A third category of worker between the self-employed and employed would still be “useful” in light of the growing gig economy workforce, the man leading a major government review of employment has said.
Matthew Taylor, who was appointed by Theresa May to lead a review into modern employment practices, has suggested that the worker status is still useful but may need a new name and greater clarity.
“I think it might be usefully described as dependent contractor. But a category which exists between full employment rights and self-employment, which captures the fact that people in that category have slightly more control, slightly greater flexibility, and in return they have slightly fewer rights, is actually a useful thing to do,” he said, speaking to a group of MPs on the work and pensions select committee.
“I think we need to look at what it is that qualifies for that category, what is in that category. If we didn’t have that category, the danger is that we create a very steep cliff edge between employment - and the costs associated with employment - and self employment. So I think it’s a useful category to have but we need to work on defining it and helping people understand and… whether they’re in that category,” he said.
Under current laws, workers are categorised as either an employed, self-employed, or worker, but new ways of working, new businesses and the rise of technology has led to an increasing grey area around these statuses and their definitions.
Taylor indicated that who controls what goes on in a working relationship is the most important factor in dictating worker status, particularly when the courts have been emphasising this in recent decisions concerning workers’ status.
“Perhaps one of the things we need to explore is how we make it clear that control is the critical factor here,” he told the committee led by MP Frank Field.
“It isn’t our intention to say company A is fine and company B is not. What we do want to do is define where we think the borderline should lie between worker status and self-employed status, so that businesses can build their business model around a reasonably clear account of what people have to do if you want people to be genuinely self-employed, which for me is that you have to ensure the worker genuinely has control over their work process,” he said.
“What I’ve found is these companies are very good at leading their self-employed contractors to think that there is a trade off between flexibility and employment protection, and there isn’t. There is no reason why you can’t have both a flexible form of employment and have worker based entitlements. So we should recognise that.”
He added that the review will make clear to entrepreneurs “these are the rules, and you need to build your business around the rules, not circumvent them”.
“The thing that feels wrong to entrepreneurs is when the rules change halfway along the line,” he added.
Taylor also suggested the review will come up with both specific recommendations and longer-term strategic goals for “how policy needs to evolve over the next five to ten years, to reflect theses deeper changes in the labour market”.
One of these will be moving towards “a more consistent way of taxing labour, both for those earning and organisations”.
However, the government was forced into an embarrassing u-turn over changes to National Insurance contributions that would have brought self-employed and employed rates closer into line as it broke a key Conservative election pledge.
The committee's investigation into the gig economy will hear its last evidence session today with its conclusions expected in due course. The results of Taylor's review are due to be published in June.