Distinguishing between Employees and “Dependent Contractors”
The “Good Work” report by Matthew Taylor has looked in detail at some of the problems that have arisen as a result of the “gig” economy. Regular readers will be familiar with some of the cases that have challenged the categorisation of those engaged to work in certain sectors. (E.g. the cases brought against Uber, Pimlico Plumbers, and CitySprint UK) and so the rights of workers (as opposed to employees or those who are genuinely self-employed) have recently been highlighted. Workers are already entitled to holiday pay, sick pay and to be paid at least the national living wage,
The Good Work report suggests significant changes to the rights and entitlements for the different categories of working individuals as well as increasing entitlements for those who are engaged as employees.
Here are some of the proposals that Taylor has made in his report:
• Keep the distinctions between employees and workers, but rename workers who are not employees as “dependent contractors.”
• Where there is a dispute as to the status of an individual, to have free access to the Employment Tribunal for a declaration as to their employment status prior to bringing any claim.
• Remove the requirement for “dependent contractors” to have a contract to perform work personally.
• Place more emphasis on control in the definition of worker (“dependent contractor”) status.
• Treat those engaged as “dependent contractors” as if they were employed for tax purposes (i.e. subject to tax and both the employer’s and employee’s NI payments.)
• Retain the need for personal service in a contract of employment for employees.
• Require written statements to be given on day one of employment (not by the 8th week as is currently the case.)
• Extend the right to a written statement of terms to dependent contractors as well as employees and include a requirement to describe statutory rights as well.
• Give a standalone right to compensation if the employer has not provided a written statement of employment details (currently this only happens if it is part of another tribunal claim.)
• Amend the law on the National Minimum Wage to make it clear that gig-economy workers whose work is allocated through an app are performing a type of “output” work and will not have to be paid NMW for each hour logged on when there is no work available,
• Consider increasing the rate of the National Minimum Wage for hours that are not guaranteed by the employer.
• Preserve continuity of employment where any gap in employment is less than one month (rather than one week as it is now.)
• For those receiving variable pay, increase the reference period for calculating holiday pay to 52 weeks (from the 12 weeks normally used at present) and allow holiday pay to be paid on a “rolled up” basis. (Currently not legal under the Working Time Directive.)
• Give agency workers the right to request a direct contract with the end use after 12 months on an assignment and give those on zero hours contracts the right to request guaranteed hours after 12 months. (Remember however that the right to request is not the same as a right for that request to be granted,)
• Give HMRC enforcement powers with regards to sick pay and holiday pay as well as minimum wage issues.
We do not know which, if any, of these recommendations will become law. The event at which the report was published was attended by the Prime Minister, so it would appear that she believes it is important. However, it remains to be seen whether her government can get any of these measures enacted given the focus on Brexit negotiations and the failure to win a majority at the recent general election.
I will post updates on any developments, but if you have a specific query about any of the proposals indicated above, please get in touch.
Posted on 21 Jul 2017