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Government Responds to Taylor Review

employmentlaw@work / 08 February 2018

ISSUE:

The Government has now published its response to the Taylor Review (on which we reported here in July 2017), as well as issuing four new consultations.

The full response (the “Response”) is available to view here.  Matthew Taylor, the author of the original review, has called the Response “substantive and comprehensive”.  However, if you have been waiting to see how the Response will affect your business, or the legal status of your workforce, there is nothing contained within it that necessitates immediate action.

Instead, the four consultations seek views on, and set out the Government’s proposed action in, the following key areas:  employment status, increasing transparency in the labour market, agency workers and enforcement of employment rights.

KEY DATES:

The Response and consultations were published on 7 February 2018.
The consultations close on four different dates as follows:
Employment status: 1 June 2018 (the “Employment Status Consultation”)
Increasing transparency in the UK labour market:  23 May 2018 (the “Transparency Consultation”)
Agency workers:  9 May 2018 (the “Agency Workers Consultation”)
Enforcement of employment rights:  16 May 2018 (the “Enforcement Consultation”)

IMPACT:

We have set out below a summary of the key areas of the Response and consultations.

Employment Status
1. The Government accepts that there is a lack of clarity over employment status.  The Employment Status Consultation seeks views on the possibility of codification in this area and asks whether mutuality of obligation, personal service and control are still appropriate principles for governing employee status in the modern workplace.
2. The Employment Status Consultation examines the possibility of using new alternative tests for employment status and sets out examples of what these might look like.
3. The Government considers that our current three tier system of employment status (employee, worker, self-employed) is still appropriate and does not therefore consider it necessary to introduce an additional status of “dependent contractor” as was recommended by the Taylor Review.  However, it is seeking further views on this in the Employment Status Consultation.
4.The Taylor Review recommended an online tool to help determine employment status and the Government intends to develop one once the legislative framework for employment status is finalised.
5. All workers are to be entitled to written particulars of terms from day one and are to receive payslips.

Agency and Atypical Workers
1. The Taylor Review proposed that agency workers receive a direct contract of employment after 12 months and that zero-hours workers be able to request guaranteed hours after 12 months.  The Response states that all workers (not just specific groups) should be able to request a “more predictable” contract.  The Transparency Consultation sets out detail on how this might work in practice.
2. The Transparency Consultation seeks views on increasing the period of a week or more which currently breaks continuity of service under the Employment Rights Act 1996.
3. The Government accepts that the pay reference period in the Working Time Regulations 1998 should be increased from 12 to 52 weeks to take better account of seasonal variations in working time for atypical workers.
4. The Agency Workers Consultation seeks views on the extent of the abuse of the “Swedish derogation” rule (i.e. that workers with a contract that provides for a minimum level of pay between assignments are excluded from the right to equal pay with permanent employees), with a view to either repealing the derogation or looking at new enforcement methods.

Enforcement
1. HMRC will take responsibility for enforcing basic pay rights including national minimum wage, sick pay and holiday pay.  The Enforcement Consultation seeks to gather evidence on the scale of non-compliance with holiday pay and statutory sick pay obligations.
2. The Enforcement Consultation considers how to implement sanctions against employers who repeatedly fail to change their practices following adverse tribunal decisions.  It also looks at raising the maximum penalty for aggravated breach of employment law from £5,000 to at least £20,000.
3. The Government proposes to introduce a “naming and shaming” scheme for employers who fail to pay employment tribunal awards.

Further Proposals

1. The Government will review and consolidate guidance on the statutory protections that apply to pregnant workers and those on maternity leave, and will review legislation relating to protection against redundancy.
2. The Government will also consider whether to reform statutory sick pay so that all workers are eligible regardless of income from day one.  The Taylor Review had suggested that individuals returning from a period of long-term sick leave should have the right to return to the same (or similar) job – however, the Response states that this requires further thought and the Government will consider how engagement with occupational health services can support this.

ACTION:

There is no need for any immediate action and we will keep you updated with any further changes.  However, do take time to respond to the various consultations (available here) if appropriate to do so.

In the meantime, the Government has confirmed that a small number of the Taylor Review’s recommendations will not be taken forward – including reversing the burden of proof in tribunal claims where employment status is in dispute, and introducing rolled up holiday pay.

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