Andrew Tobey
Posted on 19 Feb 2018

Government publishes response to the Taylor Review of Modern Working Practices

On 7 February 2018, the Government published the 'Good Work Plan', its response to the Taylor Review of Modern Working Practices (the Taylor Review').

The Taylor Review, published in July 2017, investigated the impact of modern working practices in the UK. Although the Taylor Review found that the UK's labour market was built on flexibility, it argued for a clearer focus on quality of work. It made a number of recommendations relating to improving working life for casual workers, including:

  • renaming the employment status of 'worker' to 'dependent contractor' to create a clearer distinction between 'dependent contractor' status and genuine self-employment, to ensure that those that need workers' rights (such as holiday pay and sick pay) receive them;
  • additional protections for 'dependent contractors';
  • creating new ways for people to enhance their skills and future work prospects;
  • encouraging businesses to take a more proactive approach to workplace health; and
  • encouraging the Government to promote strategies to engage key stakeholders to ensure people are not 'stuck' on national minimum wage.

In response to the Taylor Review's recommendations, the Good Work Plan sets out a series of proposals, such as:

  • accepting that the State should take responsibility for enforcing employment rights for vulnerable workers, including holiday and sick pay;
  • introducing a more robust process for enforcing Employment Tribunal ('ET') awards by introducing a new 'naming and shaming' scheme for unpaid ET awards and quadrupling ET fines to up to £20,000;
  • introducing a right for workers to request a more 'predictable and stable' contract. The Government has not defined what is considered a 'predictable and stable' contract, though the Taylor Review did suggest that zero-hours workers should be entitled to request a contract with guaranteed hours after a qualifying period;
  • asking the Low Pay Commission to consider the impact of higher minimum wage rates for hours that are not guaranteed (i.e. zero-hours contracts); and
  • considering the options for reforming the 'tests' for establishing employment status, which the Government claims would represent 'the single largest shift in employment status since the Employment Rights Act 1996'. In particular, the Government proposes to develop a test for the 'dependent contractor' status and offer increased protection to 'dependent contractors' by extending them the right to a written statement of particulars (in addition to their already established rights to holiday and sick pay).

It is interesting to note that the Government has explicitly rejected a 'worker by default' presumption until a decision on the new employment status test is made. Such a presumption would have shifted the burden of proof from the employee to the employer to show that the individual was not a 'worker' where employment status was in dispute.

Although the Government claims to have acted on 'all but one' of the Taylor Review's 50+ recommendations, the four consultations published in conjunction with the Good Work Plan focus on gaining input on the detail and implications of any potential changes, as opposed to pledging specific changes to legislation. The consultations relate to employment status, enforcement of employment rights, agency workers and measures to increase transparency in the UK labour market. The deadlines for the consultation papers are dispersed throughout May – June 2018.

The Government's response has attracted both praise and criticisms from stakeholders. The Director of the Living Wage Foundation commented that the Government's announcement was a 'step in the right direction for gig economy workers who will benefit from more secure and stable employment.' However, the TUC's General Secretary commented that:

"The Government had taken a baby step when it needed to take a giant leap. These plans won't stop the hire and fire culture of zero-hours contracts or shame self-employment. And they will still leave 1.8m workers excluded from key protections."

For further information please contact Andrew Tobey, Head of the Employment Law team at Michelmores.