The eagerly awaited report by Matthew Taylor into modern working practices was published on 11 July 2017.
Commissioned by the government last October, the review had as its objective reviewing the changing world of employment and making recommendations for such reforms as it perceived were necessary to promote opportunities for a flexible labour market but at the same time guard against exploitation.
The report – entitled “Good Work” – starts with the premise that work should be “fair and decent with realistic scope for development and fulfilment”. At the same time, achieving this objective should not stand in the way of investment and innovation.
A large part of the report is taken up with the issue of employment status and the various rights which flow from that. Resolution of disputes on status has been exclusively the preserve of the courts and there has been a long series of cases dealing initially with the dividing line between employee status and “independent contractor” and, more recently, with the difference between “worker” and “self-employed”.
The report concludes that, while the current three-tier system – employee, worker, and self-employed – should be retained (though with the category currently comprising workers who are not also employees being renamed “dependent worker”), the uncertainty in identifying the boundaries between each, and so the rights and obligations of worker and employer, needs to be reduced.
The proposal is that this uncertainty should be addressed by primary legislation setting out key principles, with more detail in secondary legislation and related guidance.
To support this, the report makes a number of recommendations:
- A fast-track enforcement system enabling workers to bring status issues before the tribunals quickly;
- These applications should be removed from the tribunal fees system (now rather superseded by the Supreme Court’s decision on tribunal fees generally);
- The reversal of the burden of proof – a presumption of employment or worker status (depending on what is asserted) which the employer would have the burden of disproving; and
- Financial penalties for employers who defend cases on similar facts to those they have previously lost.
This looks to be something of a challenge for the parliamentary draftsman but certainly would seem to provide rather more certainty as to status.
The report also looks at what it terms “one-sided flexibility”. While flexibility in the labour market is necessary to keep employment rates high, it should not be used solely as a means of reducing employer costs and transferring all risk to the worker. Many of those working in the gig economy or in zero hours arrangements are perfectly happy with the system as they can dip in and out as they please without any binding obligations. Many, however, are not, and the uncertainty over regular hours, status, holidays, and sick pay is perceived as requiring remedy. In this connection a number of further recommendations are made:
- A right to a written statement of terms of engagement for all workers;
- A right to request guaranteed hours for those who have been employed on zero hours contracts for 12 months; and
- Facilitating holiday entitlements by legislating to permit rolled-up holiday pay to be paid as a percentage addition to pay for work done.
Again, this will require legislative change, and the proposal relating to rolled-up holiday pay is particularly problematic as it would infringe the decision of the European Court of Justice in the case of Robinson-Steele v RD Retail Services Limited (C-131/04).
The report also looks at other issues, including:
- “Voice” in the workplace, with reforms proposed to increase the take-up of information and consultation structures;
- Reform of the tax system to address the disparity between employed and self-employed status;
- Extending statutory sick pay to workers as well as employees; and
- Greater enforcement powers for HMRC.
All in all, this is a wide-ranging and radical report which the government has promised will be carefully considered. To what extent the recommendations will actually be translated into legislation remains to be seen, not least as the government’s agenda is rather full at present.
A regulatory system traditionally based almost exclusively on the contract of employment has coped increasingly uncomfortably first with the EU-originated concept of a “worker” and, more latterly, with new types of relationship arising from technological advances. This report does, however, represent a real opportunity to reform the regulatory aspect of the changing world of work and create a system which promotes flexibility but hinders exploitation.
David Widdowson is a partner at Abbiss Cadres and co-chaired the Employment Lawyers Association Working Party