The government’s response to the Taylor Review

The government has commenced a number of consultations following the advice of Matthew Taylor’s review, "Good work: the Taylor review of modern working practices" (the Review) and have responded formally to confirm which aspects will be taken forward. The Review made a number of recommendations.

In its response, the government has set out the five principles that it believes underpin the quality of work:

1. Overall worker satisfaction
2. Good pay
3. Participation and progression
4. Wellbeing, safety and security, and
5. Voice and autonomy.

With these principles in mind, the government has made a number of recommendations, some of which form part of four separate consultations (employment status, the enforcement of employment rights, agency workers and measures to increase transparency in the UK labour market) and draft legislation. The main points in relation to each consultation are summarised below and serve as an early warning of what is likely to need to change in terms of working practices especially where contingent workers are used, whether that is in the form of agency staff, direct temps or consultants (referred to below as atypical staff):

Employment status

The Review recommended that the key principles which define employment status (personal service and the ability to substitute, control and mutuality of obligation) should be set out in legislation. The government have already commenced a consultation to understand the changes that are necessary to improve certainty in this area. This consultation will be jointly authored by BEIS, HM Treasury and HM Revenue and Customs. Primary and secondary legislation is likely which will codify the tests to identify who is an employee vs self-employed and worker. There will also be guidance issued and organisations will need to reassess their operations and engagement arrangements once these provisions have been finalised.

The government have also committed to the Review’s recommendation for an online tool for employees to determine employment status but this will be considered following the consultation and any subsequent change in legislation. The existence of such a tool may well lead to more individuals testing and then questioning their status and labour law rights.

The enforcement of employment rights

One of the recommendations of the Review was to strengthen and make easier the enforcement of employment rights. The government has published a consultation to take this forward. Proposals include adding state enforcement of basic employment rights beyond the current National Minimum Wage, into areas such as holiday pay, sick pay and rest breaks for vulnerable and low paid workers. Additional penalties (aggravated breach of employment legislation) are being proposed which will increase the impact and use of test or sample cases. So for example, if an employment tribunal issues a decision about employment status or payment entitlement such as holiday pay, an organisation could face additional penalties if cases based on the same issue are brought by other staff. The aim here is to force organisations to make changes without the need for further legal action. There may also be a register to “name and shame” those organisations against whom an aggravated award has been made.

Agency and atypical workers

A separate set of recommendations relate to agency workers’ rules with proposals to revisit the existing regulations. They include plans for greater transparency around the engagement of agency workers, a consultation around the abuse of “Swedish derogation” (which allows agency workers to opt out of equal pay if they sign a “pay between assignments” contract) and addressing the use of umbrella companies that employ and therefore pay wages of agency workers.

We are all familiar with the section 1 statement requirements to provide minimum written terms to employees within specific timeframes from employment commencing, it seems likely that organisations who use workers and those engaging agency staff (not the end-user but the agency itself) will have to issue minimum written terms and a “key facts” document.

Perhaps the most significant change is the plan to provide both agency and zero-hours workers with a right to request a contract which sets out ‘predictable and secure working conditions.’ Akin to existing rights to request, further detail will be provided as to the process to be followed where requests of this nature are received and the qualifying period needed to make such a request.

Measures to increase transparency

The Review made a number of recommendations in order to increase transparency and improve employment rights. At present the right to a written statement of terms extends only to employees. The government agrees that this right should be extended so have commenced a consultation around their use and the information which such statements should contain.

Temporary staff do not escape scrutiny either, with a plan to look again at the rules around what breaks continuity and whether the rules which currently exist should be changed. Currently, there needs to be a break of only one week to break continuous service and the Review, in addition to the Work and Pensions and Business, Energy and Industrial Strategy joint select committee report, recommended that it be increased to one month.

Following the Review’s conclusion that there is a general lack of awareness of holiday entitlement, the government have committed to raise awareness of it, alongside Acas. The government have also, within the consultation, sought views on their proposal to increase the pay reference period for calculating holiday pay for atypical workers from 12 weeks to 52 weeks. The question of working time will also be addressed in light of app–based workers and modern working arrangements, and those who log on and are available and it is said, should be paid NMW whilst available for work even if not actually working.

The government have also said that they will amend legislation so that workers (not just employees) have a right to a payslip.

What’s next?

The consultations close in early summer 2018. It remains to be seen what changes will arise from the consultations but, what is certain is that change is likely to take some time.

We await the outcome of the various consultations to understand the changes that the government will seek to make and we expect any changes will take a long time to implement.

Ongoing legal challenges

In the meantime, cases that currently shape the law on employment status (and which will have to be considered when codifying the law) will continue through the courts meaning that interest will remain high as will the risk of legal challenge:

• the Supreme Court’s decision in the case of Pimlico Plumbers (which will determine whether the Employment Appeal Tribunal’s decision that the plumber was a worker entitled to various rights, in this instance, the right to make a flexible working request) is imminent
• in July 2018 the Employment Tribunal will determine the employment status of Deliveroo riders and whether they are workers, and
• in November 2018, the Court of Appeal will consider Uber’s appeal against the Employment Appeal Tribunal’s decision that its drivers are workers.

Conclusion

All of this means organisations will need to revisit the ways in which they use atypical workers and be clear they are being engaged appropriately. The practical and contractual arrangements will need to be considered and usage and engagement undertaken more carefully - particularly if similar but distinct rights are extended such as key facts or minimum terms and payslips: the key is to ensure compliance with any new rules whilst ensuring a clear distinction operates with direct employees. Notwithstanding the extensive plans to make future changes, addressing the current risk and planning ahead for these changes is a worthwhile investment.