What does the Taylor Review mean for small businesses?

In this piece Alan Price, Peninsula’s employment law and HR director, discusses what the Taylor Review could mean for company owners.

The long-awaited Taylor Review on modern employment practices has been published with a focus on flexibility, increasing the quality of work and improving clarity of current legislation.

With regards to employment status and the ‘gig economy’, Matthew Taylor in the Taylor Review suggests that the government has to make legislation clearer and increase clarity so the basic principles can be understood by all. The three existing statuses – employee, worker and self-employed – should be retained with a new name of ‘dependent contractor’ covering workers who are controlled and supervised by the business. Under this label, workers will receive worker employment rights, including holiday pay and rights to rest breaks, and businesses should class these workers as employed for tax purposes. From 2014-2016 Peninsula experienced a 63 per cent increase in advice requests regarding employment status from small business owners looking for direction on the employment status of their workforce.

The report also suggests that a free tribunal system should be introduced to allow individuals to find out what their status is whilst encouraging the government to review tribunal fees in other areas.

Zero-hours contracts

Recognising the importance of zero-hours contracts for those requiring flexibility, the review does not go as far as banning these but, instead, recommends that those on these contracts for 12 months should have the right to request fixed hours. The Taylor Review also suggests that the Low Pay Commission should be tasked with examining how a higher rate of minimum wage could be applied to those with non-guaranteed hours to ensure they are not unfavourably treated due to the insecure nature of these contracts.

The review has been highly anticipated and the government itself has awaited the recommendations to see whether any changes are required to enhance and protect worker rights. For many employers, the introduction of a new name for those who have worker status will not be helpful as it appears to introduce another status at a time when many are struggling to apply the tests on a practical basis.

Additionally, introducing another level of the National Minimum Wage for those on non-guaranteed contracts will increase complexity of minimum wages at a time when non-compliance is high due to a lack of understanding about the current rules. The request for clarity and making legislation clearer is a must and the government should heed this call to ensure the determination of status, and the application of employment rights, can be carried out by businesses correctly without the need for a tribunal to determine this.

From 2014-2016 Peninsula experienced a 152 per cent increase in advice requests regarding national minimum wage from small business owners seeking guidance on upcoming changes to legislation and clarification on grey areas around the rights of external workers.

Theresa May has announced the government will study the report carefully and will respond later this year.

Alan Price is employment law director of Peninsula.

Further reading on working practices

Alan Price

Alan Price

Alan Price is employment law director of Peninsula.

Related Topics

Taylor Review

Leave a comment