The Taylor Review – what will its impact be on UK tech companies
Sam Murray-Hinde, Howard Kennedy
The Taylor Report, led by Government adviser Matthew Taylor and published on 11 July 2017, was asked to look at the UK labour market as a whole, yet it is clear that the recommendations are likely to have the greatest impact on the tech sector and on what is referred to as the 'gig economy'. Should we be concerned, asks Howard Kennedy’s Sam Murray-Hinde?
The Report acknowledges that platform-based working can offer genuine two-way flexibility, providing opportunities to those who are not able to work in more conventional ways - the recent increase in those making an informed decision to be self-employed is evidence that individuals are willing to forego certain rights and protections in exchange for greater autonomy and flexibility. The Government's focus, therefore, should not be on changes that have the unintended consequence of reducing that flexibility and freedom of choice, but on tackling exploitation.
It should also be recognised that businesses as well as individuals need protection, particularly those within the tech sector who are already acting responsibly but are being undercut by the less scrupulous.
The Report states that it has considered how to minimise additional complexity for business as part of the review, but it follows that there are likely to be wider implications and consequences as a result of some of the proposals. Some of the more obvious are as follows:
There is clearly a need for greater clarity on the current employment status framework so that it is easier to determine whether an individual is a worker, employee or genuinely self-employed. However, the suggestion that the term 'worker' is replaced with 'dependent contractor' and that its definition 'should reflect the reality of modern working arrangements' may serve only to further complicate the existing categories.
It is proposed that 'dependent contractors' would no longer have to provide personal service. It is unclear, however, how the definition would be worded so as to prevent a situation where it captures those who would previously have been viewed as self-employed and who wish to retain that flexibility.
National Minimum Wage
The Report has recommended that the Government asks the Low Pay Commission to advise on bringing in a higher National Minimum Wage for hours that are not guaranteed in a contract. Businesses would still be able to offer zero hours contracts, or require an individual to work more hours, but would have to compensate them accordingly.
This may well be financially prohibitive to smaller businesses whose work is of an ad-hoc, seasonal or uncertain nature, as well as being detrimental to individuals who value the flexibility zero hours contracts offer. There is no proposal to ban zero hours contracts, but this proposal may well lead to them losing their attraction.
For a business to determine whether it is paying the National Minimum Wage, it needs to calculate an individual's working time. The Report suggests that legislation be amended to make it clear that individuals in the gig-economy who are allocated work through an app are deemed to be undertaking 'output work' (work paid according to the individual's productivity) and would not have to be paid the National Minimum Wage for each hour they are logged on when there is no work available. Calculating working time would not be straightforward.
Output workers are entitled to either be paid the National Minimum Wage for each hour they work, or at least a 'fair piece rate' for each piece produced or task performed, provided certain criteria are met. This proposal could actually weaken an individual's rights in that they could be paid less for not completing a set quota of jobs.
Gaps in Service
The Report looked at assisting individuals who work casually or intermittently in establishing continuity of service. At the moment, in the absence of any 'umbrella contract', a gap of one week between assignments is permitted before continuity is broken. The proposal is that this is increased to one month, on the basis that this would allow individuals to accrue service more easily. However, it follows that the more unscrupulous businesses would simply increase the gap between assignments which would impact on an individual's access to work.
Larger, global tech companies have the resources to meet the recommendations made in the Report if they were to be implemented – and there are many others not covered in this article, such as reporting requirements, changes to agency worker rules, and simplifying the tax system. But at a time of increased political uncertainty, with the UK charting a new route to global markets, the Government must balance the need to protect vulnerable individuals against the need to retain flexibility and encourage entrepreneurship.
Sam Murray-Hinde is a partner in the Employment team at Law firm Howard Kennedy, sponsors of the Tech City News Elevator Pitch. She can be reached by email: firstname.lastname@example.org.
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