What next for the gig economy – “dependent contractors”?
The much-anticipated Taylor Review of Modern Working Practices has now been published. At 116 pages it’s not a light read, but you can access the full report here.
A key part of the report deals with the vexed area of employment status, which has hardly been out of the news for the last year or so. HMK Legal has previously reported on the key cases in the raft of recent Tribunal cases on this subject, and the confusion this has caused.
The three main types of employment status are employee, worker and self-employed. A worker has basic employment rights such as the right to the National Minimum Wage (and National Living Wage), holiday pay and protection from discrimination. An employee has all of the rights that a worker has, but in addition has the right to claim unfair dismissal and the right to a statutory redundancy payment (after 2 years’ service), and family friendly rights such as the right to maternity leave and pay, and the right to request flexible working. A self-employed person has few if any employment rights, depending on the circumstances.
The problem is that employers and individuals do not always agree about what the individual’s employment status is; there are obvious advantages for businesses to classify individuals as self-employed rather than employees or workers, such as not having to pay employer’s National Insurance contributions, holiday pay or sick pay. What the recent cases have highlighted is the difficulty in distinguishing between worker status and genuine self-employed status.
The Taylor Review recommends that the Government clarifies the legislation on employment status, so that the different employment statuses are distinct and do not require a court to make a determination as to which applies. The Review recognises that many people value the flexibility of working atypically, and that this should not be lost, but that wherever possible people should know who they are working for, how much they will earn and also what rights they have.
Although it was speculated that the Review would recommend getting rid of “worker” status, the Review recommends retaining the current 3 tier system of employee, worker and self-employed. It recognises, however, that it is confusing that all employees are also workers whilst not all workers are employees, and proposes a new category termed “dependent contractor” which would cover anyone who is eligible for worker rights but is not an employee. It recommends that “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.” This will involve the Government looking at the test for worker status. The Review states: “Ultimately, if it looks and feels like employment, it should have the status and protection of employment.”
The Review makes the following recommendations to the Government:
- Develop legislation and guidance that adequately sets out the tests that need to be met to establish employee or dependent contractor status.
- To reflect the realities of platform work, ensure that in developing legislation, legitimate business models that allow maximum flexibility to their dependent contractors are not prevented from operating by updating National Minimum Wage legislation.
- Provide maximum clarity on status and rights for all individuals by extending the right to written particulars to all in employment and developing an online tool providing a clear steer on what rights an individual has.
Prime Minister Theresa May has, however, refused to guarantee the legislation recommended by the Taylor Review, admitting that without a majority, she would be dependent on the support of other political parties. She indicated that the Government would respond to the Review later in the year.
If you have any queries about employment status please contact Helen Kay on or .
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