Taylor Review calls for new ‘dependent contractor’ status

Posted on Jul 11th, 2017 | Employment law

The Taylor Review – the long-awaited review into modern employment by Matthew Taylor, chief executive of the RSA, was published today, with the so-called gig economy taking centre stage.

The review, officially titled Good Work: The Taylor Review of Modern Working Practices, was commissioned in October 2016 by Theresa May in response to growing concerns over the low pay and lack of rights experienced by people working in the sector.

The review also comes hot on the heels of our work with the RSA – the Entrepreneurial Audit proposed 20 policy ideas to strengthen self-employment in the UK.

Quality of work

In his review, Taylor calls on the government to improve the quality of work experienced by the estimated 1.1 million people that make up the gig economy workforce for firms such as Uber and Deliveroo. He also highlighted the need to ensure “all work is fair and decent with realistic scope for development and fulfilment”.

Dependent contractor status

A common criticism of the gig economy is that large corporations reap all the benefits, while the workers shoulder most of the risk. Companies operating in the gig economy are under no obligation to provide work, and when they do it’s the worker who needs to provide their own tools and ensure they’ve adequate business insurance. And if they’re injured or fall ill and are unable to work, it’s highly unlikely they’ll get any financial assistance from the firm providing the work.

The Taylor review calls for a fairer relationship between the worker and the firm. One of the recommendations is to rename the current classification of ‘worker’ to ‘dependant contractor’ and make it easier to distinguish this group from the genuinely self-employed. Crucially, dependent contractors would be entitled to worker’s rights – including sick pay and holiday entitlement.

The review suggests “the status of ‘dependent contractor’ should have a clearer definition which better reflects the reality of modern working arrangements, properly capturing those more casual employment relationships that are on the increase today – an individual who is not an employee, but neither are they genuinely self-employed.

Minimum wage

Taylor also advises that companies should be able indicate their workers are able to earn the National Minimum Wage. He recommends that, using their data, companies need to demonstrate “an average individual, working averagely hard, successfully clears the National Minimum Wage with a 20% margin of error.” The National Minimum Wage currently sits at £7.20 per hour.

The review also suggests workers should be able to get a real-time view of their earning potential. If, during times of low demand, this figure is lower than the national living wage, it would be up to the worker whether or not to accept jobs. However, if they accept, they won’t be able to take action against the company for not paying minimum wage.

Reaction to the Taylor Review

So far, reaction to the review has been mixed. Commenting on leaked details of the review earlier in the week, Tim Roache, GMB General Secretary, said:

“If the Taylor review does indeed call for a radical overhaul of employment law, the recommendations that are leaking out seem to miss the point. What we’ve seen so far is tinkering around the edges and creating more loopholes employers will inevitably exploit. Current employment laws and our tax and national insurance structures are sufficient – the issue has been one of enforcement, or lack of it.”

Also speaking ahead of the review’s official publication, Neil Carberry, CBI Managing Director for People and Infrastructure, said:

“It’s absolutely right to focus on what makes for good work, and firms of all shapes and sizes will find much to agree with in the 7 principles of decency and fairness. The key now is to find practical ways to deliver both fairness and flexibility, with a focus on employee relations, not just legal reform.”

What’s next?

The Taylor review simply presents recommendations – it’s up to the government to decide whether to act on them. And without a Commons majority, Theresa May will be well aware that getting new legislation passed will likely require cross-party support and won’t be easy.

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