We reported on Matthew Taylor’s review of modern working practices last year. The Government has now published its full response to that report and has launched four consultations into the following areas:
- employment status;
- increasing transparency in the labour market;
- agency and atypical workers; and
- enforcement of employment rights.
The summary below sets out the key points arising from the Government’s response.
Employment status
Dealing with the thorny issue of employment status, the Government acknowledged that there is a lack of clarity in this area and invited views on how employment status may be defined in legislation. The Government also welcomed views on an alternative approach of assessing status by considering a number of factors including an individual’s length of engagement, the percentage of income derived from one employer and where the work is carried out. In its response, the Government also rejected the idea of a “dependent contractor” as another layer of employment status to sit among the current three-tier category of employee, worker and self-employed.
The Government confirmed it would launch an online tool to help assess employment status whilst acknowledging it was a complex area to pin down.
Increasing transparency in the labour market
The Government suggested in its response that it would extend the right to receive a section 1 statement of particulars to all workers and not just employees (as is currently the position under the Employment Rights Act 1996). It also confirmed that all workers, including casual and zero hours workers should receive itemised payslips to increase transparency.
Agency and atypical workers
In the context of atypical workers, the Government accepted criticisms in the Taylor Review that current legislation makes it difficult for atypical workers to establish continuity of service. Currently, any week not covered by a contract of employment may break continuity and the Taylor Review called for this period to be increased to a month. The Government confirmed it was committed to extending the current duration of a week but did not confirm by how much and invited views on this issue via consultation.
The Taylor Review criticised the “Swedish Derogation” model whereby agency workers’ contracts provide for a minimum level of pay in between assignments to ensure they are excluded from asserting equal pay rights with permanent employees after 12 weeks. The Government confirmed it would like to assess the extent of this abuse and if widespread, it may consider repealing the Swedish derogation model.
Enforcement
The Government consultation seeks views on a range of measures designed to toughen up on employers with poor employment practices. It confirmed it was aware that some employers regularly do not pay holiday pay or statutory sick pay and committed to assessing the scale of non-compliance with a view to creating an effective enforcement strategy.
The Government also accepted one of the Taylor Review’s recommendations that tougher action was required against employers who repeatedly refused to change employment practices even after receiving an adverse tribunal judgment. The Government confirmed it would consider increasing the maximum penalty for such “repeat offenders” from £5,000 to £20,000. It is unclear what breaches may attract the penalty. For example, if an employer refuses to change its employment contracts despite being the trigger for a previous adverse tribunal judgment, could this attract a maximum fine of £20,000? We will have to wait and see.
The Government also accepted one of the Taylor Review’s recommendations that employers should be named and shamed if they fail to pay a tribunal award.
What happens next?
The consultations close on various dates in May and June and depending on the outcomes, the Government may move to tackle some of the more “quick fixes” first, such as extending the right to receive a statement of particulars to all workers and naming and shaming employers who fail to pay tribunal awards. Trying to pin down a test for employment status will clearly require more time and consideration as amalgamating the current case law principles into legislation whilst still seeking to achieve flexibility will be a difficult task. Watch this space.