Your Thoughts: The Taylor Review, Good or Bad for Workers?

You will likely have heard the news that gig employment in the UK is set for some positive change. The government has introduced a proposal, titled the ‘Taylor Review’, which should allow the UK’s economy to be “fair and decent.” The report, titled ‘Good Work: The Taylor Review of Modern Working Practices’ was published on 11^th July 2017.

Headed by former aide to Tony Blair, Matthew Taylor, the review focuses mostly on the gig economy, and plans for workers like those that are sub-contracted to Uber and Deliveroo to be classified and legally treated as dependent contractors, with extra benefits surrounding annual leave and wages.

This week Lawyer Monthly heard Your Thoughts on the employment law changes and has set out below a number of expert opinions from sources across the country and beyond.

Debbie Fellows, Employment Partner, Thorntons Law:

The report recognises the importance of retaining a dynamic and flexible labour market but makes certain recommendations aimed at clarifying an individual’s employment status and rights. The report’s key recommendations are set out below:

• Renaming workers who are not employees ‘dependent contractors’ but keeping the distinction between employees and workers.
• Place more emphasis on control than personal service in determining worker status to ensure substitution clauses are used less frequently.
• Change the law relating to national minimum wage to state that it should not be paid when a worker is logged onto a platform but there is no work available.
• Ensure that workers are provided with a written statement detailing their statutory rights on the first day of their job. If this is not provided upon commencement of work, the worker can claim compensation.
• Increase the gap for continuity of employment from one week to one month to allow for longer breaks to occur without losing rights.
• Increase the average pay reference period for those not on normal hours from twelve weeks to fifty-two weeks to allow for continuity and fairness in holiday pay.
• Give the choice to workers of whether or not they want to be paid rolled up holiday pay.
• Agency workers and zero-hours’ workers should be able to request a contract of employment after being with the same employer for 12 months or more.
• All workers should be entitled to receive statutory sick pay.
• Reverse the burden of proof in tribunal hearings so that the employer has to prove that employment rights are not applicable to the worker.

The report has attracted much criticism with TUC general secretary Frances O’Grady stating: “this review is not the game-changer needed to end insecurity and exploitation at work.” Others have welcomed Taylor’s recognition that the UK’s flexible labour market is a source of strength and competitive advantage. It is clear that a balance between job-security and a flexible workforce is not easily achieved.

Whilst some of the changes suggested would be fairly easy to implement, it remains to be seen whether the Government will be able to gain enough support to instigate these suggestions.

Richard Thomas, Employment Partner, Capital Law:

If implemented in full the recommendations within the proposals could require ‘Gig Economy’ companies such as Uber and Deliveroo to pay all their workers Sick Pay and Holiday Pay and also be responsible for paying National Insurance in respect of these workers. However, it should be noted that the political situation has completely changed since Matthew Taylor was asked by Theresa May to conduct his review.  Since then we have had a General Election in which the Prime Minister has lost her majority. A number of the recommended changes would require new legislation and this would then allow the Labour Party (who gave the review a lukewarm response) to table amendments to such legislation to provide even stronger rights for employees and workers. The question is whether there will be any appetite within the Government to bring forward any legislation in this area. If it does then we may see some key changes coming into place quite soon.

Emma O’Leary, Employment Consultant, ELAS Group:

The Taylor report is pretty much as we had expected – amongst the 115 pages is a recommendation for a new category of employment status, the ‘dependent contractor’.  Essentially this would give someone on this contract the same rights as those that people classified as workers currently benefit from, namely holiday pay and statutory sick pay.  Given there are an estimated 1.1 million people current working in the gig economy this could have a huge impact, not just to companies such as Uber and Deliveroo but also in the legal field and the trade industry where so-called self-employed contractors are prevalent.

Currently this is a review only so no laws will change in the very near future. The Government has said they will look at the recommendations in the report seriously but implementing changes will require an overhaul of employment law in many areas, including Employment Tribunals.  Currently if employment status is disputed between parties, it is left to an Employment Tribunal to determine at a hearing. Mr Taylor’s review suggests that a Claimant should not have to pay Tribunal fees in order to have their status determined.

The review recommends a right to request set hours but recognises that a flexible labour market is essential.  Whilst it’s necessary to ensure workers are not exploited, it’s true that many people need and desire flexibility and the right to turn down work.

Employment status has long been a grey area and this review seeks to offer some clarity on the issue. The purpose of the report seems to want to marry the idea of flexibility and security which cannot be a bad thing.

Stephen Morrall, Employment Partner, Hunters Solicitors:

The gig economy is still developing and some categories of workers currently only have limited protection. The trade unions are right to pressure the government to improve workers’ rights and ensure that they are treated fairly.

It is imperative that employment law and practice catches up with the development of the gig economy, but there is no need for a new employment category of “dependent contractor”.

The retention of zero-hour contracts is good for employers and maintains a high degree of flexibility in the workforce. There is a risk that employees will be exploited, but one hopes that the market will sort out the good employers from the bad ones.

The government cannot legislate to force employers to create “fulfilling jobs” and commit to “good work”. Plenty of work is not fulfilling but it still needs to be done and there are people out there who are prepared to do it. They just need protecting.

Phillip Pepper, Employment Partner, Shakespeare Martineau:

Having clearer legal distinctions between the various types of engagement is a great idea in principle, but the practical reality is much more difficult to achieve given the endless scenarios and situations that arise.

It has long been thought that the definition of a worker has been unhelpful and unclear leading to confusion and in many cases litigation.  We have already seen that some businesses (particularly the gig economy) have labelled individuals as self-employed but in reality, they have been found to be “workers”.  Was this a case of a complete lack of understanding of the definition of a worker or an attempt to avoid basic obligations such as pay and holidays?  The answer may be somewhere in between but what is clear, is that the current definition we have is not sufficient.

There have been calls to remove the definition of “worker” altogether and instead create a clearer and wider definition of “employee”.  Whether that provides a workable solution remains to be seen for a number of reasons.  However, what is clear is that we desperately need some sort of clarity in this area.

Paul Kelly, Employment Partner, Blacks Solicitors:

The findings of the Review come as little surprise to employment practitioners and given the broad range of issues it looked at, it is understandable that some observers say the recommendations don’t go far enough to ensure fairness in the workplace.

However, what the Review does do is highlight the legislative mountain the Government now has to climb to ensure that UK employment law meets the needs of employers and grow the economy whilst protecting workers from exploitation, all the time trying to balance the conflict between flexibility and job security.

Employment law has been slow to adapt to the gig economy and new ways of working so it remains to be seen which, if any, of the Review’s recommendations are implemented and how long it will take.

Stephen Robinson, Employment Partner, Ward Hadaway:

The Taylor Review has highlighted that current legislation governing modern working practices is no longer fit for purpose and needs updating. Doing this will require a great deal of care to ensure that those working in the gig economy are protected, but also that the businesses who employ them are still able to prosper, without being held back by cumbersome rules and regulations. The need for clear contractual terms between the parties has never been more apparent.

A key component of this new legislation must focus on control, one of the traditional indicators of employee-employer relationships along with mutuality of obligation and personal service. True ‘dependent contractors’ must have genuine two-way flexibility, able to choose how and when they work, rather than being at the whim of employers, who, in order to avoid tribunal claims, must exercise better forward planning to ensure consistency and continuity for their workers.

Perhaps most interesting will be the new workplace dynamics that will inevitably emerge with any changes to legislation of this kind. How will large businesses in particular, with defined sets of ethics and values, manage to keep their workforce motivated and productive with this new mix of traditional employees, self-employed contractors and now dependent contractors? How will this three-tier workforce impact morale and retention rates? This is one of the many hurdles to be overcome when introducing legislation that works for everyone, allowing for seamless integration of new styles of working to deliver optimum results across the board.

Claire Dawson, Employment Specialist, Slater and Gordon:

The Taylor Review has rightly recognised that there is exploitation in the so-called “gig” economy and that those engaged in it are too often treated unfairly.

The growth in the digital economy – facilitated by apps such as Deliveroo and Uber – has blurred the lines between the classification of employee, worker and the genuinely self-employed, the latter group having no employment rights.

While it is welcome that this government-commissioned report has attempted to clarify the position of a large proportion of the work force, much more needs to be done to redress the imbalance in power between large companies like this and their staff.

The courts have already recognised the right of Uber drivers and others such as bicycle couriers to “worker” status meaning they have the right to holiday pay and an hourly minimum wage.  There is a danger that by allowing a piece-work rate of pay to apply, as suggested by Taylor, the right to minimum wage is diluted in this sector.  Experience shows that some large companies will use whatever the law allows to drive down costs, often to the detriment of staff.

The Taylor Review has made some welcome recommendations for making it easier and cheaper for people to challenge unfair work practices through employment tribunals. At the moment the process of establishing they have basic rights, such as holiday and sickness pay and are entitled to the minimum wage, can be prohibitively lengthy, complex and expensive. Taylor has suggested that no fee should apply where a worker wants a determination about their status.

He would also allow Tribunals to impose aggravated penalties on employers who do not apply existing rulings on employment status to similar groups of workers. Large companies should feel pressure to categorise their staff correctly from the start and provide them with information about their statutory rights so that workers don’t have to take claims.

The Government also needs to address is the way large companies often ask so-called independent contractors to confirm they are self-employed in their contracts and to sign clauses which require them to pay back the company’s liability, costs and expenses if they claim employee or worker status at a later date.  Although likely unenforceable, these clauses cause a great deal of concern and anxiety for the individual workers asked to sign up to them. This is an area that must be addressed.

Taylor has recommended that workers have the right to a statement of their terms and conditions which include details of their statutory rights at the outset, in the same way employees do. This is positive but there should be more of a disincentive on employers miscategorising staff as independent contractors and including oppressive terms in contracts.

Leon Deakin, Employment Partner, Coffin Mew:

For me the report is a mixed bag of very interesting and potentially far reaching recommendations, hidden amongst much more mundane (but sensible) suggestions, interspersed with several anti-climaxes.

For example, the much discussed and hyped (in some quarters) new category of ‘dependant contractor’ actually appears on the surface to be a simple re-naming of the existing category of worker and therefore is an important but none the less slightly damp squib of a development. Similarly, the recommendation that specific legislation be introduced to help determine status is clearly necessary and far from controversial. Likewise aligning tax status with employment status clearly has some merit in terms of clarity and efficiency but does not set the pulse racing as a cutting-edge development.

Whereas at the opposite end of the excitement scale for employment advisors and their clients are the inclusion of some much more prescriptive and potentially more individual friendly requirements. Of these, extending the right to a written statement of terms to workers along with a description of their statutory rights has to be welcomed and should not be unduly onerous for the well intentioned and advised engager.

Conversely, I suspect the proposed right to bring an employment tribunal claim without paying a fee to determine employee status as a preliminary issue along with the introduction of the burden being placed on the employer to prove a claimant is not an employee/worker will be popular for employment lawyers who have seen claim levels plummet off a cliff since the introduction of fees, but less palatable to business. Especially if the associated guidance and legislation on how to determine status fails to make a reliable assessment easy to carry out.

In relation to the key question of how to actually assess the correct employment status going forward, some important and potentially game changing ideas are advanced. Specifically, placing greater emphasis on control in the definition of worker (dependant contractor) status, which is clearly aimed squarely at those operating in the gig economy, will inevitably change working practices. As will the removal of the ability to defeat worker status with a genuine substitute clause, which would be discarded.

However, importantly, it has to be highlighted that the report inevitably leaves much of the actual detail as to how the recommendations will be implemented to legislation, supporting secondary legislation and guidance. As such, it remains impossible at this stage to say how many of the proposals would actually work in practice.

Jonathan Rennie, Employment Partner, TLT:

The Taylor Report will set the domino rally going, but in what direction, nobody knows. The recommendation of a new employment status will be comforting to some but, as the report acknowledges, it is not a silver bullet and cannot be addressed in isolation. The introduction of a new employment status such as ‘dependent contractor’ necessitates a review of all other employment status definitions across all other protective statutes, including those in the Equality Act. Current definitions are not sufficiently precise to marry up with the complex range of jobs that now exist within our economy, which drove the government to commission this independent review in the first place, and this will therefore require further analysis and clarification.

The report is mysteriously silent on the Equality Act in particular. While equalising definitions across the relevant statues is clearly a subsequent task for the government, I would have expected some observations for the need to protect worker rights under this statute given that discrimination is fundamental in any discussion about employment rights.

Barrister Anthony Korn, a member of the Employment Team, No5:

The Taylor Review rejects the submission that the current 3-tiers of employment status – employee, worker and self-employment – should be replaced by a binary division between employment and self-employment, similar to the tax system.

Instead it suggests that the current Delphic statutory definition of ‘who is an employee’ (namely someone who works under a contract of employment) should be replaced by a more detailed statutory definition reflecting the criteria which has been developed by case law such as the requirement for ‘mutual obligation’ and ‘control’.

In its view, if greater emphasis was placed on ‘control’ and less on personal service, this would lead to more people being protected by employment law and make it harder for employers to ‘hide behind’ substitution clauses: clauses which can undermine employee status by allowing the individual to substitute personal service for the service of others.

The report claims that this would make determining employment status ‘simpler, clearer and give individuals and employers more information’.

However, the position is not quite as straightforward as it sounds: the leading cases emphasise that the test to determine who is an employee is multi-factorial and ‘control’ is just one of the factors to be considered. Furthermore, the concept of ‘control’ has itself evolved considerably since the days of the ‘master and servant’.

In White and Todd v Troutbeck SA [2013] IRLR  949, I successfully argued that there was sufficient control where an absent landlord left the day to day management of a farm in the hands of the Claimants. It would be unfortunate if a modern day statutory definition of this kind did not give courts and tribunals sufficient flexibility for the law to address new ways of working in the future.

Similarly the Report’s recommendation that the definition of a worker should be extended to ‘dependent contractors’  does not fully address the challenges posed by the gig economy. The report does not attempt to define what is meant by a dependent contractor?  Is ‘economic’ dependence by itself sufficient? How is this to be defined?

As the report recognises, these distinctions will remain the cornerstone of who has the benefit of all employment rights and who only has the benefit of some.

Robert Whitaker, Employment Partner, Tees:

With the recent raft of cases involving workers’ status and rights (involving the likes of Pimlico Plumbers and Uber) the review is timely – but will any new legislation keep pace with changing working practices, and succeed in clarifying the sometimes blurred distinctions between categories of worker?

There is a consensus to create a balance between the need for those on zero hours contracts to have access to work and not be exploited, and the need for businesses to have flexibility if work is not available.

Whether any of the recommendations made in the Taylor Review become law remains to be seen, but it is evident that this is a hotly debated area in the Tribunals with the stakes high for employers if they get it wrong. In practice we venture that where employers put in place fair and clear contracts, and with stated status that reflects the reality of the relationship, they will be on stronger ground to defend claims and likely to attract stronger work candidates who are attracted to clear, fair terms and conditions.

Raphael Prais, Employment Specialist, LHS Solicitors:

Before and during the work on this review, both judicially (in the tribunals and courts) and in the media, one topic received much scrutiny; how do you decide whether casual workers, especially those in the ‘gig economy’, should be considered an employee, self-employed or a worker?

You’ll have noticed that third category – worker. In terms of the working relationship, workers are somewhere between employees and the truly self-employed, especially in terms of the control exerted by the employer. In terms of employment rights too, they sit somewhere in between; they cannot claim unfair dismissal, but they are entitled to minimum wage.

And a related question often followed; is there any point in this vague third term? It is very confusing. Can’t people either be employed or self-employed?

Given the myriad ways that people work, it will always be hard, if not impossible, to provide a bullet-proof definition of employment. Furthermore, given that there are many reasons for defining employment, it would be strange if one definition was suitable for all purposes.

Take a worker who is not controlled enough to bring an unfair dismissal claim – how does that affect minimum wage, whistleblowing and discrimination? Arguably, there should be far more than three categories.  In fact, there are at least five, as the meaning of employee is more nuanced for whistleblowing and discrimination.

The term worker has always been difficult to define. In colloquial use, it doesn’t point one way or another – both employees and the self-employed work!

In some court and tribunal judgments, the term worker simply lowered the ‘pass-mark’ – rather than workers working in a qualitatively different way than the employed. The February 2017 Court of Appeal decision of Pimlico Plumbers v Smith, however, stressed a particular aspect of working as a ‘worker’ – they provide their services as part of an undertaking carried on by someone else. In other words, they work on another’s platform.

In my opinion, the term ‘dependent contractor’ gives the impression of someone working in this manner, independently but through a platform. For that reason, it’s a useful suggestion.

Is it a radical suggestion? Certainly not, and the review doesn’t suggest otherwise. The review suggests that a third category, like the current worker, is retained but its meaning clarified. I agree.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!