The Good Work Review – what does this mean for worker status?
The Taylor Report, titled the “Good Work Review” (“the Report”) was published last week. The 116 page document proposes various changes to employment law practices. This two part article examines the proposals relating specifically to worker status. Our second article will examine the further changes set out in the Report.
The Report acknowledges that it is often difficult for employers to appreciate whether an individual is engaged as a worker, employee or as a self employed consultant (which we will refer to collectively as “Workers”.)
This is largely because the legal test has evolved through case law over many years, which has resulted in the law becoming fragmented and difficult to apply. Also many employers still do not realise that they cannot simply determine the legal status of an individual by asking them to enter into a particular kind of contract; rather the status of an individual will be determined by carrying out a factual and legal assessment of the nature of the working relationship.
The following recommendations have been suggested in the Report:
- Retain the existing three tier system but change the definition of worker to “Dependent Contractor.” The Report suggests that a clearer definition will better reflect the reality of modern working practices, capturing the more casual working relationships and the nature of work which is carried out in the “gig economy.”
- The government should implement clear legislation to make it easier to understand the difference between the different categories of Workers, to address the general assumption that the two are largely the same except that a worker just has a lower status.
- The legislation should enshrine and consolidate the principles set out in case law – basically “if it looks like an employee, it is an employee.”
- Greater emphasis and clarity should be placed on the definition of “control,” with the legislation outlining what this means in a modern labour market and not just in terms of the traditional test of “day to day” control.
- A new test should be established to help employers determine Dependent Contractor status. The Report suggests that this may prevent employers from mistakenly believing they can hide behind provisions such as the “substitution clause” to avoid an individual becoming an employee.
- Individuals should be entitled to make an application to the Employment Tribunal free of charge to determine their Worker status, in order to determine what legal rights they will be entitled to pursue. The Report identified that often a significant amount of time and money is spent in litigation, only for it to fail because the individual does not have the correct legal status to pursue that claim
The Report also acknowledged that in attempting to re-define the boundaries of worker status we should be careful not to impact on those for whom the current system works well. Whilst greater clarity is of course welcome, it should also be remembered that the labour market is made up of many Workers who have no issue with their employment status and who benefit from the flexibility and freedom that their Worker status gives them.
If your Company engages self employed consultants it is advisable to carry out an impact assessment to determine their true legal status. Shakespeare Martineau is able to support any business to carry out an audit and to address any liabilities which the business may be exposed to, in the event that the “consultants” are in fact deemed to be workers or employees.