Trevor Colling is Associate Professor in the Division of Work and Employment. His research explores the impact of the law on employment practice within the workplace. In this blog, he reflects on the UK Government’s response to the Taylor Review of Modern Working Practices and the likely consequences for the experience of work in the UK.
In the United Kingdom (UK), the labour market impact of the financial crisis from 2008 was not as severe as many had anticipated. Employers held on to staff with valuable skills, so redundancies and increased unemployment were muted relative to previous recessions, but firms found other ways to reduce labour costs and liabilities. The UK is often cited as the exemplar of employment growth through flexible forms of working and unemployment proved a more intractable problem in mainland Europe. Yet unrestrained flexibility weakens employment standards and opens the potential for labour market exploitation. The Taylor Review was established in the UK to consider the optimum balance between flexibility and fairness in the labour market and to recommend policy mechanisms that might support the generation of “good work”.
Of course, flexible working has the potential to benefit both organizations and their workforces. Discussion of working time, for example, has identified structured flexibility and autonomous flexibility. While employers are able to use both to attract and retain diverse workforces, these also offer workers respectively medium-term predictability (e.g., part-time working, term-time working) or control over short-term variations (e.g., flexitime, hours-banks). Alternatively, firms may opt to deal with uncertainty by adopting approaches based on unstructured flexibility. Here, working patterns can be scheduled closely to the operational needs of the employer but workers bear all of the consequent risk, in terms of unpredictable working hours and variable income.
The Taylor Review was launched amid concerns about the growth of business models requiring high-levels of unstructured flexibility from workers. Reports from Amazon and Sports Direct highlighted intensive targets and performance management; poor job security; compulsory overtime; and payments below the minimum wage as a consequence of unpaid time spent waiting for security checks. Across the economy, the number of people on zero-hours contracts (where working hours are not pre-set and can vary upwards from zero and back again) increased by 50% over the three years to the end of 2016.
The new wave of self-employment generates particular problems. Self-employment accounts for almost one third of employment growth since 2008. Undoubtedly, some of this is driven by a genuine entrepreneurialism and a search for autonomous flexibility but choice of this kind is not always available. The majority of new businesses are sole traders and many display the characteristics of “necessity entrepreneurialism”. Many begin businesses when they are unable to find other suitable work or when self-employed status is imposed by employers as a pre-requisite for the offer of paid work.
Employers can realise considerable benefits from bogus or sham self-employment of this kind and the presumed advantages for workers can be illusory. Those labelled self-employed are deemed to be in business independently so there is no requirement to pay the national minimum (/living) wage, holiday/sick pay, or to protect workers from arbitrary discipline and dismissal. Yet firms can retain many of the benefits of control and direction inherent in an employment relationship. Those contracted may have limited discretion over the way that their work is done; the rates that can be charged; or even the hours that they work. Low “piece-rates” (payment per completed task) mean that workers are compelled in practice to work at times when most work is available and often for long periods in order to secure sufficient financial returns (see Forsey and Field 2016 for accounts of working for Hermes).
Bogus self-employment has been challenged by a growing wave of employment status cases taken to Employment Tribunals and senior courts. Because firms such as Addison-Lee, Deliveroo, and Uber feature prominently, these tend to be grouped under the heading of the Gig Economy, though conventional firms such as Pimlico Plumbers are also involved. The courts have tended to be supportive in these cases, those deemed self-employed by the terms of their contract have been seen to deserve employment protections accorded in law to “workers” or to “employees”. The problem is that the tests for employment status are complex and cases are inherently susceptible to appeal through the court system. Fully decisive judgments through litigation can take time, energy, and considerable resources and are of immediate benefit only to the workers that have taken a case.
Such was the range of issues presented to the Government review established in 2016, led by Matthew Taylor (Chief Executive of the Royal Society of for the Encouragement of Arts, Manufactures, and Commerce [RSA]). The focus and scope of the review was certainly ambitious. At its core was a sophisticated moral, economic, and fiscal case for the generation of “good work”. Improved working lives build a cohesive sense of citizenship; foster better productivity; and increase returns to the exchequer through taxes and national insurance contributions. Much of the detailed consideration focused on the policy mechanisms that might support such aspirations, including greater clarity around employment status and the enforcement of basic labour standards.
The Taylor Review was published in July 2017 and the Government response came, amid great fanfare, in February 2018. The latter is certainly a substantial document, running to 78 pages in total, and it has given rise to four separate public consultation exercises which are due to conclude in early summer 2018.
All of this is to be welcomed of course but there are grounds for scepticism about the ultimate impact. First, the timidity of the review’s ultimate approach was exposed immediately, at the point of publication. In the same month, the Supreme Court delivered a unanimous judgment overturning the Government’s policy of charging fees to claimants at Employment Tribunal. Despite evidence that this policy had placed obstacles in the way of workers asserting their employment rights, the review made no recommendation on this specific point. As Taylor acknowledged subsequently this was partly because, “as far as possible, we avoided recommendations that would require additional Government spending.” Quite how or why an ambitious exploration of the prospective policy agenda came to be qualified by current public expenditure constraints is not fully clear.
But it is the failure to promote the role of collective representation through trade unions that has attracted the most criticism. Appropriately, the review is built upon a definition of “good work” borrowed from the Institute of Employment Research and key characteristics are set out on page 13 of the report. Under the category of “Consultative Participation and Collective Representation”, these include “union presence” and “union decision-making involvement” (sic). In submissions to the review, unions set out policy measures that might support their role in developing and amplifying employment standards, including widened rights of access to workplaces; strengthened rights to consultation; and sector-level consultation and collective bargaining to prevent poor employers undercutting the better ones. By page 53, however, the specific issues of union involvement are elided with a more diffuse concern with ensuring “employee voice”. Attempts to promote stronger forms of union involvement in decision-making, such as collective bargaining, are absent from most of the report until (at page 93) the prospect of sector level negotiating arrangements is dismissed decisively (and inaccurately) as incompatible with, “the British way”.
The significance of this omission cannot be overstated. Aside from longstanding evidence that employment standards are best observed and built-upon where unions are present, key advances on the issues at play in the review have been secured only with union-backing. Litigation over employment status has been supported through the court system by unions and the case at the Supreme Court overturning Employment Tribunal fees was taken by Unison, the public sector trade union.
Issues surrounding employment status are more prominent in the review and in the Government’s response. Employment status provides the focus for one of the Government’s four consultation exercises arising from the review, which is comprised of 64 questions. Such a comprehensive approach is encouraging perhaps but here too there is some foreboding. Though almost eight months passed from the publication of the review to the Government’s response, little has been done to develop the issues into specific policy proposals. Many of the questions are expressed in broad terms and simply invite solutions from the individuals and organizations responding to the consultation. For example, in a series of questions related to the core legal tests of employment status, the consultation asks, “what does mutuality of obligation mean in the modern labour market?” – arguably an approach better fitted to an undergraduate examination in law rather than a consultation seeking to establish viable policy mechanisms.
That the consultation on employment status is the last to conclude has prompted wider concerns. It would not be surprising at all if concrete proposals on the reform of employment status are slow to appear. In 2002, a Labour government announced a consultation on employment status. It took four years before a response was issued, which was basically to leave the extant legal framework in place. In 2014, the Coalition government launched a further review of employment status but progress was slowed following a change of government in 2015. We shall have to see what will come of this most recent round of navel-gazing but the omens are not good and, in the context of Brexit, even the current appetite for reform may yet weaken further.