‘The Taylor Review of Modern Working Practices’ has just been published. It aims to developing proposals ‘to improve the lives of this country’s citizens’. It is not in fact written by a Victorian social reformer but by Matthew Taylor, Chief Executive of the Royal Society of the Arts and his team.
- The government commissioned this review following the growing concerns that the number of full-time employees as a proportion of the UK’s workforce has been decreasing.
- The review sets off with the ambition that ‘All work in the UK economy should be fair and decent with realistic scope for development and fulfilment’.
- Although advances in technology may eventually decrease the requirement for business to employ people, new platforms are disrupting established business models, e.g. Uber v. the licenced Taxi cab, Air B & B v. hotels, Social media news v. newspapers, email v. post.
- Currently just over 70% of the workforce are employed and just 15% self employed
The review's recommendations effectively include a statutory employment test together with a more dynamic system of taxation for the self employed that will see the abolition of the ‘cash job’.
With three types of people in work: employees, workers and the self-employed there are inconsistencies:
- Whilst all employees are workers, not all workers are employees.
- Workers have lesser rights to employees and the meaning of worker is ambiguous.
The reviewers think that the aim should be to retain the three types of labour but make the taxation of labour more consistent across employment forms while at the same time improving the rights and entitlements of self-employed people.
Technological change will impact work and types of employment and we need to be able to adapt
The review proposes that:
- Workers could be renamed as ‘dependent contractors’.
- It recommends what can be recognised as a statutory employment test: new legislation and guidance, that retain the best elements of case law and better reflect modern day casual work in terms of the control exercised by employers over their staff.
- Another plan is to allow employers maximum flexibility by: not allowing the NMW legislation to prevent operations and to provide a clear steer on employment rights.
The self employed
- It is recognised that with no union to support them, a stronger voice is required for the self employed together with improvements to their pension provision.
- Given the size of the ‘tax gap’ a more dynamic system of taxation is required to tax cash. This could be via more cashless transactions or a withholding tax when new platforms permit it.
The report does not discuss the public sector or compare public sector with private sector not does it consider IR35 and taxing the self-employed contractor, nor does it really consider in any detail how some technology (e.g. machine learning/AI) will totally interupt and change the future workforce. The report may in fact be of quite limited value.
The idea of a statutory employment test has been mooted by different people over the years. A statutory set of rules to replace years of case law works pretty well for residence purposes and HMRC have an employment indicator tool which means that they have already worked out the steps in their version of the non-statutory test.