Stronachs Logo

Matthew Taylor’s long-awaited independent review of modern employment practices was launched yesterday.

 

The Taylor Review, which was commissioned by the Prime Minister last year, considers the implications of new models of working, reflected in the so-called “gig economy” and the corresponding impact on the rights of workers. The gig economy paradigm, where businesses engage individuals on a largely ad hoc basis, driven by flexibility and avoidance of unnecessary cost, has presented huge problems for determining employment status, both for the purposes of employment rights and tax liability. Many regard it as a source of unfairness involving worker exploitation. As a result, there have been a number of recent high profile tribunal cases brought involving disputes over status and corresponding rights.

There seems to have been a shift in the focus of such cases, with tribunals being increasingly asked to consider whether someone who has been engaged on a ‘self-employed’ basis is in fact a worker, rather than whether the individual is an employee, the former being a lesser status, but which still involves important rights such as holiday pay and the right to the National Minimum Wage (NMW). Last year my colleague considered the landmark decision of a London Employment Tribunal that Uber drivers in a test case were workers for the purposes of the Employment Rights Act 1996; ‘Is it over for the Gig Economy? Uber Drivers gain workers’ rights’. We keenly await the anticipated appeal to the Employment Appeal Tribunal.  A similar decision was reached in the case of Dewhurst v City Sprint (UK) whereby the London Central Tribunal determined that a cycle courier was a worker and therefore entitled to holiday pay. Employment or worker status is of course determined by the facts of each case, however, there is a clear trend for tribunals to find that individuals who had been engaged as self-employed contractors are in fact workers.

Proposals

The Taylor Review makes a number of proposals in terms of clarifying the law governing employment status. Indeed many of the substantive recommendations are in relation to this area. It is recommended that legislation is introduced which contains the key criteria that define ‘employee status’. It is recognised that the key factors in this regard are personal service, control, mutual obligation and whether the individual is carrying on a business undertaking. Primary legislation should reflect this with ‘high level’ criteria, while more detail should be contained within secondary legislation and related guidance.

Taylor recognises that the status of ‘worker’ is helpful in allowing basic protections to be applied to less formal relationships than employment relationships. However, it is also proposed that the definition is altered so that an obligation to provide personal service is no longer crucial. It is considered to be unfair that worker status can be rejected by a substitution clause within a contract (being the notional right to send a substitute to provide the service, rather than perform these personally). It is therefore recommended that greater importance should be attached to the principle of ‘control’, with legislation outlining what this means in a modern labour market and not simply in terms of the supervision of day-to-day activities. It is suggested that less emphasis on personal service and greater emphasis on control will make it much more difficult for employers to hide behind substitution clauses, while more individuals will be afforded greater protections. It is also proposed that a new term, ‘dependent contractor’, is introduced in respect of workers. The Review does however recognise that with some workers within the gig economy, there is “genuine two-way flexibility”, which many such workers appreciate. It is stated that this should not be jeopardised.

The Review also contains proposals on adjusting the scope of various employment protections, particularly for workers. Some of the most notable proposals are as follows;

• Statutory sick pay (SSP) to become a basic employment right, comparable with the NMW. However, this is to accrue on length of service. This will prevent employers   having to give the full six months of SSP to individuals who have worked for them for a short period of time.

• Workers (or ‘dependent contractors’) to have the choice to be paid rolled-up holiday pay, receiving a premium on pay, as opposed to paid time off.

• The definition of “working time” in relation to NMW to be adapted in respect of gig economy workers who provide their services through the likes of apps.

• Workers (or ‘dependent contractors’) to have the right to a written statement, similar to the right of employees, with a right to compensation for failure to comply.

• After 12 months, agency workers to have the right to request a contract of employment from their hirer.

• After 12 months, zero-hours workers to have the right to request a contract that guarantees hours which better reflect their actual hours worked.

• Individuals to have their employment status determined by tribunals without having to pay tribunal fees, with the burden of proof being shifted to the Respondent in respect of employment status.

So, is the gig really up for the likes of Deliveroo, Uber and Hermes? Frances O’Grady, the general secretary of the TUC, doesn’t think so. She said the Review “is not the game-changer needed to end insecurity and exploitation at work”. Some might also consider it disappointing that the Review rejected calls to recommend a ban on zero-hours contracts. However, Mr Taylor argued that it was “clear that many people work zero-hours choose to work that way because it suits them”. From the employee/worker perspective it will also be disappointing that there was no recommendation to abolish tribunal fees altogether. Mr Taylor said in an interview yesterday that “it would be better if those fees weren’t so high and we encourage the Government to continue to look at that issue.” However, there has certainly been a clear change in the tide in terms of the rights of individuals in the gig economy. As referred to above, we have seen tribunals finding that so-called self-employed contractors are in fact workers. The recommendations in the Taylor Review are certainly a positive development for such individuals and going forward the results of the Review will likely inform the Government’s industrial strategy.

It is also worth noting that last week, Scottish Labour’s industrial strategy was issued which proposes more robust measures relevant to the gig economy, including an outright ban on zero-hours contracts and the introduction of a “real living wage” of £10 per hour. The strategy includes the case for powers over employment law repatriated after Brexit to be devolved to Scotland. Such a development, were it to be implemented, would be a seminal moment in UK employment law with the possibility of employment law in Scotland fundamentally departing from that applicable south of the border.

We will certainly be keeping a close eye on developments in what is emerging as a hugely interesting time for UK employment law.

If you require advice on any of the above issues, please do not hesitate to contact a member of the Stronachs Employment Team.

Rowan Alexander, Senior Solicitor

 

Chambers UK 2018

Contact Info

ABERDEEN OFFICE
28 Albyn Place, Aberdeen AB10 1YL
Tel: +44 1224 845845

 

INVERNESS OFFICE
Camas House, Pavilion 3, Fairways
Business Park, Inverness IV2 6AA
Tel: + 44 1463 713225

The Legal 500 logo