Taylor Review calls for reform of 'unfair' employment tribunal procedure

Independent review recommends scrapping tribunal issue fees and calls for new ‘dependent contractor' category

Employment tribunal rules should be changed to allow claimants to bring a case without having to pay initial fees, a new report has recommended as part of a series of measures aimed at securing greater access to justice for gig-economy workers.

Published today, Good Work concludes the work undertaken by Royal Society of Arts chief executive Matthew Taylor, who was commissioned in November 2016 to carry out an independent review into how employment practices should keep pace with modern business models.

Under current rules, applicants in employment tribunal cases must pay an issue fee and, often, a hearing fee, the combined cost of which can be up to £1,200, solely to determine whether they can be regarded as an employee entitled to have their claim heard.

‘We believe that this is unfair, especially as the responsibility of proving the nature of the working relationship sits squarely with the individual,’ the report said. ‘This is especially so when an employer/engager chooses not to engage in a constructive assessment of the individual’s employment status.’

As a matter of tactics, the report continued, an employer or engager can ‘very simply, ensure the process of securing justice is as costly (and time consuming) as possible for the individual.’

Employment tribunals usually seek to determine a claimant’s status at a preliminary hearing, although that is not always the case. One solution with the current framework would be to make it a requirement to hold a fee-free preliminary hearing.

Expedited hearing

‘Government should ensure individuals are able to get an authoritative determination of their employment status without paying any fee and at an expedited hearing,’ the report said.

The hike in employment tribunal fees has been widely seen as a disincentive to bring claims and the main reason for the drop in applications in the past few years. Against this background, employment lawyers have been largely unconvinced by pledges in the Conservative manifesto to expand workers’ rights.

Taylor said there could be ‘no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought, although part of that reduction is likely to be associated with the introduction of Early Conciliation through Acas’.

However, he went on, ‘while many raised the issue of fees during our discussions (a concern we share), which even business groups accept may be too high, it would be wrong to suggest reform should only take place there. From the decision to take action against your employer to winning or losing the case against them, the odds are often stacked against the worker.’

Tony Blair’s former policy adviser recognised ‘with regret’ that it was unlikely fees would be abolished but he said the level of the fees should be kept under review. Neither does he assume that the report’s recommendations will all be enacted.

A few of them, however, could become law, starting with an online tool to determine employment status. This would be an obvious and comparatively easy stream within the bigger online courts project. This should be free to use and would give individuals an indication of their employment status, similar to the Employment Status Indicator tool for tax purposes. The expectation is that this would bypass the current preliminary hearing in the majority of cases.

‘Dependent contractor’

Another change would see the law and precedents on ‘worker’ status consolidated into a new ‘dependent contractor’ status. The new category would have ‘a clearer definition which better reflects the reality of modern working arrangements, properly capturing those more casual employment relationships that are on the increase today – an individual who is not an employee, but neither are they genuinely self-employed,’ the report says.

This would, in effect, cover gig-economy workers who have an ongoing working relationship with a work-giver but are not classed as employees. The new rule would require a change in the law that could see greater emphasis placed on the element of ‘control’ drawing from the employment courts’ caselaw. Conversely, there should be less emphasis on personal service, a key feature of self-employment, which would bring more workers within the protection offered by employment law.

‘It is important for Government to ensure that the absence of a requirement to perform work personally is no longer an automatic barrier to accessing basic employment rights. Ultimately, if it looks and feels like employment, it should have the status and protection of employment.’

VERBATIM

'DEPENDENT CONTRACTOR'

“Whilst the suggested categorisation of ‘dependent contractor’ for gig workers doesn’t give us anything we didn’t already have, and is simply another name for this broad category, the codification of recent decisions on employment status, in particular around the extent to which a worker is subject to ‘control’, is welcome and should bring certainty for employers and workers alike. In reality, it’s impossible to draft legislation which could cover every permutation of this new range of roles.” Hugh More, Withers

“This category would most likely catch those working for companies such as Deliveroo and Uber and ensure that they are entitled to sick pay and holiday pay. This recommendation reflects the suggestion from the previous report from the Work & Pensions Committee that those engaged on such terms should be workers by default, which would entitle them to holiday pay and is intended to recognise that the existing categories are out of touch with our current labour market. This proposal may well help to maintain the flexibility currently valued by so many, but this change to the categories could simply increase disputes and the additional costs will be a heavy burden for employers so even if implemented, this is unlikely to be a quick fix.”Julie Taylor, senior associate, Gardner Leader

“There are now thought to be around 1.1 million people involved in the gig economy sector in the UK. Pay ought to reflect the number of ‘gigs’ a person conducts, similar to how ‘piece work’ is conducted in other sectors. This aim is to help ‘dependent contractors’ secure payment nearer the National Minimum Wage. The ‘dependent contractors’ will be told how much the job they are about to perform will earn them, which could be based on the requirements of the business. It will then be down to them to decide whether the job is what they require.” Jo Yeates, head of employment, Hethertons Solicitors

“This is a very positive ambition but is also something that the law has traditionally struggled with for quite literally decades. It is notoriously challenging to draft a simple legal test to cover every permutation – hence why the UK relies on judge-made law, which can evolve over time. The concept of ‘worker’ is derived largely from EU law and the precise definition can vary in different regulations. There may be little the Government can do to simplify this concept – certainly until the position with Brexit is clearer.” Philip Harman, partner, Employment & Pensions Group, DAC Beachcroft

“The report heeds our call to clarify employment rights in a single piece of legislation. UK employment laws are overly complex and not fit for modern work, they cause needless confusion and too many people miss out on basic workplace rights. The proposed ‘dependent contractor’ status – a key part of this clarification – is a practical way of lifting people out of false self-employment and giving them clear minimum rights, without closing the door to new and flexible ways of working.” Joe Egan, president, Law Society

FEE-FREE APPLICATIONS

“Taylor’s recommendations would increase certainty for gig economy workers, most of all through the suggestion of allowing workers to have their status adjudicated by an employment tribunal without paying a fee. Coupled with plans to extend some family friendly rights to the self-employed, the position of low-paid and insecure workers is likely to be improved.” Hugh More, Withers

“A keystone of the whole report. Having rights without a real ability to enforce them is meaningless, which is why it’s so important that the review recognises the massive barrier employment tribunal fees create. We know that employment tribunal fees have cut people’s ability to defend their rights at work by 70 per cent, and so it is only right that someone should be able to get a ruling on what rights they have at work without paying exorbitant fees.” Joe Egan, Law Society

“One aspect of the proposals that may be easier to adopt and introduce is to allow individuals to bring a claim questioning their employment status without having to pay the normal Tribunal fee and to place the burden of proof on the alleged employer to show that the individual is not an employee or a worker.” Philip Harman, DAC Beachcroft

ZERO HOURS CONTRACTS

“Our submission to the Taylor review revealed that many Acas Helpline callers were in a zero hours, agency or self-employed arrangement out of necessity rather than by choice. Whilst these types of working relationships can offer flexibility, it is clear that there can be a lot of confusion around employment status and the rights within them.” Sir Brendan Barber, chair of Acas

“Many expected that the review would recommend the abolition of zero hours contractors, however, instead the review recognises that many individuals actually value the flexibility these arrangements allow. Instead, the sensible recommendation is that those on zero hours contracts are given the right to request fixed hours. This would appear to be supported by industry, particularly given the recent experience of McDonalds who offered all their zero hours employees the option to move onto fixed contracts and only 20 per cent of them took up the opportunity.” Julie Taylor, Gardner Leader

Jean-Yves Gilg is editor-in-chief of Solicitors Journal

jean-yves.gilg@solicitorsjournal.co.uk | @jeanyvesgilg