Matthew Taylor’s much anticipated review of Modern Working Practices was published today and there is a lot to digest. The wide-ranging recommendations encompass many aspects of the working relationship and, if put into practice, will herald the most ambitious overhaul of working conditions in recent times. It is now for the government to decide how to take forward the myriad recommendations – no mean feat with Brexit negotiations already in progress.
Click here to read a summary of the key recommendations to the government within the report.
Below we set out the view of two Osborne Clarke experts that are helping businesses prepare for the Future of Work.
Kevin Barrow, specialist in staffing/contingent workforce, comments:
Perhaps the most far-reaching proposal in the Taylor review is the idea that all payments to gig workers should be via platforms rather than in cash. To many, this may seem obvious and relatively non-revolutionary as we move to increasingly cashless economy. But as soon as payments are made via some sort of designated electronic platform, it becomes much easier for the tax authorities and others to monitor how much is paid to whom in any given period. HMRC has recently completed a consultation about potentially increasing its data gathering powers relating to payment intermediaries. Some would speculate that when HMRC gathers data it will start using it to assess people for tax, NICs and VAT, and to check compliance with the national minimum wage legislation (for which HMRC are the enforcement authority). I predict that an industry of (perhaps licensed) intermediaries will come into being who specialise in partnering with gig economy platforms to handle all payment, tax and compliance issues. It is even possible that the much-disparaged umbrella company industry will move into this space.
Another big question is whether the gig workers Matthew Taylor is trying to protect are already protected. If individuals fall within the definition of “dependent contractor” they should in most cases already be entitled to certain worker related rights. The current tests, determining whether someone has “worker” rights to minimum wage and paid holiday, relate to having a contract with someone to supply their work personally for a reward and not as part of a business they are conducting (which is probably the same as saying they are not “dependent”). Matthew Taylor’s report may therefore have the main immediate impact of alerting all to the likelihood that a number of gig workers already have rights to minimum pay and paid holiday, which may encourage some individuals to make claims when previously they would not have done.
Matthew Taylor appears to suggest that where relevant gig workers are paid by the task then they should be paid at least 120% of the national minimum wage for the time the task “should” have taken. How long a task should take will, he suggests, be based on how long the task would take to do if performed by an average person working averagely hard. Legislation about this could, in the longer run, have a more fundamental impact on working practices in the gig economy than the “dependent worker” suggestion. However, “average time to take” mechanism may be easier to apply in some industries than in others. For example, it will be interesting to see how in practice it will apply to one-off handymen or cleaning roles performed by some gig workers? And what about the difficult issue of whether a gig worker should be paid for waiting time, when they are simultaneously logged onto different apps while waiting: who should pay minimum wage for that? I think there could be quite a long period of further consultation necessary before this measure becomes law.
Julian Hemming, Partner and co-chair of Osborne Clarke’s international employment law group, comments:
As the Taylor report makes clear on page 39, one area of primary legislation that should be looked at is the right that employees have to a” written statement of their particulars of employment”, which must be given to them not later than two months after the beginning of their employment.
As the economy changes in the ways highlighted by the Report, this statutory requirement has remained largely unchanged since it was introduced in 1963. As the Taylor report suggests, there is a clear case now to revaluate the terms and conditions that must be given to employees and should be given to “dependent contractors” on day one. This could include a clear statement of the terms that apply to employees only and which do not apply to dependent contractors and the reasons why the business believes these differences should apply. This could require businesses to give thought to the status of the individual at the outset and also give the individual an opportunity to challenge why they are not getting the statutory terms that apply to employees.
The power that Employment Tribunals already have to determine particulars of employment could be extended to provide for 30 minute hearings by appointment to determine areas of dispute where the tribunals can substitute their own view (as they can already for employees). That coupled with the power to award compensation, as Taylor suggests, should give all parties the incentive not to miss the appointment. I have seen this kind of rapid hearing process work very successfully in Spain and it could be adapted to work here.
We are helping countless businesses to prepare for all of the issues discussed in this article through our Future of Work initiative (see more here). If you would like to discuss how we can help your business, please contact one of our experts below or your usual Osborne Clarke contact.