Important changes to definition of ‘employee’ and ‘worker’ proposed

Important changes to the definition of ‘employee’ and ‘worker’ are proposed by the Taylor review published today (11 July 2017).

The Taylor review was set up by the government at the end of 2016 to consider the implications of new models of working on the rights of workers and the freedoms and obligations of employers.   

  • The main proposals are:
  • The criteria used to determine who is and who is not an employee should be put on a statutory footing and in particular what the principle of ‘control’ means in a modern context;
  • The primary intermediate category of ‘worker’ should be retained but the definition should be extended to those who are ‘dependent contractors’;
  • Dependent workers should be entitled to (a) a written statement of terms and a stand alone right to compensation if employers do not comply, (b) a right to sick pay and holiday pay, and (c) a right to the national minimum wage (although in the case of those who work in the ‘gig’ economy the precise formula would need to take account of the contractual relationship between the parties).

The report also proposes:

  • For holiday purposes the pay reference period should be extended from 12 to 52 weeks for seasonal, casual and zero hours workers;
  • It should be open to individuals to elect to receive rolled up holiday pay (although this would appear to be contrary to the UK’s current obligations under the Working Time Directive);
  • Agency workers should have the right to request a direct contract of employment after 12 months employment with the same hirer;
  • the ‘Swedish derogation’ under the Agency workers Regulation 2010 should be repealed;
  • The Information and Consultation of Employees Regulation should be extended to employees and workers where 2% of the workforce requests it. Those categorised as ‘workers’  would qualify as part of the 2% for this purpose;
  • Statutory sick pay should be reformed so it becomes a basic employment right and the service qualification requirements should be altered;
  • HMRC should be responsible for enforcing the right to holiday pay for low paid workers;
  • Workers should have the right to have their employment status determined without having to pay tribunal fees and the burden of proof in such cases should be on the employer.

The Taylor review however rejects the submission that the current three tier to employment status-employee, worker and self –employment- should be replaced by a binary division between employment and self-employment.

Anthony Korn is a Barrister specialising in all aspect of employment and discrimination law at No5 Barristers’ Chambers.