Certainty for all: a plea to the Taylor Review by Caspar Glyn QC, Anna Beale & Nathaniel Caiden

In November 2016, the government commissioned a review of modern employment practices. It is being led by Matthew Taylor and will focus on what has become known as the “gig economy”. In this blog, we summarise our written evidence to that review. Our central plea was that our legislators provide certainty for all. In our view this can best be achieved by extending basic workers’ rights to all but the truly self-employed.

In recent years, the types of “employment” relationship in existence have diversified almost beyond recognition. We have, to name but some of the most common, agency workers , individuals working through personal service companies and zero hours workers. These arrangements can be used by employers to avoid granting rights to their workers. They can also be used by employers and workers to avoid taxation.

As a result of this diversification, almost every other appellate employment case seems to deal with the complexities of employee/worker status. Entitlement to the most basic and fundamental “worker” rights (the minimum wage, rest breaks, annual leave, protection against discrimination) can often only be established following lengthy and costly court battles. The recent Uber case is an obvious example.

In our experience, tribunals and courts find it particularly difficult to articulate a clear test to determine the final limb of the definition of “worker”, namely that the work must not be performed for a party “whose status … is that of a client or customer of any profession or business undertaking carried on by the individual” (section 230(3)(b), Employment Rights Act 1996). All kinds of different tests have been proposed: the degree of “subordination” or “integration” of the purported worker or the “dominant purpose” of the contract. However none has proved satisfactory.

Last year, the waters became still murkier, when Windle v Secretary of State for Justice [2016] EWCA Civ 459  re-introduced “umbrella” mutuality of obligation as a potential factor in determining worker status, when it had previously been thought to be relevant only in determining employee status. Confusion reigns.

In our written evidence to the Taylor review, we proposed what we consider to be a more certain solution. This would provide basic “worker” rights to those who need them. Those who provide personal service under a contract should be workers, whatever legal mechanism is used to provide that service. The distinction between such individuals and an independent business should be either the ability freely to provide a substitute to perform the service, or substantial determination of the terms on which the service is provided.

We therefore propose the following definition of “worker”:

a person who personally pursues economic activities for another under a contract, the terms of which are or were in practice substantially determined by:

a) the person for whom the economic activities are performed; and/or

b) the person with whom there is a contract to perfom the economic activities.

We do not consider that broadening the definition in this way would place an undue burden on employers. The definition is very similar to that already used to establish worker status in whistleblowing claims (section 43K, Employment Rights Act 1996). In our experience, the use of that definition has reduced arid arguments and avoidance measures such as those described above.

This proposal formed the heart of our written evidence to the Taylor Review, but the questions asked were not limited to the definition of different employment relationships. Our second major plea was for more certainty around the applicability of the minimum wage to carers and other individuals providing “sleep-in” duties.

There is a huge volume of (often contradictory) case law  on this question. Those unfamiliar with the issue need only read the two recent EAT cases of Whittlestone v BJP Home Support Ltd [2014] ICR 275  and Shannon v Rampersad & Rampersad (t/a Clifton House Residential Home) [2015] IRLR 982  to understand the problem. These cases reached opposite conclusions on very similar facts. The present situation is uncertain and unsatisfactory, whatever the outcome in each individual case. Full payment for sleep-in periods can render care unaffordable, while no payment for such periods fails to reflect the fact that the carer is generally at the employer’s beck and call throughout. We propose that a full consultation should be undertaken focusing specifically on this issue, but in our view the most sensible outcome is likely to be legislative provision for a flat rate payment for duties of this kind, perhaps calculated based on the extent of activity during sleep-in shifts.

It is often said that lawyers thrive on uncertainty, and our proposals perhaps run counter to our own financial interests. But uncertainty benefits no one in the wider economy, particularly given the challenges the UK faces in the future. What is needed is a clear, level playing field for all, with protection for the most vulnerable players in our economy, and clear statutory provisions that prevent the development of ever more elaborate means of circumventing both worker rights and tax.

This blog was written in a joint effort of Anna Beale, Caspar Glyn QC and Nathaniel Caiden and was also featured in Thomson Reuter's Practical Law Employment Blog.