July 11, 2017

Will It Be a Good Gig? Reaction to the Taylor Review

Moorepay has been following the development of the “Gig Economy” story for several months now.

Those currently engaged in “gig” work are classed as self-employed but a procession of employment tribunals has rejected this, contending instead that they are workers.

A year ago, in her earliest days as Prime Minister, Theresa May announced a review of current practices under the stewardship of Matthew Taylor, Chief Executive of the Royal Society of Arts and a former policy advisor to Tony Blair. His report was published today (11 July 2017) but, surprise surprise, was also leaked in advance.

Initially disclosed to the Times newspaper, the BBC and a number of other outlets have now run with the story and it’s been trailed across all mainstream media.

So what’s at stake in the Taylor Review?

Fundamental to the concept of self-employment are two key principles. Firstly you have to personally “risk” or “invest” something in running your business. Secondly, you must not be under the control and direction of your clients.

The problem employment tribunals have had is that they can see neither of those fundamentals applying to those working in the ‘gig economy’.

But if this leaks turn out to be correct, that might be about to change.

What’s the big news for employment status and the National Minimum Wage?

Using the term “dependent contractor”, Taylor’s report apparently suggests a new category of work should be developed. Gig workers – and possibly some others – would be eligible for workers’ rights but not be employees.

Undoubtedly feeding from his time as Tony Blair’s advisor, Taylor has seemingly borrowed from the “Output Work” formula Blair’s Government introduced to ensure those undertaking “piece work” were paid fairly.

Piece work is often (but not exclusively) associated with home-working, in which the individual decides when they work and the formula ensures they are paid fairly for what they do.

The “fair rate” is the amount of money that enables an average worker to be paid the minimum wage per hour if they work at average speed, and the rate is then multiplied by 1.2 to iron out any differences in individual output.

So you can see how it could be transferrable to the gig economy.

Where work is required, the organisation would have to pay at least 1.2 x the minimum wage based on the average time taken for deliveries, journeys etc.

What appears to be different is that if there isn’t much work available, a “dependent contractor” could still bid to do any that is available for less than the national minimum wage.

No doubt many SMEs would be delighted to be able to offer less than the National Minimum Wage to their employees during quiet periods, but they can’t.

Thus the new concept may already be stoking up arguments of unfair treatment from sectors such as leisure, catering and retail who must pay the national minimum wage regardless.

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There are also other considerations for employers.

It appears “dependent contractors” will be eligible (subject to earnings level) for at least statutory sick pay, annual holidays and possibly pension provisions, and their organisation might have to contribute to national insurance.

These would be major departures from current self-employment criteria.

But, of course, many people – supported by successive employment tribunal judgements &nash; perceive that gig economy work is not genuine self-employment. They believe it’s just a mechanism for avoiding statutory employment provisions and National Insurance payments.

And that’s why mainstream organisations like taxi firms currently argue they’re at a competitive disadvantage.

It would seem the report also chimes with a very recent statement from Deliveroo Chief Executive and founder Will Shu. He stated that he wanted to offer a wider range of benefits to his delivery riders but is constrained by current employment law, telling the BBC he would pay holidays, sickness and pensions if the law was changed.

Matthew Taylor’s report is also likely to have significant impact in a number of other areas including the use of agency staff and “zero hours” provisions, so we await its official publication with interest.

This could herald the most significant changes to employment status for a generation. However, with a hung and hostile parliament nothing should be taken for granted and the recommendations in the report could equally be kicked into the long grass.

We’ll continue to follow this story and keep you informed.

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About the author

Mike Fitzsimmons

Mike is a Senior HR Consultant within the Moorepay Policy Team. He is responsible for the developing of employment documentation and is an Employment law advisor. With over 30 years of senior management and HR experience, Mike has managed teams of between 30 and 100 employees and is familiar with all the issues that employing people brings. He has also served as a non-executive director on the Boards of several social enterprises and undertook a five year tour of duty as Executive Chair of a £30+ million annual turnover Government agency.