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The Taylor Review on modern employment practices – what do employers need to know?

Business Meeting 8 Print publication

25/07/2017

The long-awaited Taylor Review on modern employment practices has been published.  Our employment team analyse the key ‘need-to-know’ points for employers.

It is worth noting that, whilst the Review makes proposals for reform, there is no obligation on the Government to implement these proposals. Theresa May’s response on the day the Review was published was perhaps somewhat guarded. She simply stated that the Government will ‘study the report carefully and respond later this year’.

Secondly, whilst the Review may lead to new legislation being tabled, the current political climate means that there is no guarantee that new laws will make it through Parliament. Moreover, some of the proposals are so wide-ranging and complex (for example, amending current legislation on the definition of employees and workers to reflect the principles set down over recent years by the courts) that there must be some doubt over whether the Government will have time to focus on that at the same time as the gargantuan task of negotiating our exit from the EU.

With those points in mind, let’s look at some of the key proposals made by the review.

Key proposals

  • the three existing ‘statuses’ of ‘employee’, ‘worker’ and ‘self-employed’ be retained but with a new name of ‘dependent contractor’ covering workers who are controlled and supervised by the business engaging them
  • workers should be treated as ‘employed’ for tax purposes and HMRC should be given enforcement powers in respect of sick pay and holiday pay as well as minimum wage issues
  • the current laws defining employees and workers should be amended to reflect the principles that have been set down by the courts and tribunals on these definitions. (As we have mentioned above, this is far easier said than done)
  • a right should be introduced for zero-hours workers to request guaranteed, fixed hours after 12 months in post
  • the Low Pay Commission should be tasked with examining how a higher rate of minimum wage might be applied to those with non-guaranteed hours to ensure they are not unfavourably treated
  • workers (or newly named ‘dependent contractors’) should have a right to a written statement of terms and conditions to be given on the first day of employment and this should include a description of the individual’s statutory rights
  • there should be a ‘stand-alone’ right to compensation if the employer does not provide the written statement
  • the reference period for calculating holiday pay (where pay is variable) should be increased from 12 weeks to 52 weeks and employers should be able to pay holiday pay on a ‘rolled up basis’
  • agency workers should have the right to request a direct contract with the end user after 12 months working on an assignment
  • individuals should be permitted to bring an Employment Tribunal claim to determine their employment status as a preliminary issue prior to a substantive claim without having to pay an issue or hearing fee
  • the burden of proof should be placed on the employer in an Employment Tribunal claim to prove that the claimant is not an employee or worker.

Walker Morris comment

The Taylor Review calls for clarity above all and this is, without doubt, a laudable aim. The reality is that any changes to the current law would have to be very carefully thought through and drafted to avoid creating further ambiguity or bureaucracy. Few would disagree that the UK economy benefits enormously from having a flexible labour market so the Government will need to guard against creating unintended consequences when deciding which, if any, of the proposals to progress.

If you have any questions about this article please contact David Smedley or Andrew Rayment.

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