Don’t regulate the gig economy, urges Matthew Taylor

24 Nov 2017 By Miriam Kenner

Author of government report says flexibility and engagement are more important than new laws on employer status

The author of the government’s official review into the gig economy has warned against over-regulating portfolio workers who value flexibility – despite urgent calls for new laws from MPs and campaigners.

In a speech that came hot on the heels of a draft bill proposing that ‘worker’ status should become a default for people using online platforms to find work, Matthew Taylor drew back from endorsing further legislation on workers’ basic employment rights, status and security.

Taylor wrote the official Taylor Review of Modern Working Practices earlier this year, recommending a new ‘defined contractor’ status for gig workers. He defended the idea that flexibility was good for workers, saying it was “still good that we have flexibility” in the labour market, as “most people – gig economy people, part-time hours workers and contractors” – were “pleased” to work that way.

“I would not want to do anything to jeopardise this,” he said, speaking as part of a panel put together by tax consultancy RSM. In the light of potential legal changes to enshrine worker status on all, Taylor said flexibility was required for students and carers to ‘top up’ their income, and that “carrying on working is good for your wellbeing”.

Taylor said he was pleased by the new draft bill – which looks to tackle the exploitation of gig economy workers lacking the most basic employment rights – but remained unconvinced that workers should be classified by default, adding that it might prove unworkable in practice.

Rather than legislate for change, Taylor suggested that HR professionals instead motivate their workforces better and encourage “good employer practices” within their organisations. They should use annual employee surveys where possible to measure staff engagement.

Despite an increasing level of litigation from groups fighting for improved worker protection against unstable hours and low pay, Taylor remained unpersuaded that he would advise the Treasury for more clear-cut legislation, saying this would end the status quo.

He warned of a “tipping point” in certain sectors within which it could become “impossible” to compete with the gig economy. Royal Mail, he pointed out, must compete with Hermes – which by classing workers as self-employed avoided paying employer national insurance.

This week, outsourced University of London workers filed a group action to negotiate directly about pay with the institution, having been denied union recognition by their outsourced employer.  

On tax status, Taylor said the Treasury wanted to maintain a balance between “good for workers” and “fiscally sustainable”. Rather than abolish worker status, umbrella companies or bring in new regulations, he argued for greater transparency, shifting incentives and better alignment of employment status and tax status.

But within this low-regulation approach, he acknowledged that issues remained for those at the “bottom end” of the workforce – such as those on zero-hours contracts – who often suffered from multiple disadvantages in the labour market.

Employment lawyer Richard Fox of Kingsley Napley said there was evidence that a clearer legal definition of employment status would benefit workers. There was a need to clarify employment status at the outset, Fox said, which would shift the burden from workers to organisations to ensure compliance.

Taylor responded to questions on the recent tribunal victory by Deliveroo – which successfully argued that its riders’ ability to substitute other workers when they were unable to work made them technically self-employed – by saying that the data on dispersed workers and how to ensure good practice and compliance was unclear. He later said such companies should be required to take an “enlightened” approach to engagement.

Taylor said decisions on employment status should primarily be made on the basis of the control and supervision exercised by the employer: “We should give more emphasis to that than personal service and substitution. I don't think that the ability to get someone else to do your round fundamentally changes [things].”

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