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  • Overview

    The Taylor Review was primarily launched to consider employment/worker status in the UK following the increase in the number of people working in the gig economy. In July 2017 the Good Work Report was published which looked at, reported and made recommendations into modern working practices and its recommendations went much further than looking at employment status. On 7 February 2018 the Government published its formal response the ‘Good Work Plan’.

     

    The Response accepts and concludes that the overarching principle that all work in the UK should be fair and decent.

    It would be fair to summarise that the proposals the government intends to implement will certainly provide individuals with a number of new employment rights.

    The government has accepted that it needs to balance the need for rights and protection for workers/employees against the flexibility of our labour market. This balance, the Good Work report suggests, must be maintained going forward to ensure that the UK’s labour market is resilient to respond to changes in the labour market, build on those demands and address the issues that arise from them.

    Many of the changes proposed are aimed at bring workers’ rights closer into line with those of employees which will lead to greater protection for workers.

    The government has failed to tackle the self-employment tax issue in greater detail and many including the Director General of the Institute of Directors, Stephen Martin have commented that “the lack of action on tax reform is a wasted opportunity”.

    The recommendations and the government’s responses are wide ranging and touch upon a number of areas within employment law. We have therefore prepared a summary of the key recommendations and the government’s response to these.

     

     

    Taylor Review recommendation

    Government response

    1.

    The definition of worker to be clearer and more consistent with workers who are not employees being renamed dependent contractors. There will be less emphasis placed on personal service and more emphasis on control between the parties when considering an individual’s status.

    The government is committed to taking action in this area including legislative options. As this would be the single largest shift in employment status since Employment Rights Act 1996. The government is therefore naturally concerned that any action in this area must preserve the flexibility in the labour market and that it does not impose unnecessary burdens on business or adversely impact ability in the labour market.

    To meet this recommendation, the government intends to consult on how to best ensure clarity and certainty for both individuals and businesses.

    2.

    The government should make available a free online tool for determining employment status.

    This has been accepted and the government intends to develop such a tool but it is agreed that this will be complex to cover the various ways in which individuals could be engaged.

    3.

    Introduce a statutory requirement for businesses to provide a written statement of terms to dependent contractors on day one, similar to the right of employees to receive a section 1 statement.

    This statement would have to be in a specific format so that the information is transparent, accessible and in plain English.

    The government has confirmed that this will be implemented and the right extended to all workers. In addition, the government intend to introduce a right to request a “more predictable” contract. This will be available to all workers including zero hour’s contracts and agency workers. Whilst it is not clear what is meant by a “more predictable” contract, our interpretation is that it is likely to mean that company’s will need to be clear and transparent about the relationship specifically around hours of work and the way individuals will work.

    4.

    Allow hearings for determining employment status to be expedited and where employment status is in dispute, for the burden of proof to shift to the business to prove the individual is not entitled to the relevant rights they are claiming.

    HMRC to be given the responsibility to enforce basic rights, such as national minimum wage, sick and holiday pay and possibly unlawful deductions from wages.

    Whilst the government accepts that the state should take responsibility for enforcing rights on behalf of vulnerable workers it does not consider expedited hearings and/or the reversal of burden of proof necessary. However, this has not been entirely ruled out and the government may consider it again at a later stage.

    5.

    The government to introduce a naming and shaming scheme for employers who do not pay employment tribunal awards within a reasonable time.

    To allow tribunals to apply penalties and award costs against employers if they defend claims where there have been previously successful claims brought under broadly comparable arrangements and the employer has not, without good justification, taken steps to comply with the ruling.

     

    The government intends to simplify process of enforcing awards as a whole but accepts the ‘naming and shaming’ proposal.

    In addition, employment judges will be obliged to consider stronger punishments for employers who ignore previous tribunal judgments. The government intends to increase the maximum amount of financial penalty for losing employers who fail to comply with tribunal awards from £5,000 to at least £20,000 as soon as practicable.

    6.

    A higher rate for national minimum wage for hours not guaranteed under individual’s contracts. This higher rate would be set at a level to incentivise employers to schedule guaranteed hours as would be reasonable within their business.

    Individuals in zero hour contracts who have been in their post for 12 months to be given the right to require a contract with guaranteed hours to reflect the hours they have worked.

    This is accepted by the government who have requested that the Low Pay Commission explore the impacts of this along with alternatives. The Low Pay Commission is due to report to the government October 2018.

     

    The government intend to introduce a right to request a “more predictable” contract for all workers including zero-hour workers and agency workers.

    7.

    To preserve continuity of employment for casual contracts to be increased from one week to one month.

    The government have stated they are committed to extending this gap and will consult on this point.

    8.

    For the pay reference period, set out in the Working Time Regulations 1998, to be increased from 12 to 52 weeks.

    For the government to allow individuals a greater choice to receive paid annual leave which would include the option of “rolled up” holiday with safeguards to be built in to ensure individuals don’t simply work 52 weeks a year.

    The government have accepted the proposal to increase the pay reference period to 52 weeks but intend to consult on the finer details.

    The government do not intend to take forward the proposal of rolled up holiday pay on the basis that this has been found to be unlawful at the European Court of Justice. However, the government will take steps to increase awareness of holiday pay entitlements including how best to publicise entitlements to workers such as publicity campaigns.

    9.

    Statutory Sick Pay (SSP) which is currently only available to eligible employees to be made available to all workers.

    SSP to be accrued through length of service like holiday entitlement.

    Employers to improve return to work after periods of sickness and to go above the duty to make reasonable adjustments.

    HMRC to enforce SSP for low paid individuals.

    The government is considering whether SSP should be a basic employment right. The government will consult on changes to enable a better phased return to work before introducing this. Especially in the wake of the removal of the Fit For Work Scheme.

     

     

    10.

    Allow agency workers the right to request direct employment contract after being engaged for 12 months.

    The government is going to introduce the right to request a “more predictable” contract for workers, zero-hour contracts and agency workers.

    11.

    Increase class 4 NICs for self-employed. In return, those who are self-employed to receive the same state benefits as employees.

     

    The government has no plans to revisit this issue. Whilst the government agrees in principle to equalise benefits for self-employed it states it must consider the wider context of tax, benefits and rights over longer term.

    12.

    To make auto-enrolment available to self-employed.

     

    The government does not believe auto-enrolment should be offered to self-employed.

    13.

    The government to consider and further promote genuine flexibility in the workplace as part of the right to request flexible working.

    This is accepted by the government who will launch a joint task force with the industry on flexible working.

    14.

    The government to review and consolidate legislation protecting those who are pregnant or on maternity leave and to provide guidance related to that legislation.

    The government is currently working with ACAS and EHRC to produce guidance on maternity and pregnancy rights at work for individuals and employers.

     

    We have already started to see claims rise since the abolition of fees to issue claims. We currently have a couple of employment tribunal claims being brought by claimants who were defined by the companies they worked for as self employed but who are claiming that they are in fact employees. This is a growing area of contention and dispute and coupled with the government’s focus on the subject and the direction of changes in favour of workers, we strongly recommend that businesses audit their working practices and look at how they are engaging individuals. If you would like an employment status audit please contact us.

    To read the ‘Good Work Plan’ please click on the following link: Good Work - A response to the Taylor Review of modern working practices

     

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    Employment

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