Time to consider Taylor
The long-awaited Taylor Review, led by Matthew Taylor, Chief Executive of the Royal Society of Arts, was published on 11 July 2017. It includes many advisory recommendations for reform in employment practices to the Government.
The key conclusion of the review is that changes to employment law are required in order to:
ensure that legislation is fit for purpose and evolves with the changing workplace to accommodate new technology and changing working practices;
protect vulnerable workers; and
ensure that the workplace is accessible to those with caring responsibilities and long-term health problems and disabilities.
If the Government implements some or all of the recommendations, it would have a potentially wide ranging impact on both employers and employees.
Key recommendations under the review
Defining worker status
The review highlights the confusion surrounding the legal definition of a worker. This lack of clarity is what often results in employment disputes over issues such as holiday pay and the right to be paid the national minimum wage.
Taylor suggests that a free online tool should be introduced which would be available to both individuals and employers and would give an indication as to employment status.
In our experience, employers and individuals alike would benefit from greater clarity as to status. From an employer’s perspective it aids risk management and budgetary control if there is greater certainty on the status of the individuals that it engages. The current regime requires final determination on status to be made by the courts meaning that all parties are often put to the costs of a full hearing before a decision on status and employment rights is made.
Taylor also recommends that the term ‘worker’ should be renamed to ‘dependant contractor’. The aim of this is to provide better protection for those who are neither an employee nor a self-employed contractor. A dependant contractor would benefit from the flexibility enjoyed by a self-employed contractor but would also receive the basic employment rights of workers which include sick pay, holiday pay, and national minimum wage.
Aligning the tests for tax and employment law
Self-employed status provides certain tax advantages for individuals. However, currently there are different tests for self-employed status in relation to tax and employment law. This means an individual could potentially be self-employed for tax purposes, but a worker or employee for employment law purposes. This causes understandable confusion for employers and individuals alike and provides for a potential conflict of interest. Taylor recommends that these tests be aligned.
Changes to Zero-Hour contracts
Taylor recommends introducing an hourly premium on the use of zero-hour contracts to encourage employers to give workers and employees guaranteed hours. If adopted, this would mean that a worker on a zero-hours contract would receive a higher rate of pay than the national minimum wage. It is also suggested that workers on zero-hours contracts should have the right to request a guaranteed-hours contract after a period of 12 months.
Expanding access to justice
The review had also recommended that claimants should have a free initial tribunal hearing on their employment status. However, this has been superseded by the landmark Supreme Court judgment on 26 July 2017 which abolished Employment Tribunal fees with immediate effect.
It remains to be seen whether we will see a sharp rise in the number of claims being brought at tribunal. It is also possible that individuals will apply to have extensions of time to enable them to bring historic claims that they chose not to bring before owing to the fee.
The Government is currently considering the recommendations under the Taylor Review and we do not know which recommendations will be taken forward. However, with the abolition of employment tribunal fees and the potential for an increase in claims and backdated claims, it is advisable for employers to consider their workforce and status as part of its general risk management program.
For more information, please contact Rebecca Jorgensen, Associate - Head of Employment.
Published: 6 Oct 2017