3 Feb 2017

In late October 2016, The Business, Energy and Industrial Strategy (BEIS) Commons Select Committee launched an inquiry into the future world of work and rights of workers, with a focus on ‘the rapidly changing nature of work, and the status and rights of agency workers, the self-employed, and those working in the ‘gig economy’’.

In late October 2016, The Business, Energy and Industrial Strategy (BEIS) Commons Select Committee launched an inquiry into the future world of work and rights of workers, with a focus on ‘the rapidly changing nature of work, and the status and rights of agency workers, the self-employed, and those working in the ‘gig economy’’.

The BEIS inquiry invited written submissions on a range of issues related to this subject. As a leading law firm advising innovators, entrepreneurs and technology businesses, Taylor Vinters is ideally placed to contribute to the discussion.

We took the opportunity to consider carefully the existing employment law landscape and what changes could be made to ensure it is fit for purpose in meeting the challenges of the future world of work. We also suggested some specific, positive solutions aimed at ensuring that innovative business models have maximum flexibility to prosper, while protecting the most vulnerable workers from exploitation.

Taylor Vinters was one of only a small handful of law firms to prepare written submissions to the BEIS Inquiry, which have recently been published. A copy of our full response is available to download here.

We summarised our conclusions as follows:

1. There is a need for certainty about the legal basis on which businesses engage their workforce and the nature of the relationships that are being created. The engagement framework needs to take account of business concerns for how legal risks and liabilities are managed in relation to a workforce. However, the current approach to employment and worker status is no longer well-equipped to meet the needs of the future world of work.

2. New business models require greater agility and flexibility for staff engagement and peaks and troughs in labour demand can be better managed. The emerging ‘gig economy’ demonstrates that flexibility can work to all parties’ advantage, provided an appropriate method of engagement is created.

3. Where there is an imbalance or inequality in the relationship, workers require some protection from exploitation. This must be balanced with the right of an individual to work when, and for whom that individual chooses.

4. We recommend the following:

a. recalibrating the statutory definition of ‘worker’ to re-establish clear dividing lines between the concepts of worker, employee and independent contractor. In particular, the definition of ‘worker’ (and the associated minimum protections that come with such status) should be focused solely on those who are vulnerable and at risk of exploitation, because of their subordinate position;

b. individuals with genuine freedom and flexibility to negotiate terms of work on an equal footing should be taken out of the worker regime altogether. Instead, they should be treated as independent contractors, allowing both the individual and the business to rely solely on negotiated contractual terms, with no additional burdens on business;

c. maintaining minimum worker rights to national minimum wage, paid annual leave, discrimination protection and statutory sick pay. Those receiving the benefits of the work should carry the burden of obligation to the workforce. This should be underpinned by an appropriate safety-net, especially where society also requires that businesses might otherwise be penalised for worker absences beyond their control, such as sick leave or maternity leave (which can have a disproportionate effect and cost for smaller organisations);

d. greater accountability for businesses who engage workers through third party agencies. We consider that this, alongside a clearer ‘worker’ regime, will encourage business to engage workers directly, thus improving staff well-being and commitment;

e. aligning the definitions of ‘employee’ and ‘worker’ for the purposes of both tax and employment law, with both employees and workers paying tax and National Insurance contributions through the PAYE system. The current disconnect impacts adversely on tax receipts. Better alignment may increase tax receipts and fund the cost of any increase in benefits / protection without the cost falling on business;

f. better enforcement of workers’ rights (including the national minimum wage) by the Gangmasters and Labour Abuse Authority, especially in sectors where businesses have sought to side-step this; and

g. recognising the potential role that trade unions can play in supporting vulnerable workers participating in the gig economy. This must be kept within acceptable bounds to ensure that innovation is not stifled, while recognising that both business and workers can benefit from a degree of increased collective engagement.

5. Our submissions reflect our view that the world of work is already starting to look very different. While the old model may not be irretrievably broken, there are areas in which it is no longer fit for purpose. Some clear ground rules on who has minimum worker rights will also provide the best environment for entrepreneurs to continue developing innovative ways of doing business and make informed choices about how they wish to operate.