Taylor Review prompts gig economy reform package

The government has unveiled what it is calling ‘the biggest package of workplace reforms for over twenty years’ but has stopped short of banning zero hours contracts or developing a new approach to the payment and taxation of gig economy workers

The new legislation forms the government’s response to the Matthew Taylor review of modern working practices, carried out in 2017. It will close a loophole by repealing the Swedish derogation - which currently allows agency workers to be employed on cheaper rates than permanent counterparts.

It extends the right to a day one written statement of rights to workers, going further to include detail on rights such as eligibility for sick leave and pay and details of other types of paid leave, such as maternity and paternity leave.

The new laws will quadruple maximum employment tribunal fines for employers who are demonstrated to have shown malice, spite or gross oversight from £5,000 to £20,000.

The legislation also extends the holiday pay reference period from 12 to 52 weeks, ensuring those in seasonal or atypical roles get the paid time off they are entitled to, and lowers the threshold required for a request to set up information and consultation arrangements from 10% to 2%.

While the package takes forward 51 of the 53 recommendations made by Taylor in his review, it does not address issues raised around the use of zero hours contracts or the operation of the gig economy and the use of online platforms to source work.

In its announcement, the Department for Business, Enterprise and Industrial Strategy (BEIS) stated: ‘The government is also committing to legislate to improve the clarity of the employment status tests to reflect the reality of the modern working relationships.’

In addition, the government has published the Low Pay Commission’s letter on potential options to address the issue of ‘one-sided flexibility’, which the Taylor review described as the issue where some businesses have transferred too much business risk to the individual.

BEIS said the reforms reflected the review’s views that banning zero hours contracts in their totality would negatively impact more people than it helped, and that the flexibility of ‘gig working’ is not incompatible with ensuring atypical workers have access to employment and social security protections.

It also said the review suggested platform-based working offers welcome opportunities for genuine two way flexibility and can provide opportunities for those who may not be able to work in more conventional ways.

The reforms include changes made in response to the labour market strategy review carried out by Sir David Metcalf, the director of labour market enforcement, designed to tackle exploitation of low paid workers.

These including bringing forward proposals in early 2019 for a single enforcement body to ensure vulnerable workers are better protected; more resource for the Employment Agency Standards (EAS) Inspectorate; creating new powers to impose penalties for employers who breach employment agency legislation like non-payment of wages; consulting on salaried hours work and salary sacrifice schemes to ensure national minimum wage (NMW) rules do not inadvertently penalise employers; bringing forward legislation to enforce holiday pay for vulnerable workers; and consulting on the recommendations on non-compliance in supply chains.

Andy Chamberlain, IPSE’s Deputy Policy Director, expressed cautious support of the reforms, saying: ‘IPSE is cautiously supportive of these proposals, which appear to preserve the flexibility people crave and do not snuff out the entrepreneurial spirit of people who want to strike-out on their own.

‘We are glad the message appears to be getting through that for most people, gig work is good work. The overwhelming majority of people actively choose to be self-employed because they value the flexibility of being their own boss.

‘We are glad the government has listened to IPSE and have signalled they will introduce legislation to simplify employment status. The devil, of course, will be in the detail, and the government must ensure it does not legislate people out of self-employment against their will.  

‘IPSE will strongly resist any attempt to push all gig workers into the worker category, as this deprives people of the flexibility of being their own boss. IPSE also does not want the government to align tax and employment tests, especially if it turns out to be a tax grab dressed up as giving people more rights they do not necessarily want.’

The Good Work Plan is here

Report by Pat Sweet

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