Summary of Government response to Taylor review: The biggest change to employment status since 1996

Government have published its full response to the Taylor review which sets out the recommendations that have been accepted by both the review into Employment Practices in the Modern Economy, led by Matthew Taylor, and the report entitled A Framework for Modern Employment, drafted by the Work and Pensions Committee and the Business, Energy and Industrial Strategy Committee.

The changes proposed relating to employment status would represent the single largest shift in employment status since the Employment Rights Act 1996. See a summary of the accepted recommendations below, albeit the majority will not be taken forward and actioned until there has been a consultation process;

• Consult into improving clarity between definitions of employment status, including options for legislative reform
• Seek detailed evidence in relation to the extent of the abuse of “Swedish Derogation” contracts that allows work-seekers to opt out of equal pay entitlements
• The Director of Labour Market Enforcement to consider the extension of the scope and remit of the Employment Agency Standard Inspectorate to umbrella companies and intermediaries, and the enforcement of the Agency Workers Regulations
• Present legislative plans to ensure all workers receive important information in a clear format when working in more “casual relationship” from day one
• Provide workers with a right to request a contract with more predictable and secure working conditions
• Increase the holiday pay reference period to 52 weeks to take account of holiday variations
• Re-define working time so that gig economy workers can be clear about how the minimum wage applies
• Consult on how to avoid bogus self-employment
• Align definitions in employment law and tax
• Extend the right to written particulars to all workers from day one
• Change the law to improve pay transparency for agency workers (rates of pay and who is paying them)
• Extend the right to an itemised payslip for all workers
• Extend the qualifying period from one week to one month when considering the relevant break in service for continuous employment
• Redefine the “dependent contractor” status as the category of people who are eligible for worker rights but are not employees
• Adapt the piece rates legislation to ensure those working in the gig economy are still able to enjoy flexibility whilst earning the minimum wage
• Give dependent contractors the right to receive rolled-up holiday pay
• Promote rights such as shared parental leave and the right to request flexible working
• Low Pay Commission to consider the design and introduction of a higher minimum wage rate for hours that aren’t guaranteed as part of the contract (e.g. zero hours contracts)
• Right to request a direct contract of employment for agency workers who have been placed with the same hirer for 12 months, and an obligation for the hirer to consider the request in a reasonable manner
• Right to request a contract that guarantees hours for those on zero hour contracts who have been in post for 12 months which better reflects hours worked
• Require companies of a certain size to make public their model of employment, use of agency services, number of requests received (and number agreed to) from zero hours contracts workers for fixed hours, and the number of requests they have received (and number agreed to) from agency workers for permanent positions with a hirer after a certain period
• The burden of proof in employment tribunal hearings regarding employment status should be reversed so that the employer must prove the individual is not entitled to the relevant employment rights, not the other way round
• Introduce a naming scheme for unpaid Employment Tribunal awards
• Create an obligation on Employment Tribunals to consider the use of aggravated breach penalties and cost orders if an employer has already lost an employment status case on broadly comparable facts
• Allow Tribunals to award uplifts in compensation if there are subsequent breaches against workers with the same, or materially the same, working arrangements
• Reform Statutory Sick Pay so that it is explicitly a basic employment right for which all workers are eligible regardless of income from day one. It should be payable by the employer and should be accrued on length of service
• Adopt a similar approach to sick leave to those who have a period of away from work for having a child, whereby individuals have the right to return to the same job after a period of prolonged ill health
• Consolidate guidance on the legislation which protects those who are pregnant or on maternity leave to bring clarity to employers and employees

Keep an eye on our website for further information on the specific consultations that have been drafted in relation to some of the proposed changes detailed above.

The published consultations are as follows;

1. Enforcement of employment rights recommendations
2. Agency workers recommendations
3. Increasing transparency in the labour market
4. Employment status

Research and analysis has also been published on the following topics;

1. Gig economy
2. The use of Pay Between Assignment contracts for agency workers including the role of umbrella organisations