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Government response to the Taylor Review: What are the HR issues?

It's difficult to predict if any changes will be made, but there are areas that HR should be watching

Matthew Taylor issued his Review of Modern Working Practices on 11 July 2017 to mixed reactions, with some unions calling it ‘wishy-washy and full of fluff’. Yesterday the government published its response to the Taylor Review in which it accepted all but one of the proposals and will seek the view of businesses and unions through much more detailed consultations. Until the outcomes of these are known it is difficult to predict if any changes will be made to protect those in the gig economy, but there are certainly some areas that HR needs to have on their radar now.

The good news is that there are no immediate changes to grapple with, but plenty of opportunity to input their experience and views into the proposals that the government is accepting. There are some changes that will affect HR directly, such as a possible requirement to provide a statement of terms and conditions for both employees and workers on day one, which must include the duration of the employment and the conditions of probation, their notice period, any entitlement to sick pay and holiday pay, and all remuneration and other types of paid leave available to them.

What the proposal does not say, despite yesterday’s headlines, is that workers will now be entitled to statutory sick pay. The government intends to work towards improving the rights of vulnerable workers but with no immediate plans to make changes.

Another proposal is that a break in service of one month (rather than the current one week) is permitted without breaking continuity of service. This will be a change that HR will need to be aware of if it comes into effect.

Taking the biggest issue, which is the protection of workers in the gig economy, the government accepts the Taylor Review's recommendation of ‘rebadging’ worker status as ‘dependent contractors’ and it seeks the views of business as to whether the law should define the categories of employer, dependent contractor and self-employed more clearly to make it easier for businesses and individuals to correctly identify the status of those working for them.

This could be through writing into the law criteria based on existing tests derived from case law: mutuality of obligation, control, and personal service. Or moving to a completely different basis. They give examples such as length of service – which determines employment status in Greece and the Netherlands – the percentage amount of income earned from one employer, or a test based on where the work is carried out, which is used in the US.

The government is also considering whether tax liabilities should depend on employee status. At the moment a worker can be an employee for tax purposes but not for employment rights and this causes a great deal of confusion.

Another proposal that will have an impact on HR is changing the pay reference period for holiday pay from 12 to 52 weeks, which will certainly help with calculating holiday for those who are atypical workers with no fixed hours. It has asked for views of better ways for atypical workers to receive holiday – since ‘rolled up’ holiday was outlawed by the EU, businesses have grappled with how to adequately compensate atypical workers for holidays.

Finally, of note is the right for those on zero hour contracts to request a contract with fixed hours. If this is accepted after consultation then the key will be whether an employer can just say no – in which case it is likely to be another piece of unhelpful legislation that is easy to overcome.

Beverley Sunderland is managing director of Crossland Employment Solicitors