Government responds to Taylor Review
The government has released its response to the Taylor Review.
The ‘Good Work plan’ has set out proposals to ensure workers know their rights and receive the benefits and protections they are entitled to.
In order to protect workers’ rights, the government has put plans in place, including taking further action to ensure unpaid interns are not doing the job of a worker; creating a new naming scheme for employers who fail to pay employment tribunal awards; and quadrupling employment tribunal fines for employers showing malice, spice or gross oversight.
To ensure workers are paid fairly, the government plans to provide all agency workers with a breakdown of who pays them, together with any costs and charges that have been deducted from their wages. The government will also be asking the Low Pay Commissioner to consider the impact of higer minimum wage rates for zero-hour contract workers. In addition, it will be considering repealing laws allowing agencies to employ workers on cheaper rates.
To increase transparency in the business environment, the government is looking to define ‘working time’ for flexible workers who find jobs online or via apps, so they are clear on when they should be getting paid. The government is also launching a task force with business to promote awareness and take-up of the right to request flexible working, which was introduced in 2014. It will also be ensuring expectant mothers know their workplace rights, and ensure employers are aware of their obligations. The government will also be launching a new campaign to encourage more working parents to share childcare through Shares Parental Leave.
The government also plans to go further than the Taylor Review’s proposals, enforcing vulnerable workers’ holiday and sick pay, creating a list of day-one rights for all workers, and a right for all workers to request a more stable contract.
Tania Bowers, general counsel at APSCo, said, “We at APSCo welcome this announcement and are very supportive of the Government’s desire for clarity – particularly on employment status and how this is aligned to tax status, workers’ rights and entitlements and the differentiation between employed, workers and self-employed. APSCo will, of course, be providing responses to these consultations in the interests of our members.”
“The Employment Status consultation, in particular, which will be open for 16 weeks, is extremely broad, complex and ambitious. As we stressed when we gave evidence during the Taylor review, many of our members supply independent contractors – and it is vital that working in this way remains an attractive option for highly skilled consultants who drive much of the dynamism and flexibility in the economy. We hope that the outcome of this exercise offers greater clarity so that these professionals can supply their services without the current level of confusion over their employment and tax status.”
“We understand that the Government’s priority is addressing issues at the lower end of the market, some of which directly impact recruitment businesses. These include a list of ‘day-one’ rights such as holiday and sick pay entitlements and a new right to a payslip for all workers, including agency workers, and a right for all workers - including zero-hour and agency workers - to request a more stable contract after 12 months with a hirer, to provide more financial security for those on flexible contracts. The Government seeks to ensure fairness 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 and is considering repealing laws allowing agencies to employ workers on cheaper rates, namely the Swedish Derogation under the Agency Workers Regulations. The Government is also consulting on broadening the Employment Agency Standards remit to include enforcing the Agency Workers Regulations. We are currently inviting members’ views on these recommendations and other suggestions to be outlined in the four papers.”
REC chief executive, Kevin Green, stated, “The way we work is undergoing drastic changes and it’s high time that regulations around the gig economy are 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.
“We are very pleased to see that the government is working towards more consistency and transparency around the rights and status of people working in the gig economy. This is something that is much needed to level the playing field so gig workers get the same rights as agency workers receive, such as holiday and sick pay.
“It was disappointing that there was no decision around improving the Apprenticeship Levy by turning it into a broader training levy as this could immediately benefit millions of workers and would help address the country’s skills shortages.
“We still need more clarity on some of the points raised, including the definition of zero-hour contracts and if agency workers are included. We also need to know when exactly people are eligible to request a contract and if additional paperwork around this will mean more bureaucracy and therefore a greater burden. In addition, the government’s reform plans should not apply only to Swedish Derogation but instead should open up all parts of the Agency Workers Regulations for review.
“We are looking forward to represent our members and the recruitment industry in the consultation process and deploy our expertise around flexible working to ensure the UK’s labour market remains a success story.”
Julia Kermode, chief executive of The Freelancer & Contractor Services Association (FCSA), commented:
On Self-Employment NICs and Employment Status:
“We are glad to see no move here, although the elephant in the room is still the fact that hirers do not pay employers NICs when they engage self-employed people, which can be a driver towards poor practice, particularly in sectors where margins and overheads are squeezed. There has been an increase in tribunals where self-employed people are challenging their employment status, and without some action to address the poor practices that exploit vulnerable workers then this is only set to continue.
“For that reason we very much welcome the proposed consultation on employment status, and we hope it will bring much-needed clarity to the different statuses in which people are engaged. Care needs to be taken not to disrupt those making an informed choice to be self-employed, yet this needs to be balanced with protecting those who might be exploited by unscrupulous hirers. It also makes sense to use the opportunity to align employment and tax statuses, the current mismatch creates confusion and can drive behaviour such as engaging self-employed people in order to minimise employment NICs.
Clarity of Pay and Rights:
“We also welcome the proposal to provide agency workers with a clear breakdown of who pays them and any costs or charges deducted from their wages. For a number of years FCSA has lobbied for improved transparency of pay as it is wholly wrong for workers to be told they will receive a particular rate and subsequently find that they are paid something different. We have consistently encouraged agencies and umbrella firms to work closely to ensure that the correct rate is agreed for assignments and that umbrella employees understand how their pay is calculated.
“The proposal to ensure that all workers receive a clear list of day-one rights is very positive, this is a relatively simple change that should alleviate any confusion and improve awareness of rights for otherwise potentially exploited workers. We always encourage our members to ensure that umbrella employees do have this clarity from day one, and it is right that all workers should be entitled to this rather than it being down to whether they are lucky enough to be engaged by a firm that ensures good practice.”
“On the proposal to consider repealing laws that allow agency to employ staff on cheaper rates via the Swedish derogation rules, FCSA’s compliance code includes provision for Swedish derogation to be operated compliantly, however we recognise that there is potential for vulnerable workers to be exploited so we will monitor developments carefully.”
Ben Willmott, head of public policy at the CIPD, added, “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. The Government response also rightly places more attention on the enforcement of existing rights which can help ensure that bad practice will be stamped out wherever it exists.
“We particularly welcome the clear commitment to enshrining the principles of 'good work' and ensuring that they are measured on an ongoing basis. Work can and should be a force for good, and the measures announced today, alongside the ongoing consultation with business, will help to ensure that these principles are reflected across the economy. We look forward to working with Government to help develop these measures and ensure they capture the wide range of factors that make up ‘good work’. A clearer understanding of the elements that create good work will support efforts to boost individual well-being and create more inclusive and productive workplaces.
“The CIPD has long called for both workers and employees to be eligible for written terms and conditions of employment, so we fully support the adoption of the right to receive a payslip and terms and conditions from day one. Improving clarity and transparency of people’s contractual terms and conditions from day one can help to ensure that people’s rights are respected in the workplace and reduce abuses.”
Marian Bloodworth, employment partner at Kemp Little LLP, said, "For employers and gig economy workers, the news that the Government is looking into the issue of worker rights will be welcome, provided that it results in clarity around status, obligations and entitlements. At the moment there is too much uncertainty on both sides, with the law developing through case law, rather than statute. In addition there is a tension between employment law, which recognises three distinct categories: employee, worker, self-employed - and tax law which only distinguishes between employee and self-employed. This has not made it any easier for employers and their staff to understand their respective positions and rights.
“We will need to see what the promised Consultation papers say however before finding out whether these proposals will lead to real change.”
Crawford Temple, CEO of PRISM, stated, "The independent report commissioned by PRISM from The Social Market Foundation highlighted that policymakers need to consider the more subtle forms of arbitrage such as thresholds that apply to Employers NICs. We hear many stories where firms are limiting workers’ hours and looking to engage 2 or 3 workers on zero-hour contracts rather than one full time employee. This approach provides significant savings to the employer. Until these incentives are removed it will be difficult to fully understand the true size the issue, or whether there even is an issue.
"Umbrella companies have to work with the rates agreed with recruitment companies on assignments. It is true that in some cases a lack of transparency has resulted in worker confusion. We worked with the Low Income Tax Reform Group to provide a document to help workers using umbrella companies to understand their rights and pay. We have been encouraging all providers and recruitment companies to issue this to their contractors. We would be interested in exploring further steps that can be taken to bring further transparency to the market."
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