The House of Commons Work and Pensions committee and Business, Energy and Industrial Strategy committee have published a joint report, incorporating the text of a draft Bill intended to ‘take forward the best of the Taylor Report recommendations’. Matthew Taylor’s review of modern working practices was published in July. In May, the work and pensions committee published its own report on self-employment and the gig economy. The proposed Workers (Definition and Rights) Bill would introduce a presumption that ‘worker’ would be the default employment status, as part of a new ‘framework for modern employment’.
Earlier this year, the government asked Taylor to address the question of how legal and regulatory frameworks should be changed to protect workers in the modern labour market, leading to publication of his ‘Review of modern working practices’ in July 2017. The new committee report, ‘A framework for modern employment’, takes the view that ‘the most transformative’ of the Taylor recommendations now require primary legislation. The Work and Pensions committee’s May 2017 report, ‘Self-employment and the gig economy’, recommended a default employment status of ‘worker’, rather than ‘self-employed’. One of the main recommendations in the new report asks the government to legislate for a ‘worker by default’ model, applying to companies that have a self-employed workforce above a certain size (clause 2 of the draft Bill).
Other recommendations include:
· clearer statutory definitions of employment status, which emphasise the importance of control and supervision of workers by a company, rather than just substitution (clause 1 of the draft Bill);
· running a pilot for those who work non-contracted hours to receive a pay premium on the national minimum wage and national living wage (clause 3 of the draft Bill);
· extending from one week to one month the time workers are allowed for breaks in service, while still accruing employment rights for continuous service (clause 5 of the draft Bill);
· creating an obligation on employment tribunals to consider the increased use of punitive fines and costs orders if an employer has already lost a similar case (clause 4 of the draft Bill);
· extending the duty of employers to provide a clearly written statement of employment conditions to cover workers, as well as employees, to apply from the start of a new job;
· amending the Agency Workers Regulations 2010 to remove the opt-out for equal pay (the ‘Swedish derogation’);
· introducing stronger deterrent penalties, including punitive fines, for repeat or serious breaches of employment legislation, and extending naming and shaming to all non-accidental breaches of employment rights by businesses and supply chains; and
· setting out how the government intends the role of the new director of labour market enforcement to develop over the next five years.
The draft Bill would hand the government an opportunity to ‘end the mass exploitation of ordinary, hard-working people in the gig economy’, said Frank Field, chair of the work and pensions committee.
Rachel Reeves, chair of the business, energy and industrial strategy committee, said: ‘Companies should pay higher wages when they are asking people to work extra hours or on zero-hours contracts.’
‘We need new laws but also much tougher enforcement, to weed out those businesses seeking to exploit complex labour laws, and workers, for their competitive advantage,’ Reeves added.
Neil Carberry, CBI managing director for people and infrastructure, was more sceptical. ‘Based on a very limited review of the evidence, the committees have brought forward proposals that close off flexibility for firms to grow and create jobs, when the issues that have been raised can be addressed by more effective enforcement action and more targeted changes to the law,’ he said.
Carberry added: ‘The Taylor Review report offered an insightful picture on the challenges we must face together to improve our labour market – but the solutions to address this must be developed with businesses, and designed to ensure that those who enjoy working in flexible ways do not have opportunities closed off to them.’
A new research report commissioned by HMRC, ‘Understanding barriers in determining employment status in SMEs’, found that businesses unsure about employment status often treat staff as employees subject to PAYE in order to avoid the risk of miscategorising. Usage of HMRC’s employment status indicator (ESI) tool is low, although those SMEs that use the tool are positive about it. Around a quarter of SMEs are aware of the ESI, but only 5% have used it, with only 2% using it currently. SMEs tend to use the tool as a guide alongside other sources of information, such as advice from an accountant or lawyer. See http://bit.ly/2zqLLPv.
The House of Commons Work and Pensions committee and Business, Energy and Industrial Strategy committee have published a joint report, incorporating the text of a draft Bill intended to ‘take forward the best of the Taylor Report recommendations’. Matthew Taylor’s review of modern working practices was published in July. In May, the work and pensions committee published its own report on self-employment and the gig economy. The proposed Workers (Definition and Rights) Bill would introduce a presumption that ‘worker’ would be the default employment status, as part of a new ‘framework for modern employment’.
Earlier this year, the government asked Taylor to address the question of how legal and regulatory frameworks should be changed to protect workers in the modern labour market, leading to publication of his ‘Review of modern working practices’ in July 2017. The new committee report, ‘A framework for modern employment’, takes the view that ‘the most transformative’ of the Taylor recommendations now require primary legislation. The Work and Pensions committee’s May 2017 report, ‘Self-employment and the gig economy’, recommended a default employment status of ‘worker’, rather than ‘self-employed’. One of the main recommendations in the new report asks the government to legislate for a ‘worker by default’ model, applying to companies that have a self-employed workforce above a certain size (clause 2 of the draft Bill).
Other recommendations include:
· clearer statutory definitions of employment status, which emphasise the importance of control and supervision of workers by a company, rather than just substitution (clause 1 of the draft Bill);
· running a pilot for those who work non-contracted hours to receive a pay premium on the national minimum wage and national living wage (clause 3 of the draft Bill);
· extending from one week to one month the time workers are allowed for breaks in service, while still accruing employment rights for continuous service (clause 5 of the draft Bill);
· creating an obligation on employment tribunals to consider the increased use of punitive fines and costs orders if an employer has already lost a similar case (clause 4 of the draft Bill);
· extending the duty of employers to provide a clearly written statement of employment conditions to cover workers, as well as employees, to apply from the start of a new job;
· amending the Agency Workers Regulations 2010 to remove the opt-out for equal pay (the ‘Swedish derogation’);
· introducing stronger deterrent penalties, including punitive fines, for repeat or serious breaches of employment legislation, and extending naming and shaming to all non-accidental breaches of employment rights by businesses and supply chains; and
· setting out how the government intends the role of the new director of labour market enforcement to develop over the next five years.
The draft Bill would hand the government an opportunity to ‘end the mass exploitation of ordinary, hard-working people in the gig economy’, said Frank Field, chair of the work and pensions committee.
Rachel Reeves, chair of the business, energy and industrial strategy committee, said: ‘Companies should pay higher wages when they are asking people to work extra hours or on zero-hours contracts.’
‘We need new laws but also much tougher enforcement, to weed out those businesses seeking to exploit complex labour laws, and workers, for their competitive advantage,’ Reeves added.
Neil Carberry, CBI managing director for people and infrastructure, was more sceptical. ‘Based on a very limited review of the evidence, the committees have brought forward proposals that close off flexibility for firms to grow and create jobs, when the issues that have been raised can be addressed by more effective enforcement action and more targeted changes to the law,’ he said.
Carberry added: ‘The Taylor Review report offered an insightful picture on the challenges we must face together to improve our labour market – but the solutions to address this must be developed with businesses, and designed to ensure that those who enjoy working in flexible ways do not have opportunities closed off to them.’
A new research report commissioned by HMRC, ‘Understanding barriers in determining employment status in SMEs’, found that businesses unsure about employment status often treat staff as employees subject to PAYE in order to avoid the risk of miscategorising. Usage of HMRC’s employment status indicator (ESI) tool is low, although those SMEs that use the tool are positive about it. Around a quarter of SMEs are aware of the ESI, but only 5% have used it, with only 2% using it currently. SMEs tend to use the tool as a guide alongside other sources of information, such as advice from an accountant or lawyer. See http://bit.ly/2zqLLPv.
