Workers should be redefined as 'dependent contractors' says Taylor Report
Keenly awaited review of modern employment practices published
After all the hype and spin, the Taylor Report on Modern Working Practices has been published.
The final Report, given the punning title 'Good Work' covers broad ground, not just a review of the gig economy. It looks at the opportunity for progress and good employment practice as well as the legal framework.
Most of the specific legal issues are tackled in Chapters 5 & 8. The main takeaway on the gig economy is that flexibility is to be welcomed but that the status of 'dependent contractors' (as they suggest workers should now be named) needs to be defined with greater clarity and such individuals given some additional protections.
Chapter 5 tackles Clarity in the Law and is the authors' look at how the emergence of the gig economy has tested the current legal framework. In among the analysis are several suggestions on what the Government should do:
* replace the minimalistic approach to legislation with a clearer outline of the tests for employment status, setting out the key principles in primary legislation, and using secondary legislation and guidance to provide more detail * retain the current three-tier approach to employment status as it remains relevant in the modern labour market, but rename as 'dependent contractors' the category of people who are eligible for worker rights but who are not employees. In any test for such a status the issue of control should be given greater emphasis and less emphasis placed on the requirement to perform work personally * piece rates legislation should be adapted to ensure those working in the gig economy are still able to enjoy maximum flexibility whilst also being able to earn the NMW * a renewed effort should be made to align the employment status framework with the tax status framework to ensure that differences between the two systems are reduced to an absolute minimum * the right to a written statement should be extended to 'dependent contractors' as well as employees * create access to an online tool that determines employment status in the majority of cases.
The authors also point out that:
Many of those participating through the gig economy are already workers under today's framework – as is being established by the courts on a case by case basis. However, there will be some, especially where the right to substitution is genuine, who fall into this category for the first time. If a change of this type were to result in a loss of the flexibility so many platform workers desire, this would represent failure. As such, these changes must be accompanied by a new approach that supports genuine two-way flexibility enabled by digital platforms.
This message that flexibility should not be compromised is a recurrent theme throughout the document.
Chapter 8 deals with enforcement. Although the Report stops short of recommending the abolition of employment tribunal fees, the authors do suggest some limited circumvention of that regime when it comes to determination of employment status allowing individuals to "get an authoritative determination of their employment status without paying any fee and at an expedited preliminary hearing." On top of that, they suggest **reversing the burden of proof in such hearings so that the employer has to prove that the individual is not entitled to the relevant employment rights, rather than placing the onus on the claimant (subject to certain safeguards to discourage vexatious claims).
Other suggestions are that the Government should:
* make the enforcement process simpler by taking enforcement action against employers/engagers who do not pay employment tribunal awards without the employee/worker having to fill in extra forms or pay an extra fee and having to initiate additional court proceedings * establish a naming and shaming scheme for those employers who do not pay employment tribunal awards within a reasonable time * create an obligation on employment tribunals to consider the use of aggravated breach penalties and costs orders if an employer has already lost an employment status case on broadly comparable facts * allow tribunals to award uplifts in compensation if there are subsequent breaches against workers with the same or materially the same working arrangements (begging the question of why a later applicant should be rewarded more for a similar breach).
All these changes, and the many others set out in the report, are designed to encompass the "Seven steps towards fair and decent work with realistic scope for development and fulfilment" which form the centrepiece of the review. These are set out in full below:
- Our national strategy for work – the British way - should be explicitly directed toward the goal of good work for all, recognising that good work and plentiful work can and should go together. Good work is something for which Government needs to be held accountable but for which we all need to take responsibility.
a) The same basic principles should apply to all forms of employment in the British economy – there should be a fair balance of rights and responsibilities, everyone should have a baseline of protection and there should be routes to enable progression at work.
b) Over the long term, in the interests of innovation, fair competition and sound public finances we need to make the taxation of labour more consistent across employment forms while at the same time improving the rights and entitlements of self-employed people.
c) Technological change will impact work and types of employment and we need to be able to adapt, but technology can also offer new opportunities for smarter regulation, more flexible entitlements and new ways for people to organise.
- Platform based working offers welcome opportunities for genuine two way flexibility and can provide opportunities for those who may not be able to work in more conventional ways. These should be protected while ensuring fairness for those who work through these platforms and those who compete with them. Worker (or 'Dependent Contractor' as we suggest renaming it) status should be maintained but we should be clearer about how to distinguish workers from those who are legitimately self-employed.
- The law and the way it is promulgated and enforced should help firms make the right choices and individuals to know and exercise their rights. Although there are some things that can be done to improve working practices for employees, the 'employment wedge' (the additional, largely nonwage, costs associated with taking someone on as an employee) is already high and we should avoid increasing it further. 'Dependent contractors' are the group most likely to suffer from unfair onesided flexibility and therefore we need to provide additional protections for this group and stronger incentives for firms 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 within the organisation, which is why it is important that companies are seen to take good work seriously and are open about their practices and that all workers are able to be engaged and heard.
- It is vital to individuals and the health of our economy that everyone feels they have realistically attainable ways to strengthen their future work prospects and that they can, from the beginning to the end of their working life, record and enhance the capabilities developed in formal and informal learning and in on the job and off the job activities.
- The shape and content of work and individual health and well-being are strongly related. For the benefit for firms, workers and the public interest we need to develop a more proactive approach to workplace health.
- The National Living Wage is a powerful tool to raise the financial base line of low paid workers. It needs to be accompanied by sectoral strategies engaging employers, employees and stakeholders to ensure that people – particularly in low paid sectors – are not stuck at the living wage minimum or facing insecurity but can progress in their current and future work.
The full report can be downloaded from the Department for Business, Energy & Industrial Strategy.
Published: 11/07/2017 13:02