Business community reacts to Taylor Review

The review's recommendations include the right to request a direct employment contract, reduced tribunal fees and a ‘dependent contractor’ category of worker

The Taylor Review of modern working practices has received mixed reactions from the business and employment law community.

The independent review of modern working practices by RSA chief executive Matthew Taylor, calls for agency workers to have the right to request a direct employment contract when they have been engaged with the same hirer for 12 months. It also recommends legislation to make it easier for all working people to receive basic details about their employment relationship.

Additionally, it recommends greater clarity for those providing services, stating that ‘people should know who they are working for, how much they will earn and what rights they have.’ It also suggests the cost of employment tribunal fees should be reduced.

TUC general secretary Frances O’Grady said the report does not, however, go far enough. “This is not the game-changer needed to end insecurity at work,” she said. “A ‘right to request’ guaranteed hours is no right at all for many workers trapped on zero-hours contracts.”

Her comments joined other criticisms from trade unions. Unite said the report "spectacularly failed to deliver,” while the GMB described it as a "disappointing missed opportunity".

However, Peter Cheese, chief executive of the CIPD, welcomed the review. “We have been calling for greater clarity over workers’ rights for a long time, and therefore welcome the main thrust of the recommendations to ensure fairer treatment for gig economy workers without losing the flexibility which we know many of them value,” he said.

Other recommendations include for a ‘dependent contractor’ category of worker, with a clearer distinction between these people and those genuinely self-employed or employed. Cheese added: “We also support the proposals to clarify people’s employment status and rights and back plans to require employers to provide details of terms and conditions of employment to workers as well as employees.”

Alan Price, HR director at Peninsula Employment Law, warned however that the new status could cause confusion for employers. “For many employers, the introduction of a new name for those who have worker status will not be helpful as it appears to introduce another status at a time when many are struggling to apply the tests on a practical basis,” he said.

Others pointed out that the new status does not in fact depart hugely from the existing system. “[This] does not change the current three-tier approach in the UK,” commented Sean Nesbitt, partner at Taylor Wessing.

“[The report] rightly identifies the problem of the often grey boundaries between the three employment categories but it shies away from suggesting what the answer is, or even what it could be," agreed Nick Elwell-Sutton, employment partner at Clyde & Co. “Companies, individuals, lawyers and the judiciary have grappled with this for years and despite best efforts there is an abundance of often contradictory case law and a current situation where each case rests on its own unique facts.”

The report also suggests that the government should ask the Low Pay Commission to advise on the impact of bringing in a higher National Minimum Wage for hours which are not guaranteed in a contract. O’Grady responded however that: “Workers deserve the minimum wage for every minute they work, not just the time employers choose to pay them for.”

A spokesperson from the British Chambers of Commerce warned there could be additional consequences to raising the minimum wage for some self-employed people: “While the notion of a wage premium in exchange for uncertain working hours is superficially attractive, it could have unforeseen consequences, and push wage costs up elsewhere."

Katherine Chapman, director of the Living Wage Foundation, praised this minimum wage recommendation, however. But she encouraged employers to go further and offer the higher real Living Wage, as set by the Living Wage Foundation. “We know that the benefits of fair pay and good employment practices outweigh the costs - when employers introduce the real Living Wage alongside more secure contracts and better training and conditions, the cost is offset by reductions in staff turnover and absenteeism,” she said.

The report also recommends firms provide gig workers with a range of benefits, including National Insurance. Many in the pensions industry have responded, however, that these workers also need more support on pensions.

Kate Smith, head of pensions at Aegon, said: “Giving ‘dependent contractors’ the rights to workplace benefits such as holiday pay and sick leave is a welcome move, but without the right to a workplace pension, which could turn out be the most valuable benefit of them all, [this] is short-sighted.”

The review also recommends the government avoid further increasing the the non-wage costs of employment, such as the apprenticeship levy. It suggests a national strategy to provide good work for all "for which government needs to be held accountable."

But some queried how much time and attention the review's recommendations will be given by the government. “The big question remains the extent to which [Theresa] May will practically be able to drive through what is being proposed," said Richard Fox, head of employment law at Kingsley Napley. "With Brexit priorities and no significant working majority following the last general election, this is now going to be much more complicated than first thought,”