The long-awaited Taylor Review on modern employment practices was published recently, with a focus on flexibility, increasing the quality of work and improving clarity of current legislation. But it’s not just businesses engaging people in the Gig Economy or on zero hours contracts that need to consider the changes this report may bring. Any employer requiring a degree of flexibility within its workforce should now be giving some serious thought to the recommendations as well as listening to those individuals they engage with.
From shaking up employment status, to harsher punishments at tribunals, and more stability for zero-hour and agency workers, here’s seven things all employers should be aware of…
1. The status of ‘worker’ could be changed to ‘dependent contractor’
The Review proposed changing the status of ‘worker’ to ‘dependent contractor’ in a bid to distinguish more clearly between those who are genuinely self-employed and those who are not. The Review also suggested that as dependent contractors are most at risk of being taken advantage of by businesses, those who fall under this category should be granted additional protections.
It also recommended more weight be given to the concept of ‘control’ when determining employment status, as opposed to whether a worker can nominate someone else to do a job for them. The Review would also like to see the current legislation which defines “employee” and “worker” (Employment Rights Act 1996) updated to reflect the tests currently used by the courts to determine someone’s status. These tests involve a consideration of the degree of control exercised by the employer, whether the employer is obliged to offer work and the individual is obliged to accept that work, and whether the individual is required to provide personal service amongst others. This should help both employers and employees to better understand their positions and relative obligations and entitlements.
2. A higher rate of minimum wage could be applied to those with non-guaranteed hours
The Review also suggested that the Low Pay Commission should be tasked with examining how a higher rate of minimum wage could be applied to those with non-guaranteed hours to ensure they are not treated unfairly due to the insecure nature of these contracts. It gives the example of an individual on a contract which only guarantees them 6 hours a week. If that person is regularly asked to work more than this they should be entitled to the standard National Minimum or National Living Wage rate for the first 6 hours worked in a week and then the new higher rate for any hours beyond that.
It also called for those running platform-based working – where workers are connected with customers who want a service – to show that they are paying their average worker 1.2 times the national minimum wage.
3. Companies dragged before a tribunal could face bigger consequences
Although Mr Taylor told the BBC Radio 4’s Today programme that the report did not go as far as calling for tribunal fees to be scrapped, it did advocate some big changes to the system, including introducing a mechanism where individuals should be able to find out their employment status from the Tribunal without incurring an issue fee or hearing fee.
Currently, we have a two-tier fee system which requires individuals to pay both an issue fee (either £160 or £250 depending on the nature of the complaint) and a hearing fee (either £230 or £950). The idea behind the new proposal is that individuals can obtain a quick, cost-free decision on their status so that they can go on to make an informed decision as to whether to incur the cost of pursuing a “full-blown” Tribunal claim.
The Review also called for businesses that don’t pay awards from tribunal rulings within a reasonable timeframe to be named and shamed, while those companies who lose cases based on similar facts to those previously decided by a Tribunal could find themselves faced with penalties and/or costs orders.
4. Zero-hours workers could demand a more regular schedule
Despite calls from Unions and employee groups to do so, the Review has not gone so far as to ban zero hours contracts, recognising the importance of such contracts for those requiring flexibility. It does, however, recommend that individuals on these contracts for 12 months or more should have the right to request fixed hours.
Greater protections for workers, such as the ability to request fixed hours, needn’t be bad news for employers, as it can provide more certainty around labour supply, and help attract staff in what could be an increasingly competitive market.
5. Agency workers could also demand more stability
Much like the rights for zero-hours workers, the Review has suggested that agency workers, who have been placed with the same hirer for at least 12 months, have the right to request a direct contract of employment. The hirer would be obliged to give reasonable consideration to any such request.
6. A written statement of particulars could become a statutory requirement
It should become a statutory requirement for employees and dependent contractors to receive a written statement of particulars on day one of their job. The statement should include the rights both groups are entitled to, how these are calculated and how they are paid, and employees and dependent contractors should be able to bring a claim for compensation against an employer who fails to provide a written statement.
7. Changes to holiday and sick pay
The Review suggested that the 12-week reference period for holiday pay should be extended to 52 weeks to be made fairer for those who have peaks and troughs in work. Workers should also have greater choice as to how they receive annual leave entitlement, with the option to receive ‘rolled-up’ holiday pay in real time.
Statutory sick pay (SSP) should become a basic employment right comparable to the national minimum wage, and all workers should be eligible from day one. According to the Review it should be accrued based on length of service in a similar way to paid holiday.
In addition, those returning from time off for sickness should receive the same protections as those returning from maternity i.e. the right to return to the same or similar job, providing they have engaged with the Fit for Work service where appropriate.
"Any employer requiring a degree of flexibility within its workforce should now be giving some serious thought to the recommendations as well as listening to those individuals they engage with."
Sarah Scholfield, employment law expert, Glaisyers
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