Taylor Review proposes wide-ranging shake up to employment practices

Summary:

The long-awaited Taylor Review into employment practices was launched last week by Matthew Taylor and the Prime Minster, Theresa May. The report contains wide ranging proposals which would, if implemented, make some significant changes to employment law and practice.

The report focussed on reforms to the so-called ‘gig economy’. Chief among these is a proposal to change the definition of a ‘worker’ and introduce a new concept of ‘dependent contractor’.

Findings

The review was commissioned to investigate how employment practices need to change in order to keep pace with modern business needs. It is therefore no surprise that the report has focussed on agency and temporary workers and what can be done to increase their job security. This is more so given recent high-profile cases involving zero-hour contracts, which we have covered previously.

The Taylor Review recommends retaining the distinction between employees and workers, which it sees as relevant to the modern labour market. Taylor advocates renaming as ‘dependent contractors’ those who are eligible for worker rights but are not employees.

At the same time as doing this, the report suggests the Government introduces a clearer legal distinction between ‘employee’ and ‘dependent contractor’. Taylor says the status of ‘dependent contractor’ should better reflect the reality of modern working arrangements, capturing an individual who is not an employee but is also not genuinely self-employed.

The report advocates tribunals and courts placing a greater emphasis on the degree of control an employer has over an individual, and less on the requirement for personal service, when determining employment status.

Coupled with this is a proposal to allow claimants to bring a ‘no fee’ claim to tribunal to determine their employment status as a preliminary issue. It also recommends placing the burden on the employer, rather than the individual, to prove that the claimant is not an employee/worker.

Other key recommendations contained in the report are:

  • Extending the right to a written statement of terms to workers as well as employees, and requiring that written statements be given on the first day of employment rather than within 2 months, as now.
  • Give agency workers the right to request employment with the end user once they have worked for them for 12 months or more.
  • Give those on zero-hour contracts the right to request guaranteed hours after 12 months.
  • Consider allowing flexible working requests to cover temporary as well as permanent changes to contracts.
  • Reform statutory sick pay so it becomes a basic employment right available to all workers from day 1, but is accrued on length of service, similar to holiday.
  • Grant HMRC enforcement powers in respect of sick pay and holiday pay as well as national minimum wage issues.

Comment:

At this stage it is unclear how many of the proposals contained in the report will be implemented. The Prime Minister, who spoke at the review’s launch alongside Matthew Taylor, did not promise to implement all of the report’s ideas. Instead Mrs May stressed the importance of enforcing existing legislation, implying she may first go down the route of persuading employers to voluntary change their practices.

Given the lack of a Conservative parliamentary majority and the focus on Brexit in the current Parliament, it is very possible these proposals could take some time to become law.

Notwithstanding this, the review could prove useful reading for organisations who wish to stay ahead of the curve on employment practices. Employers should periodically review whether there is a need for a permanent member of staff where those on zero hours work regular hours.  Employers could also consider whether there is a cost saving to be made by offering permanent or fixed term employment to agency workers who have been engaged with them long-term.

Finally, employers should remember that they are required to provide employees with a written statement of terms no later than two months after their employment begins.

For further information please contact Ronnie Tong or your usual contact in the Devonshires Employment and Pensions Team.

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