Employment update
Employment practice update: Good work? The Taylor Review examined
This independent review considered the implications of new forms of work on worker rights and responsibilities, and on employer freedoms and obligations.
About the author
Martin Edwards is a consultant at Weightmans LLP
Good work: The Taylor review of modern working practices, which was published in July, has a bold ambition.* It aims to provide impetus for change so as to ensure that ‘all work in the UK economy should be fair and decent with realistic scope for development and fulfilment’ (page 6). But, of course, fairness, decency and realism are concepts that different interest groups interpret in varying ways. Unsurprisingly, therefore, reaction to the review has been mixed.
The review proposes seven guiding principles. In summary:
- The UK’s national strategy for work should be directed explicitly towards the goal of ‘good work for all’. The government needs to be held accountable, but everyone needs to take responsibility.
- ‘Platform-based working’ (a business model which facilitates exchanges between two or more groups, usually consumers and producers) offers opportunities for genuine two-way flexibility and can be beneficial for people who may not be able to work in more conventional ways. Worker (or ‘dependent contractor’ as the review suggests renaming it) status should be maintained, but the distinction between workers and those who are legitimately self-employed should be clarified.
- The law - and the way it is promoted and enforced - should help firms make the right choices and individuals to know and exercise their rights. Workers are more likely to suffer from unfair, one-sided flexibility than either employees or the genuinely self-employed and, therefore, should be given additional protections. Firms should also be incentivised to treat them fairly.
- The best way to achieve better work is not national regulation, but responsible corporate governance, good management and strong employment relations.
- Everyone should have realistically attainable opportunities to strengthen their future work prospects.
- There should be a more proactive focus on workplace health.
- The national living wage should be accompanied by sectoral strategies, engaging employers, employees and stakeholders, to ensure that people - particularly in low-paid sectors - can progress in their current and future work.
The... Review recognises the crucial importance of changing attitudes – especially the attitudes of employers – as well as legal rules
Written statement on day one
A wide range of ideas are put forward with a view to realising these objectives. Especially significant is the proposal that a written employment statement (typically, the contract) must be provided on day one of the job. This seems a sensible reform, which would remove at least some of the confusion that so often abounds about what precise contract terms are actually applicable in a particular case. The report also says that this requirement should be extended to all workers, and again the benefit of clarity probably outweighs the administrative burden.
Retain the three-tier approach to employment
The report concludes that the UK should retain the current three-tier approach to employment status, ie: employee; worker; and self employed. This seems logical, but it is difficult to see that any major benefit will be achieved simply by rebranding workers as ‘dependent contractors’.
More relevant than this cosmetic change are the proposed enhancements to the rights of workers. The review recommends that workers should no longer need to show that they are required to perform the task personally in order to be afforded rights that come with that status (for example, holiday pay, the national minimum wage etc). This is an attempt to eliminate elaborate contract terms which do not reflect the reality of the working relationship. Arguably, however, it is unhelpful to focus on the outward manifestation of a problem that undeniably exists. The reality, surely, is that personal performance is, and will remain, integral to the status of a worker.
The future of the ‘worker’
The review recommends that there should be new legal definitions clarifying precisely what each of the three categories of status means. The intention here is laudable, but given that the courts have struggled with the interpretation of status at work for more than a century, only a supreme optimist would believe that statutory definitions will eliminate the potential for dispute and the need, in some cases, for judicial interpretation.
Perhaps more meaningful, in practice, is the review’s proposal that there should also be a redefinition of worker status so as to provide minimum wage protection akin to piecework and rates. This would, in effect, give gig economy workers the ability to choose whether or not to work at quiet times, while requiring the engager to show that, on average, they pay above the minimum wage.
Matthew Taylor led the review to consider how employment practices need to change in order to keep pace with modern business models.
The review considered the implications of new forms of work, driven by digital platforms, for employee rights and responsibilities, employer freedoms and obligations, and our existing regulatory framework surrounding employment.
Managing gaps in service
The concept of continuity of employment has a crucial bearing on many legal rights, including the right to claim unfair dismissal or a redundancy payment. The report recommends making continuity easier to establish by expanding the ways in which gaps between assignments can be bridged, and automatically bridging any gaps that are less than one month (rather than the current one week). This would mean that employees who work irregularly would gain many rights which they do not currently acquire because of the breaks between their engagements;
Flexible working, SSP and holiday pay, and annual leave
The report recommends that the current right to request flexible working should be expanded, so as to include temporary changes, while statutory sick pay should become a right from day one irrespective of earnings and extended to all workers.
There should be a period of employment protection for those absent because of ill health, akin to maternity leave protection, with a right to return to the same job. At present, holiday pay is notoriously difficult to calculate for those who work variable amounts of hours over the year.
The report also recommends extending the reference period for annual leave entitlement to 12 months rather than 12 weeks, as well as suggesting that workers should be entitled to rolled-up holiday pay, with additional safeguards to ensure that workers do not work 52 weeks a year. Taken together, these changes would undoubtedly help to promote the Taylor Review’s guiding principles.
Providing stability and zero-hours contracts
Agency workers placed with the same end-user for 12 months should, the report says, be able to request a direct contract with them, and the end-user should have to consider this request in a reasonable manner. The right to request an employee representative body, which is rarely used at present, should be extended; as a result, only 2% of the workforce would need to make such a request rather than the current 10% requirement.
Zero-hours contracts are controversial, and the Taylor Review favours a measured approach to their reform. The report’s recommendations would mean that workers on zero-hours contracts have the right to request guaranteed hours, placing the burden on the employer to justify maintaining any zero-hours contract after a period of engagement.
By placing the onus on the worker to trigger a review of their hours, the proposals would allow workers who are happy to work without agreed hours to continue the arrangement unchallenged. This seems a much more pragmatic way of addressing the problems that can be caused by zero-hours contracts than a complete ban.
Unpaid internships have long been an area of confusion for employers, and represent a potential barrier to social mobility. The Taylor Review seeks, in effect, to create a more level playing field. Employers seeking to provide genuine work experience would still be able to do so, but organisations would not be able to profit from free assistance through long-term unpaid internships.
The review proposes that HM Revenue and Customs should become responsible for enforcing sick pay and holiday pay rights for low-paid workers, as well as the national minimum wage. There should be a change to the tax system so that it costs the same for employed and self-employed workers (with closer parity on national insurance contributions). This proposal seems logical, although it would almost inevitably lead to increased national insurance costs for the self-employed. The aim of aligning employment law with tax law in terms of the interpretation of employment status is admirable, although it may prove challenging to implement.
Speaking at the launch of the Taylor Review, prime minister Theresa May accepted that ‘all work should be fair and decent’ ; however, the government has not yet committed to implementing all the review’s recommended changes. Nevertheless, assuming that most of the changes are adopted, will they make much difference?
The answer is probably that gig-economy workers will benefit most from the proposed changes, whereas other employees and workers will enjoy more modest improvements to their working lives. But even if the proposals put forward in the Taylor Review are implemented in their entirety, it is unlikely that they will have an utterly transformational effect on life in the British workplace.
However, it is perhaps unrealistic to hope that legislation which aims to strike a practical balance between the interests of individuals, employers, and the national economy will achieve change overnight. The Taylor Review recognises the crucial importance of changing attitudes – especially the attitudes of employers – as well as legal rules. Inevitably, this will prove a long-term process. As the report recognises, it will require everyone concerned to take their share of responsibility for ensuring fairness and decency in the treatment of people in the British workplace.
* Available at: http://tinyurl.com/y7bax3t3