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20 July 2017

The Matthew Taylor ‘Good Work’ Report and the future impact on modern working arrangements

6 mins

Last week, a report into modern working platforms and employment practices as commissioned by the Prime Minister, was published by Matthew Taylor, the Chief Executive of the RSA and former adviser to Tony Blair.

The content of the aptly dubbed ‘Good Work’ report is both radical and wide-ranging and is set to shape the landscape of UK employment law tangibly moving forwards, directly impacting the many whose employment status remains uncertain.

We have summarised below the key recommendations that are addressed under the accompanying paragraph references of the report. These headline points are those that are thought to be the most likely to affect the rights of individuals moving forwards. 

Employment Status and the Gig Economy (Pages 35, 36, 38, 39 & 55)

With the advance of the ‘Gig Economy’ digital platforms have been useful in enabling flexibility when offering work to individuals. However, the benefits have been simultaneous with an unhelpful blurring of the lines of employment status, between those who are deemed to be self employed or ‘independent contractors’ and those who have the statutory protection of employee or worker status. This has led to difficulties with job security and abuse from employers who have exploited the unbalanced level of control they have been able to hold over working arrangements that are lucid, undefined and do not allow individuals to exercise their legal rights or seek redress against problems faced in the work place or detriments suffered. 

In response to these problems, the Taylor report urges employers to frame the distinction between employees and workers more carefully, and instead identify workers who are not employees as ‘dependent contractors’. When defining worker status, individuals should be awarded a higher degree of control when engaging in a working relationship and the emphasis of their contractual obligation to provide work should be on a personal basis. 

It is a clear mandate of the report that all-round, the existing legislation should be adapted universally to take into account the emerging definitions and different breeds of worker.

National Minimum Wage (Pages 38 & 44)

On a practical note, the Taylor report calls to amend the law on the National Minimum Wage (NMW) to make it clear that gig-economy workers who engage in work via an app are undertaking a form of output work and will not have to be paid NMW for each hour logged on when there is no work available. This will prevent them from being penalised when the supply and demand of work flow does not fall in their favour. For tax purposes the report even goes as far as to recommend that all workers should be deemed ‘employees’. 

Zero Hours (Page 48)

The report offers a solution against abuse of the zero hours working arrangement which is to offer workers a say over whether or not to stablilise their hours. After 12 months, it has been recommended that those individuals who are on zero-hours contracts should have the right to request guaranteed hours. The Government should also consider increasing the rate of the National Minimum Wage for any hours that are not guaranteed by the employer.

Larger employers will be required to report on their overall structure and declare requests from zero-hours workers for regular hours. It is however, important to note that the Taylor report is not condemnatory of the zero hours working arrangement and cites the example of McDonald’s, where only 20% of workers opted for fixed hours when given such an opportunity to transfer from zero to fixed.  

Terms of Employment and Continuity (Page 39)

The Taylor report specifies that there should be a departure from the current position to require employers to provide written statements to individuals on their first day of employment and this statement should be extended to include a thorough description of statutory rights. Currently employers are allowed a generous grace period of up to two months to provide a written statement of terms for an individual following commencement of employment that is to last for longer than one month. The Taylor report recommends that workers should be allowed a separate right to compensation should they not receive the necessary written statement.

With respect to continuity of employment, this should be preserved where any gap in employment is less than one month, rather than one week, to prevent workers from being penalised for not receiving as much work as they may have anticipated.

Sick Pay and Sickness Absence (Pages 47 & 99)

Sick pay should be accessible universally from the first day of employment cites the report, and the reference period for calculation where pay is variable should be increased from 12 weeks to 52 weeks. In addition, holiday pay should be paid on a ‘rolled up basis’ to form an hourly rate and allow employees to accrue continuous service in line with the extension of break in continuity from one week to one month (as set out above).

Statutory Sick Pay should made available to all workers and accrued in line with length of service and all individuals should be allowed the right to return to work following long-term sickness absence. 

Claims to the Employment Tribunal and Remedy (Pages 62, 63, 64)

The Taylor report makes the recommendation that claimants should be permitted to apply to the Employment Tribunal free without having to pay a fee, in order to have their employment status determined as a preliminary issue (prior to any substantive claim). This approach fits with the overall ethos put forward to place the burden on the employer in the Tribunal to prove that the claimant is not an employee or worker, rather than allowing the burden to fall on the claimant. 

Finally the Tribunal should be vested with the power to impose aggravated penalties on any employer who fails to apply any relevant Employment Tribunal decision relating to employment status on its similar groups of workers. The report further argues that uplifts in compensation should be awarded where the employer commits subsequent breaches of established working arrangements.

Overall, it is fair to say that the Taylor report recognises the benefits of modern ways of working in providing accessible online platforms for workers to offer their services flexibly and seemingly in return for a lesser obligation. However, on a parting note of caution, the report warns against the UK workforce becoming victims of technology and it is clear that flexibility will always come at a degree of cost to the individual.

Bindmans LLP is at the forefront of bringing challenges on behalf of individuals with regards to worker status, as demonstrated by the up and coming case of Gilham v MOJ which is due to come before the Court of Appeal in Autumn 2017. This case challenges the current disparity in the law that District Judges and other judicial office-holders may not rely on whistleblowing legislation and the protection it offers against detrimental treatment as they are not deemed workers for the purposes s.230(3) of the Employment Rights Act 1996

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