UK Responds to Taylor Review of Modern Working Practices

February 07, 2018

The UK Government today announced its response to “Good Work: the Taylor Review of Modern Working Practices.” This was an independent review commissioned by the Government and published in July 2017 into the changing British labour market. The Taylor Review focussed in particular on clarifying the status of, and improving the quality of work for workers in the so called “gig” economy and workers with flexible working arrangements such as zero hours contracts, and agency workers. 

The response of the Government to the Taylor Review proposes little actual change at this stage. Rather, the Government has announced that it will now consult on a number of issues such as the reform of the law relating to employment status. Many of the other measures announced involve either restating existing rights, such as giving workers a list of rights that they are entitled to from day one. There are also proposals intended to increase knowledge of existing rights - for example ensuring that new and expectant mothers know their workplace rights. 

One of the major recommendations of the Taylor Review was reform of the law relating to employment status in the light of the many and various recent high profile cases involving the status of people working in the gig economy. The aim of the Review’s recommendation is to ensure that both businesses and individuals can be clear about the status and rights of individuals particularly in the gig economy. The Government consultation will include considering whether to rename workers who are neither self–employed nor employees as “dependent contractors” and making it clear that they are entitled to workers’ rights such as holiday pay, sick pay and the national minimum wage. The Government is also looking at developing an online tool to determine worker status and extending to workers the right which employees already have to a written statement of the key terms of their employment. The consultation will also include consideration of how to align the employment status and tax status frameworks as much as possible in order to improve clarity. However, notably this specifically does not include any proposed reform of the National Insurance Contributions regime. Even though the Government has indicated that it agrees with the Taylor Review that the disparity between National Insurance Contributions for employees and self-employed contractors is no longer justifiable, the Government statement today is that “we have no plans to revisit the issue.” The Government is also consulting on a number of the Taylor Review’s recommendations to strengthen the rights of those with flexible working arrangements such as zero hours contracts, agency workers and casual workers. The Government will consult on a number of proposals including: 

  • giving agency workers the right to be given certain information such as pay rates, and who is responsible for paying them; 
  • giving people who have had a zero hours contract for 12 months the right to request a contract with guaranteed hours; 
  • giving agency workers who have been working for the same hirer for 12 months the right to request a direct contract of employment with the hirer; and 
  • whether to repeal the so called “Swedish derogation” which allows agency workers to opt out of an entitlement to equality of pay with directly engaged employees. 

HMRC will be given the responsibility for enforcing holiday pay and sick pay as well as the national minimum wage for the lowest paid workers. In addition, the Government has asked the Low Pay Commission to consider the design and impact of higher national minimum wage rates for workers with non-guaranteed hours. There will be “further action” to reform unpaid internships where the interns are doing the job of workers, which the Taylor Review described as an abuse of power and extremely damaging to social mobility. 

The Government has not taken forward at this stage the Taylor Review proposal to require employers to report on their workforce structure, including numbers of agency workers and zero hours contracts, or the proposal to allow rolled up holiday pay in certain circumstances. 

Finally, the Government is consulting on proposals to make the enforcement of Employment Tribunal awards against employers simpler, and introducing a “naming and shaming” system for those who do not pay. Consultation will address improving or extending the use of aggravated breach penalties - which essentially punish employers who repeatedly ignore the law by for example repeatedly failing to pay the national minimum wage.

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