This summer has seen the release of the eagerly anticipated independent review into modern employment practices following a swathe of high profile challenges to employment status in tribunals up and down the country.
The Taylor review, put together by former aide to Tony Blair, Matthew Taylor, was conducted to examine how employment practices need to change in order to keep up with modern business models. It paid particular attention to the method and function of the gig economy which has been a headline hitter in recent months following tribunal decisions against high-growth companies like Deliveroo, Uber, Pimlico Plumbers and CitySprint who operate increasingly digitalised business to consumer service models.
These companies allege to engage individuals on a job by job basis. Instead of a regular wage, workers get paid for the “gigs” they do, such as delivering mail or food or taking a passenger from A to B. This modern method of working has been hailed by some as a completely flexible working environment that allows self-employed people to pick and choose when and where they work. The unions consider it to be the exploitation of the lowly paid, restricting their employment rights and protection.
The approach to these issues from employment tribunals is to look beyond what’s written in any agreement and consider the reality of the situation. Recent rulings have declared these individuals ‘workers’, not ‘self-employed’, entitling them to receive basic employment rights such as: national minimum and living wage, holiday and sick pay, rest breaks, and an employer contribution into an auto-enrolment pension scheme. If they were employees, they would get even more protection.
It could cost companies who fall foul of the key tests to establish worker tests millions. No surprise then that these decisions are being appealed. But as the number of people engaged in this sector rises, it is important that the status test keeps pace with the modern world. The Taylor review sought to get to the bottom of the issue, to see if the status of self-employed in the gig economy works and if not how could it be improved. We examine how far his report went to address the problem.
At a glance
The review made the following recommendations in order to achieve a ‘fair and decent economy’:
1. Workers should be renamed ‘dependent contractors’. Flexible working should continue for those who choose it, but there needs to be greater fairness at work. There should be clear distinction between dependent contractors and genuinely self-employed individuals.
2. The Government must provide additional protections for dependent contractors.
3. Strategies must be put in place to make sure workers do not get stuck earning National Living Wage. Individuals must feel they can make progress.
4. There should be free preliminary employment tribunal hearings to discern employment status.
5. Good corporate governance should be the responsibility of the company. The government does not need national regulation to provide good work. Businesses should be open about how they employ people, how many zero contracts they offer and who is classed as working in what status.
6. The UK needs to develop a more proactive approach to workplace health which will benefit companies, workers and the wider public interest.
Not far enough
Despite some sweeping changes that the report recommends, there has been fierce criticism from some commentators that the review has not gone far enough. TUC General Secretary Frances O’Grady said “from what we’ve seen, this review is not the game-changer needed to end insecurity and exploitation at work”. His notion was supported by Tim Roach, GMB General Secretary who called the review a “disappointing missed opportunity”.
They do not believe that the recommendations of the review will be enough to shift what they say as the present exploitative corporate culture and the emerging working patterns. Noticeably the review stopped short of proposing all gig economy workers should be entitled to minimum wage. Nor did it tackle enforcing penalties on unscrupulous employers operating under bogus self-employment schemes, using unacceptable zero hour contracts and agency work to deny employing someone permanently and giving them full protected rights.
We think that potential legislative changes as a consequence of the review are likely including:
1. clearer definitions of the ‘worker’ or ‘dependent contractor’ status, with the benefit of recent case law (so a codification of and more guidelines in legislation drawn from almost 50 years of case law); and
2. the amendment of current rights to permit certain rights to come into being on day one, extended to workers or permit longer gaps between employment for continuity of employment purposes, such as ignoring temporary breaks of 1 month or less, rather than 1 week or less.
Clearly some of these changes would take some time and may require further research and/or changes to current legislation. There is much to be said for clarity around status for organisations who require flexible labour models to deliver services to the public as regards how they engage staff and the terms that they must offer them.
We doubt that anything is likely to be acted on in the next 12 months. Not least because of the current Brexit talks which may impact on which rules we continue to follow from the EU.