20th July 2017

The Taylor Review and Working Practices

Within the last week, the Government published its review into modern working practices and the current state of the law. The Good Work: Taylor Review of Modern Working Practices was commissioned in October 2016 to look at how employment practices need to change in order to keep pace with modern business needs.

The review highlights three main challenges that need to be addressed:

  1. Exploitation and the potential for exploitation at work;
  2. Increasing clarity in the law and assisting people in understanding their employment rights and how to exercise them; and.
  3. Aligning the incentives driving the nature of our labour market with our modern industrial strategy and broader national objectives.

The review is wide ranging and contains numerous recommendations and we have focussed on some of the key ones to look out for here.

The status of the worker should remain the same but should be renamed “Dependant Contractor” with a clear distinction between the rights of employees, employers and the self-employed and more emphasis should be placed on control in the definition of worker status.

Worker status has been a central tenet of the Taylor Review and has been seen as a way to address the balance given the recent “Gig Economy” cases that have made their way through Employment Tribunals within the last year involving Uber and Deliveroo.

Crucially, the new Dependant Contractor category would entitle these individuals to the rights currently enjoyed by workers, in particular, sick pay and the statutory minimum paid holiday entitlement, which is consistent with the Tribunal decisions we have seen recently.

Workers who are engaged on zero hours contracts should be given the right to request guaranteed hours after a year of employment and a higher NMW rate should be considered in respect of non-guaranteed hours.

Currently the recommendation only extends to a right to request guaranteed hours rather than a right to be granted guaranteed hours and it will be interesting to see, if this is brought into law, whether this will be treated in a similar way to flexible working requests, whereby an employer’s right to reject the request must fall within a range of specified reasons.

Clearly, a higher NMW rate for non-guaranteed hours would cause real headaches for employers in the care sector who already operate within the tightest of margins.

Employers should be entitled to pay workers engaged on zero hours contracts “rolled-up holiday pay”.

Rolled up holiday pay is where an employer pays the equivalent holiday pay accrued for each hour worked as part of the worker’s wages. Currently, this is unlawful although some employers do continue to pay their casual workers holiday pay in this way. The case law on this point stems from the European Court of Justice and as such it seems unlikely that we will see any movement on this point pre-Brexit.

The right to a written statement of terms should be extended to workers as well as employees, and require these to be issued on day 1 of employment. Obligate the employer to include a description of the employee’s statutory rights within the written statement and give employees a stand alone right to compensation where the employer has not complied with their obligations to issue a written statement.

Currently, employers are only obliged to issue written statements within 8 weeks of the employee’s start date and any claim for a failure to comply with this obligation can only be brought as part of a wider claim. A change which required contracts to be issued on day 1 of employment coupled with a right to bring a standalone claim where they are not would represent a real shift from the current position and would cause employers administrative headaches as well as exposing them to the risk of claims; this effect would be magnified if the right was extended to workers as recommended.

Employment Tribunal fees should be abolished when resolving disputes about the employment status of individuals

This would cover disputes as to whether the individual is an employee, worker or a self-employed contractor, and it is proposed that the burden of proof should be on the employer to prove that the employee is not entitled to employment rights, rather than on the employee to demonstrate that they do.

HMRC enforcement powers should be extended to cover sick pay and holiday pay in addition to the minimum wage issues that are already dealt with.

The aim of this recommendation is to provide a safety net to those who are most vulnerable within the workforce, and allow them to seek redress in respect of core employment rights via HMRC rather than via a protracted and potentially costly tribunal system.

Employers should be aware that none of these recommendations are binding on them at this stage; the report was prepared purely as an assessment of the current labour market and to identify recommendations for reform to the Government and views on how these recommendations could be introduced. However, it is a useful tool to highlight the current school of thought and the changes which may be likely in the future.

Specifically, with reference to the care sector, the recommendations in relation to zero hours and casual workers will be very relevant for a lot of employers, and employers will therefore need to ensure they are ahead of the game in respect of any changes which are coming into force. This is something that we will undoubtedly report on again over the coming months as the Government looks to give substance to some of the recommendations.

*All information is correct at the time of publishing

Katy Parkinson

Napthens LLP – Employment Law Specialist

Katy is one of our Employment Law Specialists from Napthens Solicitors. Read more

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