· News

Is the Taylor Review a step in the right direction?

The Taylor Review into modern working practices has divided the business community

Publication on 11 July of the delayed Taylor Review into modern employment practices was highly anticipated. The 116-page document struck a balance between calling for improved worker rights and ensuring flexibility for them and businesses.

Headline recommendations included renaming ‘workers’ as ‘dependent contractors’, new ‘piece rate’ calculations for gig economy workers, and a higher national minimum wage for non-guaranteed hours. Others included: Information and Consultation of Employees legislation to be obligatory when only 2% of the workforce request it (rather than 10%); statutory sick pay made a basic employment right, including for ‘dependent contractors’; improving the powers of bodies such as HMRC to enable state enforcement of certain rights; and ‘dependent contractors’ to receive a written statement of terms from day one.

But criticism has come from both sides, with some elements critiqued for not going far enough on workers’ rights, and others for going too far in their potential to hamper businesses’ ability to compete.

Gemma Dale, interim policy advisor at Manchester Metropolitan University and former HRD at Tunstall Healthcare, welcomed the recommendation that employment status could be decided as a preliminary issue without hearing fees. But she said the Review doesn’t go far enough in overhauling a system still unaffordable for many. “The Review stops short of recommending reform of the area that’s undermined enforcement of rights – the employment tribunal regime,” she said.

She added that the Review’s focus on business’s responsibility to take ownership and improve corporate governance doesn’t go far enough. “The Review states the best way is not regulation but responsible corporate governance, good management and strong ER,” she says. “Although it is hard to argue with this from a theoretical perspective, many employers will defer to the minimum statutory requirements. The current debate about platform-based work is evidence of this.”

Another key feature was the Review’s recommendation that zero-hours workers be given the right to request minimum hours after 12 months. TUC general secretary Frances O’Grady said this was not the game-changer needed. “A right to request guaranteed hours is no right at all for many workers trapped on zero-hours contracts,” she said.

Others, however, pointed to this element as one that strikes a good balance between workers’ rights and business. “Giving people the right to request will empower those that find insecure work problematic to request more predictable work, without forcing change on those that enjoy the flexibility of zero-hours contracts,” felt Catherine Sermon, employability director at BITC.

Opinion is equally as divided over the Taylor Review’s ‘dependent contractor’ recommendation, designed to make clear the distinction between this category and the genuinely self-employed. Experts warn this may simply further complicate things for both parties.

“[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,” agreed Nick Elwell-Sutton, employment partner at Clyde & Co.

Others, however, welcomed the move. The Law Society president Joe Egan called the ‘dependent contractor’ category “a practical way of lifting people out of false self-employment and giving them clear minimum rights, without closing the door to new and flexible ways of working.”

“A new ‘dependent contractor’ category seems like a sensible proposal that would help to identify legitimately self-employed workers,” commented Kevin Green, CEO at the REC.

Other elements of the Review received more unanimous approval. Popular with industry figures was the proposal that The Institute for Apprenticeships work more with low-paying and atypical working sectors to ensure the levy is being most effectively used, and to address differences in the take-up of apprenticeships for different industries. The Review also recommended the government bring together educators and employers to develop a strategic approach to employability and lifelong learning. “I’m delighted to see the specific recommendation that the levy should be looked at again so that it works better for people in non-permanent roles,” commented Green.

However, other recommendations haven’t received such a warm reception from the business community. One is that the burden of proof in employment tribunal hearings be reversed so employers have to prove the individual is not entitled to relevant employment rights. CBI managing director of people and infrastructure Neil Carberry said this would increase uncertainty for employers, adding that individuals would be better protected by enforcement and awareness of existing legislation.

The recommendation that the Low Pay Commission bring in a higher national minimum wage (NMW) for work not guaranteed in contracts has proved similarly contentious. “There is a risk that in practise this could perversely incentivise companies to employ more people on contracts with low guaranteed hours,” said Sermon.

CIPD chief executive Peter Cheese agreed these NMW recommendations should be treated with caution: “There is a risk any changes may result in a reduction of opportunities as employers react to concerns of the growing cost of labour, turning to agency workers to keep that flexibility in wage levels.”

“The great strength of the present NMW system is its relative simplicity,” added CBI head of employment law Matthew Percival, warning of increased administrative burden for businesses. The Review’s recommendation for greater transparency, with employers above a certain size being obliged to publish details of their workforce structure, could add to this burden said Sermon.

“With technology changing the nature of work so rapidly, we believe it’s more important to encourage businesses to invest in the skills of workers, particularly those who are stuck in low pay and may be at risk of redundancy through digital evolution – and would prioritise this over measures that add cost and regulation,” she added.

But with the long wait for publication now over, another wait now begins on the government’s response – whether it will move swiftly to adopt certain measures or, preoccupied with Brexit, boot it into the long grass for the foreseeable future. Time will tell.