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An employer’s guide to the Taylor Review

July 13, 2017 9:19am All News Stories  Employment Law News  vector antique scales of justice

The eagerly-awaited Taylor Review of Modern Working Practices has now been published, touching on a wide range of areas of employment law.

In this 116 page government-commission review, the following recommendations are made.

Employment Status

The review argues that the government should keep the distinction between employees, workers and self-employed, but it should rename the category of people who are eligible for worker’s rights but who are not employees as ‘dependent contractors’.

Employment status is important because each status dictates the individual’s rights and employer’s obligations. Employees have extensive rights, including maternity leave, unfair dismissal or redundancy pay, whereas workers have access to certain rights, such as the right to holiday pay and the right to be paid the National Minimum Wage. Those who are self-employed do not have any real significant employment law rights or protections.

Tests to determine status

As legislation is so minimal, the courts focused on certain factors, such as level of control, mutuality of obligations, personal service, integration, financial risks, equipment and remuneration to determine a person’s employment status. However, it is still difficult for individuals and employers to ascertain a person’s employment status and what rights they are entitled to.

The Review suggests that the government should provide a clearer outline of what the tests entail. The key principles should be laid down in primary legislation and supported with secondary legislation or guidance.

When developing the tests for the “dependent contractor” status, more emphasis should be put on “control” and less on the “requirement to work personally”. They argue that this approach will lead to more people being covered by employment law.

Terms and conditions

At present, employers are required to provide each employee whose employment is to continue for more than one month with a ‘statement of written particulars of employment’. This must be done within two months of the employee starting employment.

The review proposes that the government should extend the right to a written statement to ‘dependent contractors’ as well as employees. This should be given on day one and include the rights they are entitled to.

They also state there should be a right to submit a claim for compensation if the employer does not provide a written statement.

Status for tax and employment law purposes

Both Employment Tribunals and HMRC can make decisions about employment status, but they can reach different conclusions. Therefore, a person may be classified as one thing for tax purposes and another for the purpose of key employment law rights.

The Review suggests that the government could ensure that where someone is deemed an “employee” for tax purposes, that decision is also binding for employment law purposes.

Holiday pay

If your employees’ hours differ from week to week, holiday pay is calculated on the average pay the employee earned in the past 12 weeks. The review suggests that this should be extended to 52 weeks.

It also says that individuals should be given the choice of whether they receive “rolled up holiday pay”. This involves not paying holiday pay while the employee is on leave, but paying the employee an extra amount during the weeks that the employee works.

Zero hours contracts

Zero hours contracts remain controversial because they do not offer guaranteed hours, therefore there is no real job security or fixed income for workers. There have been calls for zero-hours contracts to be banned, but the review has suggested that the government should ask the Low Pay Commission to advise on the effect of introducing a higher national minimum wage for those hours that are not guaranteed in the contract.

It suggest that individuals on these contracts should have the right to request guaranteed hours after they have been in the role for 12 months.

Continuity of service

The nature of zero hours contracts may mean that there are breaks in their contract, which can affect the rights they accrue over time. For some rights, the employee must have worked for you for a specific length of time and for others it is a right from day one. At present if there is a gap of a week between assignments, continuity is broken. The review suggests increasing this to a month.

Agency workers

In this area, the review says that agency workers should have the right to request a direct contract with the hirer after 12 months. These requests must be considered in a reasonable manner.

It also takes aim at the pay of agency workers. Presently, the law gives agency workers who have been doing the same job for the same hirer for 12 weeks equal terms and conditions to a comparable employee. This covers basic pay, annual leave, duration of working time and rest breaks. However the law does also allow agency workers to opt out of equal pay if they sign a contract which provides pay between assignments. The review says this should be prohibited.

Interns

The Government should ensure that exploitative unpaid internships are eradicated. They suggest that steps are taken to clarify the interpretation of the law.

Sick pay

At present, if the employee meets the eligible requirements, Statutory Sick Pay (SSP) will be paid by the employer from the 4th day of absence for up to 28 weeks. The review suggests that SSP should be a basic employment right which is comparable to the National Minimum Wage. It should be available to all workers from their first day of employment and be accrued like holiday pay.

It also sets out that individuals who are returning to work after a long period of sick leave should have the right to return to the same or similar job as long as they have engaged with the Fit for Work Service.

Transparency

The review also urges the government to introduce new obligation on employers of a certain size to publicly report their model of employment, how many requests they have received from zero hours workers asking for fixed hours after a certain amount of time and the number of requests from agency workers for permanent positions from the hirer after a particular time period.

Employment Tribunals

The review states that individuals should be able to work out their employment status without having to pay a fee. They want to shift the burden of proof from the employee to the employer. This means it would be the employer who must demonstrate that a particular employment relationship does not exist.

They also want the government to ramp up the punishment for those employers who are breaking the law. They think those employers who are not paying Employment Tribunal awards within a reasonable time period should be named and shamed and aggravated breach penalties and costs orders should be imposed on those employers who have previously lost a similar case about employment status.

Comment

This is not an exhaustive list, but highlights the main recommendations made. Given the result of the Election and Brexit, it will be interesting to see whether these recommendations start to collect dust or are given proper consideration later in the year.