Taylor's Modern Employment Practices - real change?Posted on 14th July 2017
This week saw the publication of Matthew Taylor’s long awaited independent review into modern employment practices.
The review sets seven principles for ‘fair and decent work’. They are difficult to summarise in sound bites but the full list can be found on page 9 of the report, please click here to review.
The one of particular interest is the ‘renaming’ of the current ‘worker’ status to ‘dependent contractor’ with the promise of clearer guidance on how to distinguish ‘workers’ from those who are genuinely self-employed.
The status of a ‘worker’ is a confused area of law and there is no doubt that reform is needed, particularly to address the specific challenges that have arisen with the rise in the gig economy.
As things currently stand, ‘workers’ can be either employees (full employment rights), self-employed (no employment rights), or a worker (some employment rights like national minimum wage and holiday pay). Which they are, currently depends on what happens in practice in terms of the obligations between the two contracting parties. That involves a full factual analysis of a whole range of factors. This has meant that the category of ‘worker’ has always been a grey area and that ‘greyness’ has been arguably exploited by the new breed of ‘platform’ based employers such as Uber and Deliveroo, commonly referred to as the ‘gig economy’. Those companies retain their drivers on a self-employed basis but in practice the driver does not have the true independence and flexibility of a self-employed worker. Recent cases have looked at what happens in practice and has found, as the Tribunals did in the Uber case, that in fact those drivers are not truly self-employed and are in fact workers.
The Taylor Review considered the removal of ‘worker’ status and creating the binary choice of employed or self-employed; it also considered the possibility of ‘accruing’ employment status over time but it rejected those alternatives on the basis that it would not reflect that ‘increasing casualisation of the labour market’. It proposes to retain the ‘worker’ status but rename it ‘dependent contractor’ and clarify the test to determine precisely what that is. It suggests for example, that the test should focus more on control than on the requirement for personal work which would mean that those with a genuine right to substitute someone else to do the work for them, may well fall into this new category, which is less likely to be the case under the current ‘worker’ status.
So far, so good.
The most controversial element of the review however is the proposals in relation to National Minimum Wage (NMW). As things stand at the moment, a ‘worker’ is entitled to the NMW but the Taylor Report highlights the difficulties in calculating the NMW for what is essentially piece work (where you are paid for the work you do, not your working time). Uber and Deliveroo have argued that it would be unfair to force them to pay NMW as drivers/couriers could, arguably, simply log on to the platform in the middle of the night when there are no requests for rides or deliveries and expect NMW for the time worked. The Taylor Review has therefore recommended an adaptation of the current piece rates legislation to balance the requirement for flexibility in the gig economy with the requirement to pay the NMW.
The devil, as always, will be in the detail and we will watch that devil for you.