July 17, 2017
The much anticipated Taylor review into modern working practices was published on 11 July 2017 and could pave the way for a significant shake up of the UK employment market. Chaired by Matthew Taylor, a former policy chief in the Blair administration, the ‘Good Work’ report (as it has been named) is a thorough and sensible analysis of what does and doesn’t work within UK employment law. Most importantly, it makes a wide range of pragmatic suggestions clearly aimed at balancing the often conflicting interests of labour resource and business.
If the proposals are adopted, it could represent a substantial change to the way employment works in the UK – and one that will have a huge impact for media and technology companies.
Some commentators and unions have claimed the report “spectacularly failed to deliver “. And yes Taylor, could have gone further. But in 2017, with an economy arguably not as stable as is often made out, and with the need to remain competitive internationally more prevalent than ever given Brexit, the report is refreshing and honest.
Another type of employment status…
The main headlines surrounding the report’s publication focused on its aim to try and give greater clarity to the issue of employment and worker status. Always a topical issue, particularly with the recent scrutiny targeted at the so-called ‘gig economy’.
Taylor proposes to address this issue by replacing the current status of ‘worker’ with that of ‘dependent contractor’. In short:
- same rights – such individuals would have the same rights as ‘workers’ (minimum wage, holiday pay, pension contributions etc.) but the category would be considerably widened;
- no personal service – most significantly, the requirement for dependent contractors to perform their services personally would be removed (so arguments about whether a substitution clause is effective or whether the right actually applies in practice would go right out the window);
- focus on ‘control’ – instead, we’d have a new simpler definition which reflected the current case law principles. The focus would be on ‘control’ with the recommendation that the legislation outlines exactly what this means in the modern labour market rather than simple concepts like day to day supervision;
- more protected – the expectation is that more people would qualify as a dependent contractor than currently are classed as a worker.
This could be a significant change that will impact both media and technology businesses. However, provided there’s more certainty and it doesn’t obstruct the development of new innovative and flexible working arrangements, it’s unlikely to be too unpopular even if more people start to be entitled to basic employment rights.
Media and Tech insight
We’ve analysed the report and have summarised the key things media and technology businesses need to be aware of. Please click the below links for our views targeted at each of these respective industries:
The Taylor report spanned 116 pages and made many more suggestions. Here are some other notable highlights:
- zero hours – the government should increase the minimum wage for hours that are not guaranteed by the employer. This would make zero-hours working more lucrative but potentially much less popular or affordable for seasonal businesses;
- gap in employment – continuity of employment should continue where a gap in employment is less than a month, as opposed to the week which is the current position. This could have a significant impact on the ability of companies to avoid unfair dismissal risks in cases where there are short term breaks in employment;
- tribunal fees – claimants should be allowed to bring a claim to a tribunal to determine their employment status for free without paying a fee and in such cases the burden would be on the employer to show the individual isn’t (or wasn’t) an employee or worker. This has the potential to considerably increase the number of employment disputes.
There’s clearly quite a lot to digest here. With the current political climate, it’s of course possible that none of these proposed changes will make their way onto the statute book. However, with all three of the main political parties advocating for enhanced employment rights at the recent election, it seems inevitable that a shake up is on the way in some form. And given there is unlikely to be another report commissioned any time soon with the scope given to Taylor, it’s likely that these recommendations will at the very least form the foundation of future developments in this area.
We plan to touch on the proposed changes in more detail at an upcoming breakfast briefing and would be happy to answer any questions you may have in the meantime.
Employment status has become an extremely topical issue for tech businesses over the last year or so with high profile employment tribunal decisions scrutinising the operating models of the likes of Tech giants Uber and CitySprint. New staffing methods are being developed by the day (we’ve seen this first hand in our work with the UK start-up community) and the current law simply doesn’t cater for the innovations which the country is naturally keen to promote.
The Taylor report suggests that most individuals working in such a way within the gig economy will have the status of a dependent contractor. If dependent contractors get the minimum wage, is there a risk that these new, innovative business models won’t be affordable? This is a genuine concern that was neatly highlighted in the recent Uber tribunal decision which took an odd approach to determining when a driver is contractually obliged to work – one we felt at the time was wrong.
Thankfully, Taylor has proposed a common sense solution to this:
- peak times – dependent contractors who are allocated work via an app would be entitled to the minimum wage at peak hours (which are the hours when demand has meant that workers often receive on average less than minimum pay);
- quiet times – However, the same level of pay would not be required during times when there is no or limited work available. This would avoid the absurd situation of having to pay an individual the minimum wage simply because they have turned their app on in the middle of the night when jobs are harder to come by.
A sensible compromise and perhaps not the nightmare for tech firms that many were anticipating.
Media businesses, particularly those involved in TV and Film production, will be pleased with one of Taylor’s much less publicised proposals – the suggestion that rolled up holiday pay be permitted.
Holiday pay has been an issue for some time within the production sector, as the law simply doesn’t (and wasn’t designed to) work well within the industry. The problem has been that most direct hire crew or talent will have the status of a worker and therefore be entitled to paid holiday. Yet they work in a field where no one generally takes any holiday during a production.
The simple solution to this dilemma would be to pay each crew member their holiday along with their weekly fee. This is what’s known as rolled up holiday, and has been unlawful since a string of cases in the early 2000s. Productions have therefore been faced with the much trickier task of withholding holiday pay from fees and then paying this out as a lump sum at the end of the engagement. The cost is the same and the crew member isn’t short changed, but it has often led to difficult discussions with crew who, for cash flow reasons, would typically prefer to get all their pay as they earn it.
The Taylor report proposes to reverse this position and suggests that dependent contractors should be given the choice to be paid their holiday rolled up with their normal pay. If enacted, this change would massively simplify how holiday is dealt with for crew and talent as it is likely most would opt to have their holiday pay rolled up.
Such a change won’t be easy though, as it is European case law which has held the practice unlawful on the basis it discourages individuals from taking their holiday. Maybe Brexit could be the answer here?
If the proposal regarding rolled up holiday represents some good news for media businesses, unfortunately there is some bad news to go with it. Another of Taylor’s suggestions is that workers (or dependent contractors if that term is adopted) should automatically be regarded as employed for tax purposes. While this would give certainty, it could have drastic consequences for Film and TV productions which have long relied on HMRC guidance permitting the treatment of most crew as ‘Schedule D’ or self-employed.
This proposal would presumably change all that, with the cost of affected crew effectively increasing by 13.8% (the rate of employers national insurance contributions). We’ll be keeping an eye on this one and will report more when we hear anything.