Employment law: The Government’s proposals following the Taylor review

Matthew Taylor, the Chief Executive of the Royal Society of Arts, produced a report last year on various working practices due to concerns about the gig economy.

The report is known as the “Taylor Review” or the “Taylor Good Work Report”.

The Taylor Review report made a number of interesting observations and recommended the following:

Clarity and transparency within the law

There is a need to replace the current test for employment status, with more of a focus on “control” as opposed to personal service when determining the test for status as an independent contractor.

Flexibility

A higher National Minimum Wage ought to be used for hours not guaranteed, an extended time frame to break continuity of service (1 week to 1 month), improved transparency for agency workers, promotion of awareness of holiday entitlement (and increase pay reference to 52 weeks) and the right to request contracts for both agency workers and zero hours contract workers after a 12 month period. It also suggested allowing “rolled up holiday pay” (something that is banned by the European Court of Justice).

Responsible business

Examination ought to be made into the Regulations which impose duties of “information and consultation” to improve employee engagement. There is the recommendation that employers should work with Acas to promote employee engagement and relations, as well as reporting public their models of employment (including how many agency staff and zero hours workers are used)

Enforcement

The burden of proof in Tribunal cases concerning employment status ought to be reversed so that the onus is on the employer. A system “naming and shaming” employers who do not pay tribunal awards and allowing HMRC to take responsibility for enforcing core rights of NMW, sick pay and holiday pay for the lowest paid workers.

What the Government are doing about the Taylor  Review’s recommendations

The Government announced its proposals in respect of what they would do to ensure “good work for all”.

Most notably, the Government has not accepted the Review’s recommendation that, in cases where employment status is in dispute, the burden of proof should be placed on the employer. Employment status is topic which has attracted significant media attention as a result of the Uber and Deliveroo decisions and the Government will not pursue this recommendation immediately due to it being something which is still being developed, including the new online employment status for tax tool (which can be accessed by clicking here).

With regard to holiday pay, the Review recommended that individuals should have the choice to be paid ‘rolled-up’ holiday pay, receiving a premium on their pay instead of paid time off. The Government accepts the concern that some workers may not be receiving the holiday pay to which they are entitled but will not implement rolled-up holiday pay because the European Court of Justice has ruled it to be unlawful.

The response also notes that the Government will not be taking action on non-compete clauses. Although this did not feature in the Taylor Review, it was the subject of a call for evidence in May 2015 on whether such clauses unfairly prevent individuals from moving between jobs. The Government notes that the majority view among respondents to that call was that restrictive covenants are valuable and necessary and do not unfairly affect an individual’s ability to find other work. It, therefore, does not propose any action in this area.

Some of the proposals by Government are as follows:

• More stable contracts for all workers.
• Help to enforce workers’ sick and holiday rights, including a reform which allows all workers (regardless of income) to statutory sick pay from day one and it accrues on a length of service.
• A name and shame scheme for employers that don’t pay tribunal awards.
• A scheme to ensure new and expectant mothers know their rights by updating the pages on gov.uk by summer 2018.
• A higher rate of the national minimum wage for workers on zero hour contracts.
• An easier process for workers to trigger a formal consultation process with their employer (rather than just employees).
• Individuals suffering a prolonged period of ill health should have the right to return to the same (or a similar) job after sick leave, analogous to the job protections currently available to those taking time off work for family reasons.

The full response to the consultation and the consultation papers can be accessed by clicking here.

Our view

Ministers state that the new consultations will mean that millions of people will be able to seek a more stable contract, have holiday pay and sick pay enforced, receive a list of their rights and be given a payslip. However, unions and other critics say the plans do not go far enough and are frustrated about the plans to further delay the decision on the topic of employment status (meaning those working for companies such as Uber and Deliveroo will not acquire as many rights).

We consider that clear legislation is needed to distinguish between the different employment categories which not only affect rights, but also tax obligations.

In conclusion, our view is that the standout item from the report is employment status, something that has been dealt with in a number of cases. The law is tightening up on this point so it is worth looking at any self-employed and working arrangements you have to see if they will stand up to scrutiny.