The Taylor Review of modern working practices – will this clear up the confusion regarding employment status issues?

This article first appeared in QuickBite magazine.

Is that delivery driver of yours an employee, worker or self-employed? Many readers will recall that the issue of employment status has been under the microscope a lot recently, in particular during legal cases involving Uber, CitySprint and Deliveroo, which examined whether an individual was classed as an employee, worker or self-employed. The Taylor Review makes various recommendations about how to clear up the confusion regarding an individual’s employment status.

Employment status is an important issue as it governs what protections the individual has, for example, only an employee can claim unfair dismissal and only employees and workers can claim pay of at least the national minimum wage and paid holidays. However, there can often be doubt as to what category the individual falls into and obviously such uncertainty is undesirable for both employee and employer.

The Taylor Review makes some recommendations to try and fix the situation, including:

  • That the category of “worker” needs to be redefined and, in particular, the tests used to determine worker status need to be overhauled. Currently, there is a focus on both the degree of control exercised by the employer over the individual and the requirement for the individual to perform the service personally. However, it is acknowledged that some employers include a substitution clause in the individual’s contractual documentation (namely the right for the individual to send a different person to perform the services instead of them) to try and defeat the worker test, Essentially they argue that there is no requirement for personal service, despite the fact that, in reality, the substitution clause will never be used. Matthew Taylor, who led the Review, makes it clear that the law-makers need to get wise to this type of practice and a revised definition with less focus on the element of personal service is needed.
  • That the individuals we currently know as “workers” should instead be referred to as “dependent contractors” as this is more reflective of the reality in many situations. Taylor acknowledges that an intermediate category of individuals who benefit from limited employment rights is desirable for the world we live in.
  • That the individual’s status should be the same for both employment and tax purposes, as presently an individual can be classified differently under these two regimes. However, it must be recognised that tax law does not have a “worker” category and there appear to be no plans to introduce this. That said, where an individual is self-employed for tax law purposes, the Review makes it clear that they should also be self-employed from an employment law perspective too as this will help avoid confusion for all.
  • That there should be a legal requirement for the employer to provide both employees and workers/dependent contractors with a clear written statement of their basic terms on day one of their employment/engagement and if they do not, there should be the right to compensation. Currently, only employees are entitled to receive such written particulars and then only within the first two months of their employment. Taylor believes that there needs to be more transparency at an earlier stage.
  • That a free online tool should be developed so an individual can check their employment status themselves with certainty over the result. (A similar tool exists for tax law purposes already.)

Only time will tell whether the recommendations from the Review are adopted and the detail of what form any changes will take. However, this is perhaps the first step towards getting clarity on employment status issues which will, in turn, hopefully make life more certain for employers going forward.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice.  If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.