UK: Work, Work, Work, Workers Rights Bolstered By The Taylor Review?

Last Updated: 10 August 2017
Article by Deborah Miller

Those who have read our recent blogs will be aware that the development of the 'gig-economy' in the UK has had a direct impact on employment law and the status of those working within it. These developments have been a focus of recent Employment Appeal Tribunal and Court of Appeal decisions where the courts have been willing to look behind the terms of the contract to the actual working relationship established in practice with the decisions impacting on well-known brands such as Deliveroo, Uber and CitySprint.

As a result of this development, the Government announced the Taylor Review to focus on modern employment practices and tackle the perceived one sided flexibility in the current gig-economy where employers seek to transfer all risk onto workers. The Review published its recommendations earlier in July with much focus being placed on the classification of employment status. Currently, an individual's employment status (employee, worker or self-employed) will be determined by looking at personal service, control, mutual obligation between the employer and individual and whether the individual is carrying on a business undertaking. The Taylor Review recommends that these determining factors should be enshrined in legislation, with further detail and guidance provided through secondary legislation to allow the law to remain reactive to changing conditions.

Although, the Review found the intermediate status of 'worker' beneficial in providing basic protections to those in less formal working relationships it recommended that this status should be renamed "dependent contractor". This change will arguably ensure that more emphasis is be placed on the level of control between the employer and the individual rather than the requirement for personal service. The Review believes this altered focus will lead to more people being protected by current employment law rights and make it harder for employers to hide behind well drafted "substitution clauses" in contracts.

However, the Review remained active to the fact that imposing too many rights could prevent genuine two way flexibility occurring within the gig economy where an estimated 1.1 million workers provide their services through the use of apps. In order to protect employers, the Review confirmed that the definition of 'working time' for the purposes of National Minimum Wage (NMW) would have to be adapted to prevent individuals logging onto an app and being paid NMW for each hour logged on when no work is available.

Other significant recommendations for improving the rights of individuals in the gig economy include:

  • Aligning the definition of self-employed between employment law and tax law. If an individual is treated as being a dependent contractor then they are treated as an employee for tax purposes.
  • Dependent contractors should be provided with the right to a written statement of terms as well as the right to compensation from employers who fail to comply with this obligation.
  • Considering the impact of bringing in a higher NMW for hours that are not guaranteed under a contract. This would mean businesses could still utilise zero hours or short hours contracts but would have to pay more for the workers' flexibility.
  • Increase the pay reference period for calculating holiday pay from 12 weeks to 52 weeks, to improve access to this right for seasonal, casual or zero hours workers.
  • Allow holiday pay to be paid on a rolled up basis, allowing individuals to receive their pay instead of paid time off.
  • Zero-hours and agency workers should be provided with the opportunity to regularise their earnings by requesting a move to fixed hours or fixed employment after 12 months with an employer, who in turn should be obliged to consider any such request "reasonably".
  • Statutory Sick Pay (SSP) should become a basic employment right, comparable with NMW. However, the right should be accrued based on length of service to protect employers from paying SSP for employees employed for a short time.
  • Provide HMRC with enforcement powers in respect of sick pay and holiday pay on top of the NMW powers already bestowed.
  • The burden of proof of establishing employment status before an Employment Tribunal should be placed on employers.
  • Employers who do not pay tribunal awards within a reasonable time should be named and shamed.

Despite these recommendations, the Review has been criticised for being feeble with Labour's shadow business secretary, Rebecca Long-Bailey, arguing it does not go far enough to help the 4.5 million people in insecure work. However, Theresa May has stated the Government will be taking the Report's recommendations seriously and so it is important that employers understand the risks and opportunities of the recommendations proposed.

This article was co-written by Ruth Moffett.


The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.

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