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Government backs concept of default worker status as it responds to Taylor review

20 Apr 2018 By Emily Burt

Proposals to amend Agency Workers Regulations to end Swedish derogation – but experts fear ‘missed opportunity’ for wider reform

The government has detailed a new series of proposed actions to protect the rights of workers in the UK – including legislation clarifying worker status, agency workers’ rights and a proposed pilot for a national minimum wage and national living wage pay premium. 

The latest response to the Department for Business, Energy and Industrial Strategy (BEIS) and the Department for Work and Pensions’ recommendations suggests the areas where the government will consult and potentially implement new laws. 

Crucially, it seeks to offer greater clarity around employment status given the number of cases currently being pursued through the courts relating to gig economy businesses. 

The government said it would look to amend the Agency Workers Regulations 2010 to remove the opt-out for equal pay, preventing organisations from recruiting workers on extended agency contracts that keep them on low pay through the ‘Swedish derogation’ loophole for businesses recruiting through agencies.

This followed a recent report into agency workers, published in March by the TUC, which found that six in 10 agency workers were employed for more than a year in the same role at the same workplace, driving pay levels down. 

“We further recommend that the Employment Agency Standards Inspectorate be given the powers and resources it needs to enforce the remainder of those regulations,” the report said. 

On the key point of clarification of worker status against the background of the gig economy – a central concern for businesses and workers – the government was advised to legislate to introduce greater clarity on definitions of employment status.

The government said it shared “the BEIS and work and pensions committees’ view that for some people the current employment status framework does not provide the certainty and clarity that they need”, adding that it would be “exploring the options for reforming employment status for both employment rights and tax to achieve greater clarity and certainty”. 

It referred to a consultation published by BEIS, HM Treasury and HMRC on “the options for reforming employment status for both employment rights and tax to achieve greater clarity and certainty”. 

On the recommendation to implement the Taylor review’s ‘worker by default’ model of employment – which would mean that for “companies that have a self-employed workforce above a certain size” the category of worker by default would be law –  the government said it would return to the question of the burden of proof in tribunal hearings at a later date, if this was not implemented.

Such legislation would automatically class gig economy workers as workers rather than self-employed, as they are seen under the current legislation, which could affect platform organisations such as Uber and Deliveroo, among others.

While this legislation would not guarantee full employment rights for gig economy workers, it would afford them more protections than current legislation allows, supporting cases such as the legal claims currently being made against three London-based taxi firms from drivers arguing that they are workers, not independent contractors. 

“The wide-scale deprivation of employment rights is not unique to Uber, it is rampant across the private hire sector in the UK,” said Dr Jason Moyer-Lee, general secretary of the Independent Union Workers of Great Britain, which is backing the case. 

He added that it was time for drivers to be “recognised as the workers they are and enjoying the rights to which they are legally entitled”.

On the recommendations to create an obligation for employment tribunals to consider the increased use of higher, punitive fines and costs orders if an employer has already lost a similar case in court regarding employment status, the government said it “wholeheartedly agrees” that strong action should be taken against employers “that repeatedly ignore both their responsibilities and the decisions of employment tribunals”, adding: “Exploitation of workers cannot be allowed to become a competitive advantage and the government cannot allow good businesses to be undercut by those who ignore court rulings.” 

The government responded to calls by MPs to bolster the position of precarious workers by exploring a pilot of a pay premium to the national minimum wage and national living wage for workers on non-contracted hours, assisted by the Low Pay Commission. 

It said it would “find ways to tackle this issue that retain the flexibility that many people find so valuable and avoid placing unnecessary burdens on business”. 

The chair of the Low Pay Commission, Bryan Sanderson, told People Management that it supported the “highlighting of practices for some low-paid workers”, adding that ‘good work’ should be relevant to all workplaces “irrespective of earnings or hours worked”. 

“We welcome the government’s response to the review and look forward to considering the potential of a premium rate of the national minimum wage, as well as other possible solutions to the issue of one-sided flexibility,” he said. 

“We will use our experience, knowledge and analysis and work with our stakeholders to provide evidence-based advice to the government.”

The government further accepted a recommendation that employers have a duty to provide a written statement of employment conditions to cover workers as well as full-time employees that should “apply from day one of a new job”, and would “extend the right to written particulars to all workers”. 

“The government is consulting on how best to achieve this and what information this statement should include,” it said, adding that it would investigate “additional measures that will increase transparency across a range of employment rights”. 

The new recommendations were not universally welcomed. Alison Downie, partner at Goodman Derrick, said: “While it’s good [that] the government has accepted a small number of the Taylor review recommendations, these are not substantial and are really tinkering around the edges.

“It has indicated acceptance of a number of other recommendations, but subject to yet further consultation for most before any final acceptance or work starts on designing and implementing the changes.

“Given the review recommendations in the first place were not as wide-reaching as some had hoped, Matthew Taylor’s [pictured] score of the government’s response as 4/10 seems right. We are in danger of a major missed opportunity to make much-needed improvements to the workplace.”

BEIS did not respond to People Management’s request for comment. 

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