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The Taylor Review - Defining the Modern-Day Worker

on Friday, 14 July 2017.

The long-awaited Taylor Review of Modern Working Practices has now been published receiving an extremely mixed reaction in both the media and across public and private sectors.

The review makes numerous proposals for clarifying the law on employment status and protection for workers, in particular focusing on the gig economy and zero-hours contracts. But what are the key recommendations for the government to consider?

Gig Economy and Employment Status

  • Introducing new terminology for referring to 'workers' who are not 'employees'. The Taylor Review proposes the term 'dependent contractors'.

  • Introducing primary legislation defining 'employee' status to take account of principles laid down by case law.

  • Amending the definition of 'worker' (or 'dependent contractor') status to remove the requirement for 'workers' to provide personal service and instead to place a greater emphasis on 'control'. The aim behind this recommendation is to bring more people who would otherwise be self-employed within the scope of statutory protections by making it more difficult for employers to rely on substitution clauses in their contracts.

  • Adapting the definition of 'working time' for the purpose of the National Minimum Wage, as individuals who access work by logging on to an app or platform (such as Uber or Deliveroo) when they know there is no work available should not be entitled to be paid for their time. This is to ensure that 'genuine two-way flexibility', which many workers appreciate, is not jeopardised.

  • Aligning the definition of 'self-employment' for both employment law and tax purposes, so that being employed for tax purposes would mean that an individual is either an 'employee' or a 'dependent contractor'/'worker'.

  • Giving 'dependent contractors' the right to a written statement of terms (including a description of their statutory rights) at the start of their engagement, akin to the right of 'employees' to receive a S.1 statement and introduce the stand-alone right to compensation where an employer fails to comply with this requirement.

  • Entitling 'dependent contractors' as well as 'employees' to Statutory Sick Pay albeit accruing in line with length of service so that employers are not required to give the full six months of Statutory Sick Pay to individuals who have only worked for them for a short period of time.

  • Allowing claimants to have their employment status determined by an Employment Tribunal as a preliminary issue, without being required to pay a fee.

  • Placing the burden of proof in the Employment Tribunal on employers to show that the claimant is not an 'employee' or 'worker' and is therefore not entitled to the employment rights claimed.

  • Allowing the Employment Tribunal the power to impose aggravated penalties on employers who do not apply the ruling on employment status to 'workers' on broadly comparable arrangements, and to give the government the power to enforce tribunal awards itself, as opposed to requiring the claimant to complete additional forms/court proceedings and pay an extra fee.

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Zero Hours Contracts and Other Recommendations

Although some submissions to the Taylor Review sought the ban of zero-hours contracts this is not a recommendation that has been made. Instead the Taylor Review suggests:

  • Increasing the National Minimum Wage for contracts where hours are not guaranteed by the employer, so that businesses can continue to employ workers on zero and short-hours contracts but will be required to pay more for this flexible working arrangement.

  • Giving people on zero-hours contracts the right to request guaranteed hours after 12 months' service.

  • Increasing the pay reference period from 12 to 52 weeks, in order to improve access to holiday pay for seasonal, casual and zero-hours workers.

  • Improving the information provided to agency workers and giving them the right to request a direct contract with the end-user after 12 months spent on a particular assignment.

  • Requiring larger employers to report on their overall workforce structure, including requests from zero-hours workers for regular hours.

  • Abolishing the so-called 'Swedish Derogation', which excludes workers from the right to equal pay, if they have a contract that provides for a minimum level of pay between assignments.

  • Preserving continuity of employment where any gap in employment is for a period of less than one month, rather than one week.

  • Allowing individuals to be paid 'rolled-up' holiday pay, receiving a 12.07% premium on their pay instead of paid time off.

  • Extending the Information and Consultation arrangements to 'workers' as well as 'employees', and requiring employers to set up the arrangements when requested by just 2% of the workforce, rather than the current 10% threshold.

  • Allowing HMRC, which is currently responsible for enforcing the right to the National Minimum Wage and Statutory Sick Pay, to enforce the right to holiday pay for low-paid workers.

  • Introducing uplifts in compensation awards where employers commit subsequent breaches of employment law based on similar working arrangements to those already dealt with by the Employment Tribunal.

  • Allowing flexible working requests to cover temporary, as well as permanent, changes to contracts.

  • Allowing individuals a right, similar to that of those on maternity leave, to return to the same job following long-term sickness absence.

  • Establishing a 'naming and shaming' scheme for those employers that do not pay employment tribunal awards to successful employees within a reasonable time.

Best Practice

At this stage the proposals contained in the Taylor Review are recommendations only and it remains to be seen whether or to what extent the government will seek to implement any of them. A number of the recommendations would be relatively straightforward to implement and others would require a great deal of work.

It is too early for employers to consider changes to their practices and we will all keep a keen eye on how the concept of worker status is to be re-defined.

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For more information, please contact Nick Murrell in the Employment Law team on 0117 314 5627.

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