As readers of our alert will know, employment status (in particular the ‘gig economy’) has been the hottest topic over the last year or so.
The Government commissioned a review of modern working practices during that period. Matthew Taylor, former advisor to Tony Blair and current Chief Executive of the Royal Society for the encouragement of Arts, was set the task of reviewing modern working practices and “informing the Government’s industrial strategy.”
The report, entitled “Good Work”, was published yesterday and we have summarised the key employment law recommendations arising from the report – some of which were expected and some of which are fairly radical.
It is important to note that the review was not aimed at the gig economy, or employment law per se. It was intended to be a root and branch review of the way modern Britain works now, how that differs from times gone by, whether the current legislative infrastructure is suited to the way people work and what might happen in the future. It is clear that the contributors and authors have gone to great lengths to understand how UK PLC goes about their working lives. It is a substantial and interesting insight, covering just about every aspect of the labour market.
Part of the review’s remit was to inform strategy on the world of work moving forwards. The report covers this by identifying current challenges and identifying ways they could best be overcome, with a significant emphasis on better protection for more flexible workers, whether they be in the gig economy, zero-hours contractors or otherwise.
Case law has developed tests to establish whether an individual is an employee, a worker that is not an employee or is self-employed, although many judges acknowledge that there is often a very fine line. The report recommends updating legislation to specifically include the key tests. Additionally, the report recommends changing the definition of “workers” who are not employees to “dependent contractors”. Each of these brings not insignificant problems, not least as the term “worker” carries different meanings in different pieces of legislation…..
The report suggests eliminating the current requirement that a person has to be under an obligation to personally perform work in order to be considered a worker. The report is highly critical that someone can’t be a worker just because they are able to send a substitute to do the work for them. Instead, the report suggests that greater emphasis is placed on how much control a business has over the individual to determine their status. This ties in with the phrase “dependant contractor”.
The report does not recommend interfering with the status of employee, as this typically works.
Following a number of recent cases where gig economy workers have claimed an entitlement to the National Minimum Wage (NMW), the report suggests that such workers should have their pay assessed by reference to output work for NMW purposes. Taking the Uber case as an example, this protects the business, as workers would not be able to make themselves available during very quiet times and still benefit from the minimum hourly rates set out in the NMW Regulations.
The report suggests that individuals should be able to ask an employment tribunal to determine employment status without paying a fee, as a preliminary issue.
Finally, the report suggests reversing the burden of proof in relation to employment status, so that an employer has to prove that an individual is not an employee or worker. Essentially, the report suggests a presumption in favour of whatever status the claimant thinks they are unless the employer proves otherwise.
Other Significant Recommendations
- Require written statements of key terms to be provided to workers as well as employees, and in both cases for such statements to contain a description of statutory rights and be given on day 1. Currently, only employees have a right to receive written terms and it can be provided within 2 months of employment commencing. The report suggests that employees/workers should have a freestanding right to claim compensation if they don’t receive this, whereas currently it can only be claimed if the employee succeeds with one of a number of specified claims in the employment tribunal.
- Preserve continuity of employment where there is a gap of 1 month (as opposed to the current gap of one week) between employment with the same business.
- Holiday Pay – Legislate for holiday pay to be calculated on the basis of a 12 month rolling period, as opposed to the current 12 week period (which doesn’t work for most employers – particularly those who pay commission and have peaks and troughs in demand). Also allow employers to pay ‘rolled-up’ holiday pay. The latter of these won’t be possible until Brexit, as the European Court of Justice has previously ruled that rolled-up holiday pay, where an amount is added onto hourly rates, isn’t permitted.
- Agency workers – Give agency workers the right to request direct employment after 12 weeks and introduce a requirement for them to be given more transparent information about pay rates and who is paying for them. Additionally, the report recommends removing the so-called “Swedish Derogation” which means that agency workers don’t have to receive comparable pay after 12 weeks of an assignment if they are paid between assignments.
- Allow those engaged on a zero-hours contract a right to request guaranteed hours after 12 months. The report calls this “formalising the reality” of their working relationship.
- Give HMRC the power to enforce sick pay and holiday pay. This would sit alongside existing enforcement powers in respect of NMW. The report is critical that too much onus is on employees/workers to pursue employment claims and also critical of employment tribunal fees, acknowledging that they are here to stay.
- Expand the right to request flexible working, so that temporary changes can be requested.
- Statutory Sick Pay should be overhauled so that employees accrue the right to receive it over time. This prevents employers being on the hook for lengthy periods of SSP where an employee has only just started their employment.
- Legislate for those on long-term sickness absence to be able to return to their existing jobs, in the same way as is the case for maternity leave.
With so much resource being taken up on Brexit, it is difficult to envisage that there will be a sudden rush to implement the recommendations in the report; however, it does identify an ever increasing gap between employment legislation and the reality of the world of work. This gap is growing primarily due to technological advances, enabling people to work in different ways to the traditional 9-5.
We will keep readers up to date with any proposals to implement the recommendations in the report or any other developments arising from it.
If you require any advice on employment status or any other employment law/HR queries please contact Joanne Holborn, Tom Scaife or Caroline Rayner on 01228 552600/01524 548494.