UK Unveils Labor Reform Package Based on Taylor Review Recommendations

UK Unveils Labor Reform Package Based on Taylor Review Recommendations

The UK on Monday enacted a sweeping series of reforms to its labor laws, raising fines on employers for deliberately harming their workers and obliging them to give employees details of their legal rights from their first day on the job, among other changes. Based on the findings issued last year by the Independent Review of Employment Practices in the Modern Economy, led by Matthew Taylor, a former advisor to Tony Blair, the reforms are intended to strengthen the rights of agency workers and those participating in the gig economy, as well as to step up enforcement of existing labor protections. According to Personnel Today, the new legislation will:

  • repeal the Swedish derogation, which allows organisations to pay agency workers on cheaper rates than permanent staff;
  • extend the right to a written statement of rights from a person’s first day in their job to workers, going further to confirm their eligibility for sick leave and pay, as well as other types of paid leave including maternity, paternity and shared parental leave;
  • quadrupling the maximum fines handed out at employment tribunals to employers that have shown malice, spite or gross oversight from £5,000 to £20,000;
  • extending the holiday pay reference period from 12 to 52 weeks to ensure that those in seasonal roles are able to take the time off they are entitled to; and
  • lowering the threshold required for a request to set up information and consultation arrangements from 10% of employees to 2%.

In a report called the “Good Work Plan,” the government also pledged to enact further legislation so that employment classification tests “reflect the reality of the modern working relationships.” The Taylor Review had recommended that the employment status currently known as “worker” be renamed “dependent contractor” and that workers in this category be entitled to employment protections like the minimum wage, sick leave, and holiday pay. It also recommended enacting legislation to clarify the legal tests for different employment classifications, rather than relying on case law as the UK currently does.

The government’s reform package did not, however, ban the controversial practice of zero-hour contracts. Taylor had concluded that abolishing these contracts would do more harm than good, though his review also recommended that workers in zero-hour arrangements be entitled to request guaranteed hours after working for their employer for 12 months. The government of Ireland, in contrast, has said it plans to end most zero-hour contracts with a bill expected to pass the legislature in the spring. Whitehall’s decision not to ban zero-hour contracts drew criticism from unions, the Guardian reported on Sunday, with Trades Union Congress general secretary Frances O’Grady saying the government had missed an opportunity to strengthen the rights of a vulnerable segment of the workforce:

“These reforms as a whole won’t shift the balance of power in the gig economy. Unless unions get the right to organise and bargain for workers in places like Uber and Amazon, too many working people will continue to be treated like disposable labour. “The right to request guaranteed working hours is no right at all. Zero-hours contract workers will have no more leverage than Oliver Twist,” she said.

Opposition leaders echoed this criticism, with shadow business secretary Rebecca Long Bailey saying the reforms would not mitigate what she sees as the erosion of workers’ rights under other government policies and would “do nothing to tackle the growing number of people on precarious zero-hours contracts.”

Gig economy platforms like Uber and Deliveroo, whose contractor business models have been threatened by worker classification lawsuits in the UK over the past few years, welcomed the reforms, Reuters reported:

“We welcome more clarity from the government and look forward to working closely with them to make sure drivers can keep all the benefits that come from being your own boss,” said an Uber spokeswoman. Deliveroo said it would work with the government to ensure the interests of its riders can be advanced.

The response from industry leaders and employment lawyers has been mixed, People Management added:

Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), said recruiters will “welcome the acknowledgement that temporary and agency work” is a key part of the UK jobs market. … But many industry leaders have criticised the reforms, saying they do not address underlying issues which face workers. Prisca Bradley, director and head of employment at Hedges Law, said the reforms “go some way to addressing the imbalances [faced by agency workers] but not far enough”.

“The new reforms however do not go as far as banning zero-hours contracts which was debated during consultation,” Bradley said. “Given that the tribunal system is already creaking under the strain of a huge increase in claims since the abolition of fees, the government could have been more robust to stem likely further litigation in this area.”

Other employment attorneys commented to Personnel Today that the reforms were helpful in clarifying employers’ obligations, but would also heighten the risks of noncompliance:

Philip Richardson, head of employment law at Stephensons Solicitors, said the announcement would hopefully give organisations with staff on zero-hours contracts more clarity about their rights. “One of the clearest messages that come from these reforms is that employers will be squarely in the spotlight and under increased scrutiny to better protect the rights of their workers and tighten up their employment practices,” he commented.

“Most employers have and continue to take steps to do so but those who have looked for a loophole in the legislation will now find themselves facing significant fines at a tribunal and potentially long-term reputational damage.”

The challenge for the government going forward is just how to rewrite employment status tests to provide clarity and account for the new ways people work in the modern digital economy. Rachel Farr, a senior professional support lawyer in the Employment, Pensions & Mobility group at law firm TaylorWessing, remarked to TechCrunch that this was easier said than done:

This element of the reform is a key consideration where gig economy businesses are concerned, as they typically allow for so-called ‘multi-apping’ — meaning those providing a service on one platform can be logged into multiple (rival) platforms simultaneously available to work. So the issue — for employment law purposes — is how to determine what constitutes working time in a platform context. (Which you need to be able to measure in order to determine employment status.)

“Simply codifying the existing case law tests will still mean each case is dependent on its specific facts, so is the government proposing to change the boundaries with some ‘check box’ style tests as they have in other EU jurisdictions?” wondered Farr. “This means greater clarity through simplifying the law but would probably mean we lose the nuances of existing U.K. tests and that some people who are currently genuinely self-employed will find that they may become workers (or vice versa).”