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Taylor report on employment practices published

Employment Law & HR
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The long-awaited Taylor report into employment practices has been published, setting out a wide range of proposals for reform. The review was launched in 2016 and headed by Matthew Taylor, Chief Executive of the Royal Society of Arts. Mr Taylor was tasked with evaluating working practices in the UK over the past 20 to 30 years, and reporting on areas for reform. It was expected that a primary focus of the report would be the effect of the emerging “gig economy” on workers’ rights. 

The report sets out a plethora of suggestions for reform, from employment status to tax reform, and it is expected that the government will launch a consultation on the proposals later this year. However, it remains to be seen whether any of them will make it on to the statue book, particularly given that the legislative timetable will be dominated by Brexit-related issues in the next few years. The key findings of the report are as follows.


Employment status

  • Some of the principles that have emerged in recent case law should be enshrined in law, such as removing the need for a worker to demonstrate “personal service” and placing more emphasis on examining the control an employer has over a worker.
  • Retain the distinction between “workers” and “employees” should remain, but create a third category, to be known as “dependent contractors” to bridge the gap between the two.
  • The government should create a free online tool to help individuals assess their employment status (there is currently a tool which assesses status for tax purposes, which is a different assessment).
  • The definitions of “employee” and “worker” should be harmonised for employment law and tax law purposes.
  • Workers and “dependent contractors” should have the right to a written statement of terms, mirroring the current right of employees under s1 of the Employment Rights Act.


Gig economy and zero-hours contracts

  • Amend the law on the National Minimum Wage to make it clear that gig-economy workers allocated for through an app are undertaking a form of output work and will not have to be paid NMW for each hour logged on when there is no work available.
  • Consider increasing the rate of the National Minimum Wage for hours that are not guaranteed by the employer and give those on zero-hours contracts the right to request guaranteed hours after 12 months.
  • Preserve continuity of employment where any gap in employment is less than one month, rather than one week.
  • Require larger employers to report on their overall workforce structure - including requests from zero-hours workers for regular hours.


Holiday pay

  • Increase the reference period for calculating holiday pay (where pay is variable) from 12 weeks to 52 weeks.
  • Allow holiday pay to be paid on a 'rolled up basis'.


Agency workers

  • Improve the information to be given to agency workers.
  • Give agency workers the right to request a direct contract with the end user after 12 months on an assignment.
  • Abolish the 'Swedish Derogation' which allows agencies to avoid matching end user pay by employing agency workers in a way that allows for pay between assignments.


Enforcing employment rights

  • Introduce a fast-track tribunal system for dealing with disputes over employment status and reverse the burden of proof, so that it is for the employer to prove that the individual has a particular status.
  • Give the HMRC power to enforce basic rights in relation to pay.
  • Give BEIS the power to pursue the enforcement of Tribunal awards, i.e. pursuing the actual award, not just imposing a penalty for non-compliance.
  • Allow tribunals to impose aggravated penalties on an employer who does not apply an ET ruling on employment status to similar groups of workers.
  • Allow uplifts in compensation where an employer commits subsequent breaches of employment law based on similar working arrangements to those already dealt with by ET.
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