in the UK favours companies that have notionally self employed staff working for them.

The Taylor Review of Modern Working Practices recently released the findings to its independent review which considers the implications of new forms of work on worker rights and responsibilities, as well as on employer freedoms and obligations.

The first point to note about the Taylor Report is the sheer breadth and extent of its express  recommendations. There are more than 30 recommendations laid out in the course of the review and this does not take account of the suggestions or opinions scattered throughout it.  A government which wishes to introduce change to the gig economy, has plenty of opportunities to do so, even if it only implements some of the recommendations.  And there are some comments which the government will point to as evidence supporting its actions so far.  For example the Report asserts that the UK is good at encouraging economic activity and creating jobs.  It also agrees with the current tripartite distinction between employed status, self employed status and an intermediate category.

However, the Report states that there is a need to enable a shift in the quality of work in the UK, and challenging exploitation of the weaker with one sided flexibility where it is the business that in truth benefits from the flexibility of the arrangements.

First, it should be easier for individuals to establish whether or not they are dependent contractors or genuinely self-employed.  The Taylor Report recommends a speedy tribunal process (without any tribunal fees attached) to allow individuals to establish their status at a preliminary stage in any tribunal litigation.

Secondly,  it would be for the business to prove the individual was not a dependent contractor rather than the other way around.  The test for a dependent contractor would then be focused predominantly on the extent to which individuals were controlled by the business rather than whether or not it was due to personal service.

The Taylor Report recommends that aggravated penalties could be awarded if a business does not apply a tribunal ruling on the status of one individual to other comparable individuals. HMRC would be able to enforce rights to holiday pay for example, in addition to their current remit over National Minimum Wage (NMW).  Larger employers would have to report on their workforce structures.

There are proposals to extend the statutory rights for dependent contractors, including  the right to statutory sick pay. Those who are employed via an agency would have a clearer right to pay with a comparable permanent employee at the organisation in question.  At the moment, the so called Swedish derogation means that end users can sidestep that obligation.

There is no proposal to abolish the zero hours contract. The report recognises that some individuals welcome the flexibility.  However individuals who have worked on a zero hours contract for 12 months would have the right to request guaranteed hours.

Separately, the report recognises that individuals who are being offered work via a platform  (such as Uber) could fairly be paid by reference to the work they do rather than being paid for waiting for work.  However business would have to demonstrate that a worker working averagely hard at that time would exceed the NMW by 20%.  It was also suggested that the hourly rate for the NMW should be higher for worked hours that are not guaranteed by the business.  In other words the business would be paying more for the increased flexibility.

Dependent contractors would have a right to a written statement of terms and conditions, including an explanation of their statutory rights.  This would be radical, because it could make clear what at the moment, is brushed over by many organisations.

The Report suggests that the trigger for starting the statutory information and consultation process (meaning the setting up of an employee elected forum) should be reduced significantly from a 10% threshold to 2%.  Such a voice in the work place could potentially be the strongest protection yet for individuals working in the gig economy by building up collective representation.

What’s next?

The Report is wide ranging and makes a number of significant suggestions to improve the rights of those working in the gig economy without threatening the flexibility of the UK economy.  It is  not a radical document and favours adapting existing mechanisms rather than an extreme makeover.

The issue now is whether the political will exists to implement these changes. It is difficult to see this government taking action to strengthen collective rights and allowing the unions to grow.  Similarly we cannot see the idea of a different levels of NMW being embraced or that the Swedish derogation will be dropped.  But granting additional statutory rights such as a statement of terms, and a right to request guaranteed  hours may be easier to accept, and making businesses report on their work structures may be more palatable. It is difficult to imagine that the Government will simply ignore the Report altogether.

About Nicholas Robertson

Nicholas Robertson is a partner and Global Firm Practice Leader of Employment and Benefits Group for international law firm Mayer Brown.

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