How the Taylor review could change your workplace

Anna McCaffrey
Taylor Review On Working Practices Suggests All Work In U.K. Should Be Fair
Source: Getty

The much anticipated Taylor Review of modern employment practices was launched today.

The 115 page report makes recommendations which could impact on employment strategy for the coming decades in the UK, particularly (but certainly not exclusively) within the gig economy.

Central to its recommendations is the objective that "all work in the UK economy should be fair and decent with realistic scope for development and fulfilment".

Read more: Uber, Deliveroo, CBI and more: How everyone's reacting to the Taylor review

What are the main practical changes that have been proposed?

There are three main categories of working status: employees (who enjoy the highest level of protection but are also controlled to the highest level); self-employed people who enjoy high levels of flexibility and low levels of control, but have the least legal protection); and the mid-category of "workers" who fall somewhere in between (but are entitled to minimum protections in relation to working time, paid holiday and the national minimum wage).

The review recommends that workers be renamed as "dependant contractors" but otherwise that the existing three categories broadly remain in place.

Instead, the review recommends that tests for each status are made clearer. This could be achieved with more specific legislation setting out exactly what makes an individual a "dependant contractor".

The review considers that a key focus should be on the level of "control" exerted over individuals (in perhaps a nod to the rationale underpinning the recent decisions of the Employment Tribunals and Court of Appeal that Uber drivers, CitySprint couriers and Pimlico Plumbers are "workers").

National minimum wage, paid holiday and sick pay for dependant contractors

Dependant contractors would be entitled to the national minimum wage. The report recognises the difficulties of applying current national minimum wage legislation to a flexible workforce, who may be "multi-apping" and logged in to work for more than one platform at a time.

Those gig economy workers providing services through platform based models would be entitled to national minimum wage calculated in a manner similar to the current "piece work" rules (where wage level is worked out based on productivity and output levels rather than hours of work).

The review recommends that existing piece rate legislation be adapted to allow companies to compensate dependent contractors based on their output, provided the platform can demonstrate through data shared with the individual that an average individual, working averagely hard, successfully clears the national minimum wage with a 20 per cent margin of error.

An individual who chooses to work at a time of low demand does so, provided that he or she understands that position, without any risk of pay claims for the employer.

Dependent contractors would also be entitled to rolled-up holiday pay, meaning that an additional of 12.07 per cent would be added to each pay packet. Rolled-up holiday pay is currently unlawful under EU law, so implementing this recommendation would represent a move away from current rules on holiday and holiday pay.

Separately, it is proposed that HM Revenue & Customs should add holiday pay (for the lowest paid workers only) to its existing duty to enforce the national minimum wage and statutory sick pay.

The review also proposes that dependant contractors be given the right to be provided with written terms and conditions from day one.

Zero-hours contracts

The review has not recommended that zero-hours contracts be banned (despite some calls from Labour and union groups to do so) and concludes that both business and workers welcome the flexibility these contracts offered.

However, it suggests that a higher national minimum wage rate is set for those on zero hours contract who are not guaranteed hours.

What next?

In addition to the key changes above, the recommendations touch on other areas such as worker representation, resolution of disputes at Employment Tribunals, and regulation of agencies that supply temporary workers.

Despite the wide reach of the review, there has already been criticism from some that the review has not gone far enough to protect workers.

However, while it remains to be seen which recommendations of the Taylor Review the government will choose to take forward (if any), it is clear that, if implemented, the recommendations could significantly impact on modern working in the UK.