Francesca Jus-Burke Senior Associate
Taylor Review: Government response
In February 2018, BEIS set out the Government response to the Taylor Review of Modern Working Practices published in July 2017.
A number of recommendations set out in the report have been accepted by the Government and consultations have now been launched in the following areas:
> Employment status
> Agency workers
> Enforcement of employment rights
> Measures to increase transparency in the UK labour market
The Taylor Review recommended greater clarity in respect of employment and worker status and the government has accepted that:
> There is a lack of clarity and certainty surrounding the tests for employment status.
> The current three-tier approach to employment status in employment rights (employee, worker and self-employed) should be retained.
> An online tool could be useful in helping determine employment status.
Since the proposed changes to employment status would “represent the single largest shift in employment status since the Employment Rights Act in 1996”, the Government is seeking views on whether the recommendations will achieve their desired results particularly in relation to the realities of the modern labour market. Consultation will cover working time definitions for national minimum wage purposes and effective ways to achieve clarity for individuals and business on their employment and taxation rights and responsibilities. A change to employment status will impact on the way in which companies contract with their labour resource and extended rights may result in a higher employment costs.
The Review also made a number of recommendations designed to improve the working conditions of ‘atypical’ workers and those in the gig economy. In particular, it highlighted the lack of transparency around contractual arrangements for agency workers and the use of umbrella companies for paying wages and making deductions. The Government proposes that:
> Any contract between a work seeker and an employment business should contain a "key facts" document provided at the time of registration with an employment business to ensure that the work seeker fully understands what is being offered.
> Umbrella companies or intermediaries could be brought within the scope of the employment agency standards inspectorate (EAS).
A combination of a “key facts” document, along with the regulation of umbrella companies and “pay between assignment” contracts, would strengthen workers’ rights.However, it is clear from the Government’s response that workforce flexibility is considered a vital component of the UK’s international attractiveness and is vital for business competitiveness.Again the use of PBA contracts is likely to increase employment costs which will undoubtedly be passed to the end user company.
Government has agreed that vulnerable workers should be entitled to a wider range of basic employment rights. Specifically, the Taylor Review recommended that:
> HMRC should be responsible for enforcing a basic set of core pay rights (National Minimum Wage, sick pay and holiday pay) for the lowest paid workers.
> The process of enforcing tribunal awards should be made simpler for employees and workers.
> A naming and shaming scheme for those employers who do not pay employment tribunal awards within a reasonable time should be established.
> Employment tribunals should be directed to consider the use of aggravated breach penalties where employers lose employment tribunal status cases on broadly comparable facts.
The Government makes clear its plan to simplify the enforcement process for employment tribunal awards and its intention to introduce a naming scheme for unpaid employment tribunal awards. The Government also seeks views on the extent of non-compliance with workers’ rights and entitlements to help determine how enforcement activity might best be targeted.With latest Employment Tribunal figures showing a 64% increase in the issue of Tribunal claims since the abolition of Tribunal fees in July 2017 managing the risk of employment litigation may result in challenges for organisations.
The Government has taken immediate steps to increase transparency by legislating to extend the right to payslips for all workers, and to improve the quality of the information provided on those payslips.
The Taylor Review noted that some employers use UK labour market flexibility to transfer risk to workers, and there is no corresponding benefit to the worker from the flexible arrangement. As a result, greater transparency around contractual arrangements between workers and employers in order to clarify their rights and responsibilities is recommended.
The timescale for new legislation maybe several years away but reviewing how you contract with your staff now will minimise what could be a substantial pain point in a couple of years.