Taylor Review proposals could struggle to make it into statute book

14 min read

12 July 2017

Deputy Editor, Real Business

The Taylor Review is set to shake things up for the gig economy, but is it for better or worse? We canvassed the business landscape for opinion on the matter.

On 11 July, the much-awaited Taylor Review, which seeks to weed out the challenges currently facing the labour market, was launched.

Its pages reveal seven recommendations, the first being the benefit of having the same “basic principles” scattered across the nation. The UK workforce requires “a distribution of rights and responsibilities, a baseline of protection and routes to enable career progression,” it said.

That “the best way to achieve better work is not national regulation but responsible corporate governance,” is another point the Taylor Review makes, alongside the need to offer contractors additional protections.

The issues it confronts go right to the heart of the government’s agenda and right to the heart of our values as a people,” prime minister Theresa May said at its launch. “Our motivations for going to work are deeply personal. It is how we provide for ourselves and our families.

“It’s how we keep a roof over our heads and provide for our old age. And as the Taylor Review suggests, ‘work is a pathway out of poverty’.”

But while it espouses the virtue of good health, better environments and an increasing quantity of jobs, do those in business feel it has hit its intended mark?

Seb Maley, CEO of Qdos Contractor

“The Taylor Review has made the case that over time there should be equal tax treatment of the self-employed and employed. It argues bosses should contribute to National Insurance Contributions (NIC) for their contractor workforce, as they would their employees as the government ‘loses out’ on £5.1bn a year from lower rates of NICs paid by the self-employed.

“The self-employed do not enjoy the same benefits as employees, so to call for a balanced taxation system seems shortsighted. And while it was suggested companies engaging with self-employed workers could perhaps make these NIC contributions, many contractors would feel as though an element of their independence was taken away.”

“The new-look government has an opportunity to rethink the support being offered to the UK’s 2m freelancers and contractors, who make up a large proportion of the UK’s 4.8m self-employed people. This should start with a change in attitudes towards the self-employed, some of whom have been unfairly tarnished as tax-avoiders.”

Julian Sansum, employment partner at PwC

“The Taylor Review could prove seminal for working practice and trends. While legislation may take time, it sets a clear direction of travel that policy makers cannot ignore. The new ‘dependent worker’ category will bring significant costs for gig platforms in particular, but employers which adopt the recommendations quickly are likely to see first mover advantage and reputational benefits.

“Zero hours contracts have been stigmatised but it’s positive Taylor recognises they have a place in the UK’s flexible job market, if protections are increased and employees are given the right to request fixed hours. Also of great interest are the proposals to apply a 20 per cent premium rate to the National Minimum Wage for those carrying out piece rate work. But this is an area that would require detailed consultation.

“It’s not just businesses engaging people in the gig economy that need to consider the changes this report brings. Any employer requiring a degree of flexibility within its workforce cannot ignore the recommendations. The UK’s entrepreneurial community and culture is a key strength and partly why the growth of our sharing economy has outpaced the rest of Europe.

“Striking the right balance between fostering greater productivity and employment options, with increased workers rights will be even more important as the UK looks to its future.”

Stuart Chamberlain, lead commentator for Wolters Kluwer Croner-i HR

“It was recognised that flexibility in the gig economy is one-sided, too much in the employer’s favour. The Taylor Review thus recommends the adoption of the term ‘dependant contractor’ for those who work in the space, with additional employment protections and stronger incentives for firms to treat them fairly.

“Hoping to push the government towards achieving ‘fair and decent work’, it calls for, as an example, the Low Pay Commission to examine how a higher National Minimum Wage rate might apply to non-guaranteed hours. But all in all, the Taylor Review is likely to come as a disappointment to those who hoped for more radical suggestions. It has already been labelled as ‘feeble’ by Thompsons, the trade union solicitors.

“It is wishy-washy on employment protection rights: there is a lot about ‘requesting’ and ‘receiving’ but little on ‘hard’ rights. It is also debateable whether the new employment status of dependant contractor is necessary. May has said the government will take the recommendations seriously. It remains to be seen whether this will happen.

“The PM is faced with parliamentary uncertainty and there must be a doubt whether her administration has the inclination, let alone the time to do much with these recommendations.”

Nicholas Le Riche, employment partner at Bircham Dyson Bell

“The Taylor Review wants to see a sharper definition between who can be classified as employed, self-employed and this new category with greater emphasis placed on the control rather than whether the work has to be done personally.

“The greater clarity it brings on the issue of worker status is to be welcomed although businesses will want to see greater detail on how Taylor’s proposals for a ‘fair rate’ of hourly pay will work in practice. It will be interesting to see whether the government acts on the report’s recommendation to ensure that dependent contractors are also seen to be employed for tax purposes.

“The review is being presented as one of the government’s key initiatives at the moment but given the current political climate these proposals may still struggle to make it into the statute book.”

Employers operating in the gig economy will view the Taylor Review as an attack against work structures, someone suggests on the next page

Beverley Sunderland, managing director at Crossland Employment Solicitors

“It recommends there should be a free initial assessment of employment status in the employment tribunal to try and cut down on costs and time wasted – and that harsher penalties be inflicted on employers who deny staff the proper status. This is a positive recommendation that reflects the practical reality of hundreds of workers in the gig economy who are integrated into businesses.

“It is an overall significant step in the right direction, addressing the fast-changing landscape of the modern labour market, while trying to find a balance between business and workers’ needs. However, creating a third type of employment category is likely to mean further litigation over who qualifies as a dependent contractor and what the difference is between that and a worker.

“Employers should now review their working arrangements with the self-employed against the new proposed definition for dependent workers to see if they fall within this new category of employment status. As and when legislation is passed to enact these changes, employers should issue new contracts to reflect this.”

Kate Smith, head of pensions at Aegon

“The world of work is changing at a rapid pace and the law needs to be refreshed to ensure that workers are treated fairly. A new balance must be struck to enable flexible working but not at the cost of the workplace protections and benefits most people view as essential.

“In the UK, pension provision is largely delivered through the workplace, via auto-enrolment, so the self-employed, including gig-economy workers are excluded. Giving contactors the rights to workplace benefits such as holiday pay and sick leave is a welcome move, but without the right to a workplace pension, which could turn out be the most valuable benefit of them all, is short-sighted.

“It’s possible there’s a perception that gig-economy workers are all in their 20s and have more pressing concerns than saving for a pension. However, as this form of flexible working becomes more accepted, it’s vital that a means of ensuring pension provision is not overlooked.

“A right to a valuable employer pension contribution should be carved in stone for those who want to start saving and this has the power to kick start savings habits.”

Kerstie Skeaping, employment partner and head of the commercial employment in Liverpool at Hill Dickinson

“Be under no illusions, employers operating in the gig-economy will view the Taylor Review as an attack against their work and reward structures. What is widely seen as false self-employment by outsiders and the Government, is viewed by many in the gig-economy as the future way of working.”

“The driving force for change appears to be increasing tax revenues. Firms will be liable to pay employer’s NI contributions in respect of their newly classified ‘dependant contractors’, which in reality will be most people working in the gig-economy.”

“The genuinely self-employed will undoubtedly be surprised by the shock recommendation that their work should in future be paid for via a digital platform, which will facilitate the automatic deduction of tax and NI contributions. It seems that paying your handyman, cleaner or gardener ‘cash in hand’ will soon become a thing of the past.”

Will Winch, lawyer at Mishcon de Reya Lawyer 

“Many individuals enter the gig economy willingly as a result of the flexibility it offers. A large proportion of the gig economy is made up of those in the creative industry, as well as project managers and administrative staff. They are often well paid. Others, though, struggle to earn the minimum wage through the work they do.

This is a nuanced area, and it would be difficult to make any sweeping changes that would benefit everyone: even if steps are taken to protect the most vulnerable, this may have a knock on effect on those who could lose the flexibility that they value so highly.

“The difference between ‘dependent contractors’ and the existing worker status is that the person supplying the labour may be entitled to offer someone else to do the work for them – this would have disqualified them from worker protection under the old rules. The Report calls on employers to provide workers with a statement on the first day of their employment which sets out their status and rights (extending the current requirement which only applies to employees).

“The extent to which the recommendations in the report will be implemented into statute remains to be seen. Before the election, it was likely to have formed the basis of legislation for years to come. However, given the reaction from Labour and the unions, it may only become a ‘best practice’ guide for employers in the gig economy.”