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The gig economy and the Taylor Report

11 Jul 2017

What is the “gig economy”, I hear you ask? In brief, the most widely accepted definition is:

"A labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs".

In this article, I am going to use the word “employer” for want of a better word to describe the huge variety of parties which contract with individuals who work for them in one capacity or another.

Theresa May commissioned Matthew Taylor to look into the gig economy and propose reforms. The review was long overdue; HMRC estimates the gig economy results in £4.4bn of undeclared tax. Employers and workers are struggling to define where the rights and obligations of each are delineated. Matthew Taylor is a British former political strategist and has been the  Chief Executive of the Royal Society for the encouragement of Arts, Manufactures and Commerce in the United Kingdom since 2006.

Recent court decisions, such as Pimlico Plumbers in February 2017 and Uber in October 2016, are already moving towards categorising people as workers with workers’ rights in employment law, rather than, as the companies contended, self-employed.

Judges are alert to changes in the employment market and are keen to stop practices that they feel do not provide sufficient rights to workers. Having read the report, I fear that more confusion than clarity will be added to the field of employment law. Into this careful evolution, the Taylor Report has been dropped.

Having just listened to the Today Programme on BBC Radio 4, Mr Taylor was interviewed by Justin Webb. Mr Taylor formulated his major recommendations as follows:

  • If a company can prove that the worker earned 1.2 times the national minimum wage, then that worker “would not be able to take a case”. If this is adopted in legislation, the result would be surprising. How would employers and employees “test” this “1.2 times” other than by asking a tribunal or a court to have a look at the situation?
  • Zero-hours contracts would be permitted – but workers would have a right to request fixed hours – and companies must disclose how many applications have been made and granted
  • There must be “genuine freedom” to accept such a zero hours contract. Well, it is open to employers/employees to accept or refuse a contract now. What is “genuine freedom” in this context and who is to police it and how?
  • In addition, Mr Taylor  proposes a new, free “pre-employment tribunal system”. In effect a pre- judgment on “worker” or “self-employed” status. The mechanism is yet to be established
  • Finally, there are aggravated damages for a refusal by companies to allow future applicants worker status, where those future applicants are in a similar situation to decided cases involving the same employer

Mr Taylor further recommends that employers which have a "controlling and supervisory" relationship with workers would have to pay a range of benefits. But if I hire a plumber to fix my washing machine, I exercise some degree of control and supervision. Mr Taylor includes national insurance contributions as a benefit to this new category.

Currently, within the employment law landscape, we have “employees”, “workers” and “self-employed”. The dividing lines between these categories are not easy to find. Given that, many regard as surprising Mr Taylor’s recommendations for a new category of “dependent contractor”. Quite how this new category will fit into the current landscape is open to question.

Reception so far to the Taylor Report is mixed, I think it is fair to say.

Rebecca Long-Bailey, Labour’s Shadow on employment matters, told the Today programme: "If it looks like a job or it smells like a job then it is a job, and the worker should be employed. And I think in those situations where a worker is carrying out work on behalf of an employer...they should not be exploited as a flexible workers." In the decisions above, the courts have very much taken Ms Long-Bailey’s view.

Frances O'Grady, General Secretary TUC, said: "From what we've seen, this review is not the game-changer needed to end insecurity and exploitation at work."

So the jury is out. The courts have shown an increasingly activist tendency to support workers, look at Uber, Pimlico Plumbers and CitySprint to name but three. The advice of many is to let the tribunals and courts do their jobs and develop the law in a sensible evolution. Many feel that the report undermines recent case law on the national minimum wage. Even the TUC is less than convinced by Taylor. We shall see how the Government deals with the reports and its recommendations.

If you have any questions about employment law and how it relates to your business, please contact me via the details below.

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