Posted by Ben Lees, Partner
A brave new world for workers’ rights, or a missed opportunity?
Basic rights for all workers, clear rules, robust penalties for employers, and new tax laws for the self employed; all are key to a fair and modern work place according to a government commissioned report.
The Taylor Review of Modern Working Practices in the UK recommends a series of changes to improve working lives, as well as embrace the changing labour market and continuing technological revolution. But while the review has been praised for its proposals to enhance workers rights, it has also been criticised as a “missed opportunity” for failing to recommend the abolition of zero hours contracts and Employment Tribunal fees.
The proposal for a fairer National Insurance tax system between employees and the self employed has also led to concerns that the majority of the UK’s 4.8 million self-employed would pay the price under such a tax regime.
Clarity in the law
The Taylor Review highlights the current complicated law regarding the definitions of ‘worker’, ’employee’, and ‘self employed’. This has led to confusion in the work place about rights and obligations, and been abused by employers seeking to avoid paying minimum levels of pay, holiday and sick pay.
The recommendation is to replace the ‘worker’ category with a ‘dependent contractor’ category; the hope being that this will properly reflect modern working arrangements and cover people who work flexibly, in the gig economy, and on zero hours contracts, but who are not genuinely self employed. It proposes that the right of substitution in contracts should not be an automatic barrier to worker rights which has in the past been exploited by employers.
Furthermore, the review recommends that those who seek clarity on their employment status through an Employment Tribunal should not pay a fee, as currently required.
Written statement of work and rights
Employees and ‘dependent contractors’ should receive a statement on day 1 of their job which sets out their terms and conditions and statutory rights in plain English. This would provide clarity and certainty to staff, whilst employers would have to acknowledge their obligations.
To address 36% of Employment Tribunal awards which are unpaid, the Taylor Review urges the government to take action against employers by naming and shaming respondents who fail to pay. There should also be powers to award costs or a financial penalty against an employer where it has lost a case with similar facts.
Introducing parity in National Insurance contributions between employees and the self–employed, paid by employers, will remove incentives for businesses to seek to engage self-employed contractors.
There are more self-employed people in the UK than ever before. However, as little as 27% save for their pension. The Review calls on the government to explore ways to improve pension provision for this category of individuals. It also urges the government to work with partners to help develop a range of technological platforms, to help the self-employed gain access to non-statutory benefits and protections, and give them a collective voice.
Statutory Sick Pay
Statutory Sick Pay should be a basic employment right for all workers and should accrue on a length of service basis in a similar way to accrued holiday pay.
Employment Tribunal fees
The Review acknowledges that Employment Tribunal fees are too high and are a barrier to justice, but that they are unlikely to be reduced. It nevertheless recommends that the government continues to review fees.
What you should expect
Some of the Taylor Review’s recommendations will be subject to further scrutiny and consultation in the coming months. The government is likely to take heed of the call for greater clarity regarding employment status for those who work in new and flexible ways, particularly in the gig economy which is destined to grow rapidly over the coming decade. It goes hand-in-hand with the need for better communication between employers and staff as to rights and obligations in the workplace.
What is certain is that the disparity in tax and National Insurance contributions in the labour market remains a hot issue, one which is unlikely to go away given the escalating costs of state pensions and benefits.
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