Taylor Review of Modern Working Practices and the Gig Economy
The government has today published the Taylor Review into Modern Working Practices. Matthew Taylor was commissioned by the government to review (amongst other matters) the impact of the gig economy on the world of work and proposals for reform of employment law to ensure fairness for workers providing services via apps. The report considers a wide range of areas of employment law and makes the following key recommendations:
1. Employment status and the gig economy
The report recommends renaming the “worker” status as the “dependent contractor” status and proposes that the level of control a company has over its staff should be more important in determining whether someone is self-employed or a worker/employee. Currently the concept of “personal service” is more important, i.e. whether the individual can send a substitute to work in their place, which can lead to companies attempting elaborate substitution clauses to try to avoid the worker status.
On its face, this may seem like a welcome simplification but in reality this is likely to create more employment tribunal litigation around the meaning of whether a company has sufficient “control” over its dependent contractors (which will be highly fact-specific), instead. The key problem is the enforcement of these rights – the government’s employment tribunal fees policy means that legal action is too costly for most gig economy workers to contemplate. The report proposes that employment tribunals would determine worker status questions for free, as a preliminary aspect of any case. Whilst this resolves part of the problem, the individual would still need to pay Tribunal fees at a later stage. The report therefore calls on the government to consider reducing the cost of employment tribunal fees, but in reality, the government is unlikely to back-track on this policy.
The only apparent advantage of the “dependent contractors” status is to the government: companies would have to pay national insurance contributions in respect of such workers.
2. Hours of work and pay in the gig economy
The Taylor report has a number of other, more practical proposals for applying existing legislation to workers in the gig economy, however they risk undermining employment rights in unforeseen ways.
Firstly, it proposes that statutory sick pay should accrue based on an individual’s length of service with the company, so companies do not have to provide a full six months’ statutory sick pay to individuals who have only worked for a short period of time.
Secondly, the report proposes a change of law around hours of work so that, when a dependent contractor (like an Uber driver) logs onto an app seeking work, there is no obligation on the company to pay them until work is provided. Instead they would be remunerated on the basis of the number of tasks performed, i.e. a “piece rate”. This means that companies would not need to pay the minimum wage for every hour worked, provided that they can show the average worker gets at least 1.2 times the minimum wage, based on performing the average number of tasks per hour. The report suggests that platforms like Uber could provide dependent contractors with a guide to their potential earnings at the time they sign in, based on the current real time data available via the app.
In practice, these changes would add to red tape for companies and are bound to lead to even more tribunal litigation about the finer details.
3. Other proposals, beyond the gig economy
- To improve rights to holiday pay for seasonal, casual and zero-hours workers, the reference period for calculating holiday pay should be increased from 12 to 52 weeks and individuals should have the choice to be paid ‘rolled-up’ holiday pay (i.e. being paid an additional 12.07% of their hourly pay as holiday, rather than receiving paid time off).
- Agency workers should have the right to request a direct contract of employment after 12 months’ service with the same hirer, which the hirer would have to consider reasonably. Likewise, zero-hours workers should have the right to request guaranteed hours after 12 months.
- Abolition of the ability under the Agency Workers Regulations to exclude workers from the right to equal pay compared to permanent employees, if they have a contract that provides for a minimum level of pay between assignments.
- Extension of the right of employees to require employers to negotiate with the workforce regarding the establishment of workplace representatives under the Information and Consultation of Employees Regulations 2004, so that only 2% of the workforce need to request this, rather than the current 10%.
It remains to be seen which, if any, of these policies will see the light of day, given the government’s precarious majority in the House of Commons.