Today, the much-anticipated Taylor Review was published, with a speech by Matthew Taylor outlining his recommendations, followed by comments from Prime Minister Theresa May. The opening lines of the Review set out Taylor’s ambition: “The work of this Review is based on a single overriding ambition: All work in the UK economy should be fair and decent with realistic scope for development and fulfilment,” an aim May echoed in her own speech, calling for a balance of flexibility and protections of worker rights in the labour market.
The report comprises more than 100 pages of detailed analysis and recommendations, and will no doubt form the basis of debate over the coming weeks and months. We’ve set out here some of the key recommendations which will be of most interest to employers.
The Review deals with the ‘gig economy’ and the issue of the employment status of people who deliver services via platforms such as Deliveroo and TaskRabbit. The status of these people has been at the heart of a number of the high-profile cases recently, where companies have asserted that they are ‘self-employed,’ and individuals have argued they are ‘employees’ or ‘workers.’ However, the issue of employment status is not just confined to gig economy companies – it is relevant to any organisation that engages people on a freelance or self-employed basis.
Employment status: what’s new?
Employment law currently recognises three categories of individual, each with different rights and protection (see more detail in our blog here), broadly:
- The self-employed, who have no employment law rights
- Workers, who benefit from basic protections such as the minimum or living wage and paid annual leave
- Employees, who have the greatest number of rights and protections
The Review covers a number of interesting recommendations in this area:
The three statuses of individual should be retained, but the status of ‘worker’ should be renamed ‘dependent contractor.’ The Review highlights that platform-based working offers the genuine flexibility that some individuals desire, but that there must be fairness for those who work in this way, and those who compete with them. It asserts that workers in this category are those most likely to suffer from ‘one-sided flexibility,’ and that there must be real differentiation from a ‘dependent contractor’ and someone who is legitimately self-employed.
There should be a clearer test to establish an individual’s status for employment law purposes. Currently, the tests for each status are set out very briefly in the legislation and are supplemented by a plethora of case law. The Review recommends in contrast that “legislation should do more of the work and courts less.” The tests should be distinct, and not open to interpretation. If adopted, these recommendations may make it easier for individuals to understand their own employment status, and many organisations will welcome any change that brings more clarity to what is currently a difficult area for them to navigate.
Employee status should be determined at a preliminary stage in the Employment Tribunal process. As we have seen in the many high-profile cases recently, individuals currently wishing to establish that they have a particular status have to bring a claim linked to one of the rights attaching to that status – for example, someone wishing to establish ‘worker’ status may bring a claim for holiday pay. As things stand, the fees to pursue a claim in the Employment Tribunal to its conclusion can be as much as £1,200. The Review recommends that employee status be determined at a preliminary stage without the requirement to pay a fee. The Review also recommends that the onus be on a company to prove that an individual is self-employed. This would be a very significant change to the approach in these cases.
The notion of ‘control’ should become even more significant. The Review recommends that the test for whether an individual is a worker should focus more on the notion of ‘control’ and less on the requirement for ‘personal service’ by the individual. The Review notes that, currently, an individual can have almost every aspect of their work controlled by a business but, if their contract provides for a right of substitution (i.e., the right to send someone else to do the work in their place), they will not have worker status because there is no requirement for them to provide personal service. Although control is currently an important part of the test for worker status, this approach would involve a significant shift in emphasis.
The initial response to the Review has been mixed, with some commentators clearly disappointed it has not gone far enough – for example, in not supporting an outright ban of Zero Hours Contracts – and others pleased to see it has not advocated additional heavy-handed regulation.
It’s worth noting that although substantial in nature, and compiled at the request of government, the findings of the Review will remain just recommendations, until the government takes action to implement them. In her speech thanking Taylor and his team for their work, May committed to respond in detail ‘later in the year,’ and we know that some of the proposals may require primary legislation to implement – which means there could be a hiatus of many months before businesses can have any certainty about what the Review will mean to them.
The challenge faced by organisations looking to implement new business models which are commercially viable and compliant with current regulation remains a difficult one. We continue to support clients grappling with these issues, covering many of the relevant questions in our recent webinar, and we will be monitoring developments closely in the months to come.