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Freshfields Risk & Compliance

| 2 minutes read

The Taylor Review of Modern Working Practices: Good Work or Room For Improvement?

The Taylor Review on modern working practices was published yesterday. It’s called “Good Work” and takes a fresh and, at times, aspirational look at how the structures applicable to modern working practices might be overhauled and refreshed for the 21st century.

A lot was expected of Matthew Taylor, who was appointed by the government to lead the review last October. His report is wide-ranging but has already attracted some criticism from commentators, some of whom complain that it fails to advocate the radical overhaul of the employment regime they think is required (whilst others say it would impose too many restrictions on businesses).

It’s worth reading pages 17 to 31 in full: they provide a detailed overview of Britain’s labour market and include a range of statistics on full-time and part-time work; inactive workers; zero hours contracts; under-employment and self-employment.

The report will be looked at in detail over the next few days and months but here are some points that struck me as particularly interesting:

Employment status 

  • The report recommends changes to legislation to help make individuals’ employment status clearer. According to the report, many people think they can agree their employment status rather than it being a question of fact. Taylor hopes that setting out the test in legislation will tackle this. The legislation would detail the tests for determining whether an individual is an employee, a worker (which Taylor recommends renaming “dependent contractor”) or self-employed.
  • The report states that the “best elements” of case law will be retained and incorporated into legislation. The success of this particular recommendation will depend on how successfully this is done.
  • The report recommends that individuals should be able to get a free, formal determination of their employment status so that they know whether they can bring particular legal claims (i.e. where the claim depends on having a particular status). The advantages of this approach can be seen, but what checks and balances would be built into the system so as to avoid it being overrun or abused?

Employee representation 

  • The scope of the current UK information and consultation regulations should be extended, according to the Report. If implemented, the support of only 2% of the workforce would be needed to trigger a requirement to implement an information and consultation agreement. The regulations are not used at the moment as much as Taylor would like, and so this change is only likely to increase levels of workforce engagement if there is a campaign to educate people about the regulations in the first place.

Tax and the self-employed

  • The report devotes a few pages to the UK tax system and the role it plays in incentivising the establishment of self-employment relationships. Essentially, it is currently cheaper for individuals and companies for work to be engaged under a self-employment model and Taylor wants the government to think about ways to level the playing field.
  • As such, the report says that the cost of labour should be neutral. In other words, there should be no financial benefit to claiming that particular individuals are self-employed. This is likely to involve looking again at the Chancellor’s abandoned plans from earlier in the year to increase the national insurance contributions paid by the self-employed.
  • Finally, there are various proposals about a “new offer for the self-employed”, which look at things like encouraging better retirement savings, putting in place arrangements for sick pay and holiday pay and encouraging discussion and collaboration between self-employed people.

There’s a lot for the government to chew over in the Report and it’s unlikely that all of the recommendations will be implemented (but if they were, it would represent one of the most significant overhauls of the UK employment law regime). It will be very interesting to see what proposals for change are put forward by the government. The Prime Minister has promised a detailed response later in the year and has asked for cross-party engagement on the subject.


flexible working, taylor review, tax, employee representation, fintech, intellectual property