There has been much in the press lately about the GIG ECONOMY, affecting an estimated 1.1 million people. Most recently the Government published its response to the Taylor Review.
As set out in my previous blog, The Taylor Review – What does it mean for Employers?, the Taylor Review, also known as the ‘Good Work’ Report, was commissioned by the Government to look at how employment practices need to change to keep pace with modern business practices. The review made several recommendations, which the Government considered and has responded to. So, does the response make any changes?
One of the most difficult issues for employers is the employment status of individuals that they engage. Are they employees, workers or genuinely self-employed, and what is IR35? The tests can be confusing, with individuals resorting to the Courts and Employment Tribunals for clarity on their employment status. Most recently, these decisions have found that Uber drivers are workers, a status sitting between employees and those who are self-employed with rights to paid holiday and the national minimum wage, while Deliveroo riders were found to be self-employed, so not entitled to either of these rights.
In its response, the Government said that it would be keeping the three-tier status (employees, workers and self-employed). However, it accepted the difficulty for employers and individual in knowing what their employment status is and therefore what their employment rights are. It agreed that this needs to be clarified and said an online tool could be helpful. But at this stage it has made no proposals. Instead it has started a new consultation about employment status (amongst other things). In the consultation, it asks questions about whether the tests for employment status should be set out in legislation and whether the existing tests are still relevant to the current workplace. So, for now there are no changes to the gig economy, and it is unlikely that the law on employment status will change anytime soon – as there will have to be a further response to this consultation before any changes are introduced. And even then, the Government’s response maybe to make no changes.
Where does this leave employers? The existing rules on an individual’s status, based on previous court decisions, continue to apply. The relationship should be reviewed not just in relation to the terms of the contract, but also the reality of the situation, considering all the documents and circumstances that apply to the individual. Key factors in deciding employment status still include: