Taylor Review criticised for going too far - and not far enough

Business leaders say plans will costs jobs, but unions say they will not end 'scourge of insecure work'

Len McCluskey

Business leaders and trade unions have both criticised a government-commissioned review into working practices in the so-called "gig economy" but for very different reasons.

Industry trade bodies says the Taylor review's proposals to clamp down on the use of zero-hours contracts and give gig economy workers more rights go too far and could cost workers hours or even their jobs.

At the same time, workers' leaders claim the recommendations are not strong enough to tackle the "scourge of insecure work".

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The report calls for the minimum wage to increase for uncontracted hours to encourage employers to guarantee more work, while employees on zero-hours contracts, as well as agency workers, would also have the right to request a move to direct employment on fixed hours after 12 months in a role.

In addition, gig economy workers at companies such as Uber and Deliveroo would be reclassified as "dependent contractors" and entitled to sick, holiday and maternity pay. They would also receive an above minimum-wage rate for "peak" hours and be classified as employees for tax purposes meaning companies would have to pay more national insurance.

Neil Carberry, managing director for people and skills at the CBI, told The Times the proposals "could have unintended consequences that are negative for individuals, as well as affecting firms' ability to create new jobs".

A higher minimum wage for zero-hours workers could encourage the creation of a "large number of fixed, short-hour jobs, leading to fewer people getting the work that they want", he added.

Adam Marshall, director-general of the British Chambers of Commerce, added that a wage premium for uncertain working hours "is superficially attractive… [but could] push wage costs up elsewhere."

However, union leaders criticised the report for not banning zero-hours contracts altogether and allowing gig economy firms to pay some hours at less than the minimum

"Instead of the serious programme the country urgently needs to ensure that once again work pays in this country from Taylor we got a depressing sense that insecurity is the inevitable new norm," Len McCluskey of Unite told The Independent.

Tim Roache, general secretary of the GMB, also called on the government to enforce current laws "and end the insecure work epidemic that continues to spread like wildfire through the economy".

Taylor review calls for higher minimum wage for 'insecure' work

11 July

A higher minimum wage should be introduced to give people in "insecure" work more certainty, says a government-commissioned review.

Report author Matthew Taylor says hours not guaranteed in contracts should be paid at a higher rate "set at a level which incentivises employers to schedule guaranteed hours as far as reasonable within their business".

Essentially this would create a financial penalty for firms that do not offer fixed hours for work needing to be done and would "compensate the most vulnerable workers… for the additional flexibility demanded of them".

Zero-hours and agency workers would also be given more opportunity to regularise their earnings through a new rule enabling them to request a move to fixed hours after 12 months with an employer, who would be obliged to consider any such request "reasonably".

Elsewhere, so-called "gig economy" workers would be reclassified as "dependent contractors", a status that would correspond to that of "employee" in tax law so as to remove any incentive not to give staff more security.

"Dependent contractor" would have the same rights as the existing "worker" status, with entitlement to sick pay and holiday pay.

Taylor also says employers such as Uber and Deliveroo should set out "piece" pay rates for dependent contractors equating to at least 20 per cent more than the minimum wage.

Contractors could work for less than this during "non-peak" times, but that rate would need to be set out in advance to allow them to make an "informed" choice about working.

Taylor, who is head of the Royal Society of Arts and a former adviser to Tony Blair, says the reforms would set "principles for fair and decent work" and could help to improve UK productivity.

However, unions branded the reforms "feeble" for failing to ban zero-hours contracts or flexible gig economy working practices, says Sky News.

Rebecca Long-Bailey, shadow business secretary, also called for the 4.3 million people in "insecure" work to get more guarantees.

"If it looks like a job or it smells like a job then it is a job, and the worker should be employed," she said.

'Gig economy' workers to be paid more than minimum wage

10 July

"Gig economy" workers such as Uber drivers and Deliveroo delivery riders could be about to get a guarantee of earning 20 per cent more than the minimum wage.

A report into employment practices, led by Royal Society for the Arts chief executive Matthew Taylor, this week will demand more clarity on when someone qualifies for certain employment rights.

At the moment, there is a middle ground status, "worker", between self-employed and fully employed in employment law. It applies to people flexibly employed by a company and entitled to the minimum wage, holiday pay and sick pay, but not other rights, such as the ability to sue for wrongful dismissal.

Experts and even gig economy companies themselves say the status is too vaguely defined.

Under Taylor's proposals, which will be published tomorrow, this status would be rebranded as "dependent contractor" and clarified to apply to more workers, says the Financial Times.

They will also be paid 1.2 times the national living wage under normal working conditions, which the BBC's Kamal Ahmed says is based on a model used widely for "piece work" in the farming sector.

To counter criticism this would result in flexible work being withdrawn when demand is low, the review will say companies can offer a "real-time" pay system to allow workers to log in and see if they will earn less than the minimum rate at that time. If they accept the work, the minimum wage law will not apply.

Contractors will still qualify for holiday and sick pay at standard rates.

As there is no third option in tax law, these workers will probably be classified as employed and so companies will have to pay national insurance of 12 per cent, not nine.

While that could cost some jobs, the Trade Union Congress says it could also make up some £4bn in lost tax revenue for the Treasury in recent years due to the rise in self-employment.

Beyond the gig economy, Taylor is also to make recommendations on areas such as zero-hours contracts.

But he is likely to frustrate unions by stopping short of calling for a ban, says Ahmed of the BBC, citing high employee satisfaction and usefulness for industries with high variable demand, such as events organising or retail.

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