Government pledges to improve workers’ rights to holiday and sick pay

But complex issues of employment status ‘kicked into the long grass’ in response to Taylor review

The government has put back long-awaited changes to the UK labour market today (7 February), responding to a study by Matthew Taylor last year on modern work practices by launching four consultations to ‘reform’ the rights offered to flexible workers in the gig economy and beyond.

The Department for Business, Energy and Industrial Strategy (BEIS) said today that it had acted on “all but one of Matthew Taylor’s 53 recommendations”, but before taking any action to change workers’ rights, it will consult with businesses on the impact of plans to enforce employment rights, change rules concerning agency workers, increase transparency in the labour market and consider employment status. 

Commissioned in October 2016 by the prime minister, Good Work: The Taylor Review of Modern Working Practices looked at how employment practices should change to keep pace with ‘modern business models’ such as the gig economy. The six-month review made recommendations on non-employee workers in the UK, but stopped short of advocating new regulation.

The government today promised that “detailed consultation examining options, including new legislation”, will focus on reconsidering employment status, “to make it easier for both the workforce and businesses to understand whether someone is an employee, worker or self-employed – determining which rights and tax obligations apply to them”.

Many today welcomed the government’s wide-ranging proposals, which included a list of new ‘day one’ rights such as holiday and sick pay entitlements, a right to a payslip for all workers, including those on casual and zero-hours contracts, and to request “a more stable contract” for individuals including agency workers. The BEIS said this would offer financial security for those on ‘flexible’ contracts. The proposals would only affect those people without a contract or who work flexibly, and are currently unprotected by their employment relationships.

The BEIS’s view, however, was that “individuals in the gig economy [...] found that gig workers enjoyed the flexibility and freedom to choose when they worked” and would not immediately bring in new laws. 

The government said it would seek to protect workers’ rights by “cracking down on sectors where unpaid interns are doing the job of a worker”.

It also pledged to introduce a new “naming scheme for employers that fail to pay employment tribunal awards” and quadruple employment tribunal fines for employers “showing malice, spite or gross oversight” to £20,000. It “may” raise “penalties for employers that have previously lost similar cases”. Details of this were unclear, but a similar scheme regarding the minimum wage already exists. 

Ben Willmott, public policy head at the CIPD, said: “The Taylor review shone a light on some of the biggest issues facing our modern labour market, and it is good to see that the government has committed to taking action to address almost all of its recommendations.

“The UK has a flexible labour market that broadly strikes the right balance between providing flexibility for employers and employment protections for individuals – but we should always look to tackle abuses of employment rights, provide greater clarity on employers’ obligations and close loopholes wherever we can.” 

Willmott said the government should place more attention on the “enforcement of existing rights” to help ensure that bad practice will be stamped out.

The BEIS promised to help agency workers get paid fairly by “providing all 1.2 million agency workers with a clear breakdown of who pays them and any costs or charges deducted from their wages”. 

The BEIS will ask the Low Pay Commission “to consider higher minimum wage rates for workers on zero-hours contracts – and consider repealing laws allowing agencies to employ workers on cheaper rates”.

To “raise transparency in the business environment”, the BEIS promised to define ‘working time’ for flexible workers who find jobs through apps or the internet – so that they know when they should be being paid. It will also launch “a task force with business” to promote awareness and take-up of the right to request flexible working, which was introduced in 2014. 

Overall, however, “the government response to Taylor will be a disappointment for those hoping for real and immediate change in the law”, said Sarah Ozanne, employment lawyer at CMS. 

“While there are positive elements to the government’s proposals, the really tricky issue of worker status has been pushed into the long grass of consultation,” Ozanne said. 

Diane Nicol, partner at Pinsent Masons – and one of the four experts who formed the Taylor review panel of consultants – told People Management that there had already been a lot of consultation previously, particularly around employment status, and therefore the government could have been bolder.

Kerry Garcia, head of employment, pensions and immigration at Stevens & Bolton, said: “The long-awaited response to the Taylor report is largely a disappointing read for many workers – especially those working in the gig economy – as the changes announced today do not appear to provide significant new employment rights for them.  

“There are also plans to provide all workers with the right to request a more stable contract, but it is not clear what this means or how this work in practice.”

Overall, it showed a reluctance to implement any legislative changes and to favour the balance of employer flexibility. 

Purvis Ghani, partner at Stephenson Harwood, told People Management that the proposals were “in keeping with the direction of travel in this area for a number of years. Successive governments have been removing the differences in how each category of employee/worker can be treated.”

“[But] the substantive recommendations made by Taylor in relation to which rights and tax obligations should apply to the different categories of worker seem to be being kicked into the long grass with a number of consultations. Given wider political priorities, there's a real possibility that nothing will come of this before Brexit."

More wide-ranging proposals made today included raising employers’ awareness of their obligations on maternity rights while “making sure new and expectant mothers know their workplace rights”, and a new campaign to encourage more working parents to share childcare through shared parental leave – a right introduced in 2015.

The government rejected Taylor’s proposals to reduce the gap between the national insurance contributions (NICs) of employees and the self-employed in 2016. The Federation of Small Businesses’ national chair, Mike Cherry, welcomed “today’s commitment to shelve permanently plans to hike NICs for the self-employed” as a watershed moment. But this needed to be followed up with delivery of the promise to abolish Class II NICs for the self-employed, Cherry said. 

Recruitment & Employment Confederation chief executive Kevin Green said: “The way we work is undergoing drastic changes and it’s high time that regulations around the gig economy were aligned with other flexible workers. We therefore welcome the news that the government has decided to further consult with businesses on the future of the UK workforce,” though more detail was needed. 

The BEIS said its proposals sought “to ensure workers know their rights and receive the benefits and protections they are entitled to, and that action is taken against employers that breach workers’ rights”.