After a long wait, the Taylor review of employment practices is now out. Its recommendations around employment rights could well shape government policy – and affect businesses and their employment strategies – in the months and years ahead.
AccountingWEB will look at the report from all sides in the coming days, but for starters, Christian Annesley rounds up the main points – and the initial reaction.
Matthew Taylor’s independent review of modern working practices was published yesterday and has drawn comment from business and trade-union groups, as well as many other interested parties.
Taylor, chief executive of the Royal Society of Arts, headed a four-strong review team charged with looking at the fairness and decency of working practices in the UK economy, including routes for individuals to progress in work and earn more, and for workers to be treated with respect and decency.
The review also focused on the pace of change in the modern economy, and particularly how technology and tech platforms have enabled the rise of the gig economy (see our recent analysis).
The review asked (and answered with a cautious ‘yes’): does the development of tech-enabled new business models mean the UK needs an updated approach to work and working practices?
What’s in it?
The review calls for ‘fair and decent’ working practices, built around a national strategy for work that’s explicitly directed toward the goal of “good work for all”.
It argues that the same basic principles should apply to all forms of employment in the UK economy – with a fair balance of rights and responsibilities that offer baseline protection for workers.
In relation to platform-based working (the Ubers and Deliveroos of this world that facilitate exchanges between two or more groups, usually consumers and producers), the report says genuine two-way flexibility for all parties is beneficial for those who may not be able to work in more conventional ways.
"These should be protected while ensuring fairness for those who work through these platforms and those who compete with them,” it argues – and pushes for a new status of “dependent contractor” that distinguishes some workers from those who are legitimately self-employed.
The review also emphasises that business should step up – and regulation is not the answer to everything. “The best way to achieve better work is not national regulation,” says the report, “but responsible corporate governance, good management and strong employment relations within an organisation.
"[It] is important that companies are seen to take good work seriously and are open about their practices and that all workers are able to be engaged and heard.”
Business and trade union groups were quick to offer their opinion on the report:
|Snap verdict – the think-tank|
Mark Littlewood, director general at the Institute of Economic Affairs, was negative about the thrust of the review.
“Taylor’s recommendations are likely to achieve little to reduce in-work poverty while increasing costs,” he argues.
“These costs will be passed to consumers in higher prices for taxi rides and home deliveries, and to workers in terms of reduced net pay and fewer, and less varied, employment opportunities. The gig economy empowers consumers over businesses, and these new recommendations could overturn this balance.”
Littlewood says that as the gig economy has blurred the old regulatory distinction between employment and self-employment, “politicians and their paid advisers have naturally concluded that we therefore need yet more regulation.
“Sooner or later another innovation will come along to allow the sellers and buyers of labour to escape these new regulations. And then yet more regulation will be called for. Rather than playing this economically costly and ultimately futile game of cat and mouse, politicians should use the emerging gig economy as an opportunity to liberalise labour law.”
Julia Kermode, chief executive of the Freelancer & Contractor Services Association, was more positive in her response, welcoming Taylor’s move for greater transparency on umbrella pay along with plans to police umbrella firms to raise standards.
Kermode said: “At the launch event this morning, it was pleasing to hear the prime minister acknowledging that the flexibility and responsiveness of the UK workforce is a key strength. This bodes well as we prepare to leave Europe and will need to rely on the skills of the flexible workforce to help us through this uncertain period.
“I am pleased that the review has concluded that more should be done on transparency of pay, something that I and FCSA have campaigned for tirelessly in recent years,” said Kermode.
Kermode added that the proposal for greater clarity regarding worker status branding such workers “dependent contractors” made sense in theory because current legislation is complex.
“Taylor’s review recommends that control should play a greater role in determining status and we are pleased to hear that HMRC’s frequently used mantra of “supervision, direction or control” is not going to be used as a measure to determine status,” she said. “Any such new legislation should be subject to public consultation, and care will need to be taken to ensure that it truly does deliver simplification without unintended consequences. As the PM said this morning ‘good work is in the interests of good business and the economy as a whole’.
Kermode added: “The proposed online tool for determining employment status could be positive, but our recent experience of the IR35 tool has not been good so I do not have any confidence in the ability to develop something suitable that truly works as it should.”
The Federation of Small Businesses (FSB) gave the report a cautious thumbs-up.
FSB national chairman Mike Cherry said: “We welcome having a set of proposals on the table which attempt to strike a balance between fairness and a flexible labour market. The new ‘dependent contractor’ status, if done right, should bring protections to those unfairly treated in the gig economy, while also protecting the genuinely self–employed.”
The FSB said it was positive that the review promotes self-employment as a career choice.
“It’s right that skills, productivity, savings and the cost of employment are highlighted as key issues for the government to address. Collective action and collaboration can play an important role in this.
“However, the tax system must continue to recognise the risk and insecurity faced daily by the genuinely self-employed – this is right in principle. Ministers must make no attempt to single out them out for tax hikes.”
The TUC argued that the report is not the ‘game-changer’ gig economy workers need.
General secretary Frances O'Grady said: “I worry that many gig economy employers will be breathing a sigh of relief this morning, as the report is not the game-changer needed to end insecurity and exploitation at work.”
O’Grady said the report would not shift the balance of power in the modern workplace.
“There’s nothing on concrete plans to ban the zero hours contract abuse that is growing so quickly in UK workplaces. A ‘right to request’ guaranteed hours from an exploitative boss is no right at all for many workers – especially when they’d still have to fork out £1,200 up front before they could take a case to tribunal.
“And we’re particularly concerned these proposals might even weaken gig workers’ rights. Introducing a new category of “dependent contractor” looks like caving in to special pleading from app-based companies, which are claiming that they cannot pay the minimum wage like any other employer.”
In response to the report Dave Chaplin, founder and CEO of ContractorCalculator, a website for contractors and freelancers, warned that clarifying employment laws to distinguish workers (or "dependent contractors") from the genuinely self-employed would be a particularly complex task for the government.
“The Taylor review has faced some crucial challenges, particularly regarding the rights of lower-paid vulnerable workers, and I welcome better legislation around providing protection to workers who are forced into self-employment when they should be classed as workers and have rights, said Chaplin.
“One of the inherent challenges with employment status case law is that the layman, without an understanding of the case law, assumes the laws align with the common sense view of what it means to be employed – but this is far from the truth of the complexities involved. The stark reality is that anyone calling for “a simple test of employment or worker" is akin to calls to find the Holy Grail. If it was that easy it would have been done decades ago.”
Chaplin said it was now “vitally important” to distinguish between low-skilled, low-paid workers in the gig economy, who are vulnerable to exploitation, and highly skilled, well-remunerated contracting professionals who have actively chosen to freelance over salaried employment.
“We know from research we conducted last year that 80% of self-employed high-end professionals do not want rights or benefits so we do not need any more onerous legislation that reduces the flexibility of the whole market simply to protect one sub-section. The inequality comes in the bargaining power that up until now has been cleverly exploited by platform-based companies to advance gig-working arrangements. Unlike conventional employers, these companies do not pay their workers for any intervals between jobs which enable them to circumvent employment law which benefits the companies who then avoid paying for standby time between jobs.”