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Briefing Note

February 2018 report on employee status | A good start but more to do.

In February 2018, government published its Good Work A Response to the Taylor Review of Modern Working Practices.

The Taylor Review included 50 recommendations to reform employment law especially for those workers working in the so called ‘gig economy’ where the issue of worker rights and employment status is too uncertain and currently considered by many to be wide open for abuse by employers.

The Response

The recommendations and policy aspirations together amount to a good start by government to update our employment law so that the considerable uncertainty and ambiguity about employment status and worker rights is replaced with clear and consistent legal tests and legislation. That said, the response has been criticised for being big on bold statements and limited on action beyond the launch of four related consultations. We all know there is a problem with the gig economy and worker rights and further consultation is seen by many as unhelpful delay.

The response highlights how the gig economy has disadvantaged many people, especially where employers hold the balance of power so that contractual terms are unreasonable and rates of pay are kept unfairly low. An example of the Response’s bold statement is that government wants to strike the right balance so that all work is “fair and decent with realistic scope for development and fulfilment.” So what? What is needed now is for government to introduce clarity to build on the recent employment tribunal decisions concerning Pimlico Plumbers, Uber and Deliveroo. These cases and others have been looking at the question of employment status. They have explained why the individual ‘self-employed’ claimants were actually workers. But clarity is required because the enforcement of such rights is expensive, uncertain and involves protracted and no doubt hostile employment tribunal litigation. An opportunity has been missed. We don’t need more consultation we need this area of law made simpler and clarified to the benefit of both employers and individual workers.

However, consultation is underway that seeks views on how to make the employment status rules for employment rights and tax clearer for individuals and business. The consultation closes on 1 June 2018. The preamble to the consultation stresses that employment status is at the core of both employment law and the tax system. It recognises that the Taylor Review highlighted that the current tax and legal framework often fails to provide the clarity and certainty that individuals and businesses need. This is increasingly the case for those who are working in new ways, including those working through digital platforms in the so-called “gig economy” – gig meaning ‘job to job’ or ‘task to task’.

The consultation accepts that this lack of clarity leads some people and businesses to waste time and energy trying to understand the rules and allows unscrupulous employers and individuals to game the system in order to save on employment costs and taxes. Government therefore “wholeheartedly agrees” with the Taylor Review’s conclusion that there is a compelling case for greater clarity in this area and this is a conclusion that we at Quantrills support.

I encourage interested readers to make the time and participate in this consultation exercise because reform is long overdue and not only will workers and employees benefit from improved clarity but so will businesses.

The government’s response shied away from adopting plans to give “independent contractors” employee status. The response talks about the “employment wedge” i.e. the additional, largely non-wage costs associated with taking someone on as an employee and these already being high and the government’s conclusion is that they should avoid increasing it further. Therefore for dependent contractors, a group identified as most likely to suffer from unfair one-sided flexibility, additional protections and stronger incentives for firms to treat them fairly are envisaged.

The key plan if adopted is that it should be easier for individuals and businesses to determine whether someone is an employee, a worker or self-employed, and the government is committed to improving clarity and certainty in this area. Government is now going to consult to explore the best way to improve clarity for those on the boundary between employment and self-employment, including options for legislative reform. Government wants to ensure that fewer workers have to bring employment tribunal claims to enforce the legal rights they should already have.

Additional proposals

  • The right to written particulars to all workers is going to be granted from day one.
  • Government plans to provide workers with a right to request a contract with more predictable and secure working conditions and there’s going to be consultation about this.
  • Government is going to be looking at ways to give people in atypical work an improved right to establish continuity of service by extending the qualifying break in service period and related rules.
  • There is going to be consultation about views on the best way to define working time so that those in the gig economy who are workers can be clear about how the minimum wage applies, i.e. what work and activity deserves to be paid.
  • Consultation is going to take place on the Review’s recommendation for greater alignment between definitions in employment law and tax, in order to tackle this issue holistically (good luck with that one!).
  • Agency workers and other workers are going have the right to an itemised payslip to improve pay transparency.
  • The calculation of holiday pay is going to be made easier, especially to help season workers get the holiday pay they are entitled to by increasing the pay reference period to 52 weeks, rather than 12 months
  • The challenge of defining what constitutes working time for those working in the gig economy who are entitled to the minimum wage is going be improved and clarified and finally guidance on maternity and pregnancy rights at work for individuals and employers is going to be provided
  • Government has confirmed that they going to retain the current three tier approach to employment status as it remains relevant in the modern labour market but workers will be renamed as “dependent contractors”.
  • In developing the test for the new dependent contractor status control should be of greater importance, with less emphasis placed on requirement to perform work personally.

Time will tell

With Brexit taking up too much of government time, I will not be surprised if the bold statements and aspirations slowly get forgotten so that a good start turns into a poor finish with little to show from the future consultations.

On a positive note, I would encourage you to take part in the consultations in the hope government will listen and then act quickly to update our employment laws to be fit for our new post-Brexit world, including our growing gig economy.

 

By Simon Quantrill | Managing Partner

Getting your contracts of employment to meet your business needs

for you and us, its personal

Simon Quantrill, Managing Partner

Contact me on

01473 688 100

Getting your contracts of employment to meet your business needs

for you and us, its personal

Simon Quantrill, Managing Partner

Contact me on

01473 688 100

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