On 7 February 2018, the government published its response (the response) to Matthew Taylor’s 2017 review of modern working practices (the review), which considered the issues around the so-called gig economy. The review contained 53 recommendations for how things could be improved (see News brief “Report on the Taylor review: full steam ahead or running aground?”).

The response accepts almost all of the review’s recommendations. Much of it appears to acknowledge that more needs to be done to ensure that the current laws are enforced, and that the spirit, as well as the letter, of those laws is respected. However, many of the substantive proposals are subject to consultation and may be a long time coming, if they make it into law at all (see box “An overview”).

The response is split into four main sections:

Good work. The government accepts that quality of work, as well as quantity of work, is important, and acknowledges that it has a responsibility to ensure that good work is available. It sets out a number of principles against which it believes work should be measured, including satisfaction, fair pay, participation and progression, wellbeing, voice and autonomy. While the review recommended that the Low Pay Commission (LPC) should take a wider role in promoting good work, the government has decided that this would risk detracting from the LPC’s current work. Instead, the government or LPC will work with input from various sources to ensure that it effectively measures and improves the quality of work.

Informed choices. Currently, the judiciary rather than parliament is guiding the debate with regard to employment status and, therefore, the rights and entitlements of working people. The government commits to providing greater statutory clarity in this area, and this forms the basis of one of the consultations. The government has also said that it is committed to avoiding situations of bogus self-employment and will develop an online tool to help determine employment status. It has, however, stopped short of reversing the burden of proof to introduce an assumption that someone is a worker unless the employer can show otherwise. The response promises to reform how continuity of service is calculated, so that breaks of more than one week will no longer break continuity, except in certain circumstances. Whether the government agrees to adopt a one-month break will depend on the outcome of the consultation.

The response promises to introduce the right to written particulars for all workers, not just employees, and the government is consulting about what further information should be provided to agency workers to enable them better to understand the basis on which they are working. The right to a payslip will also be extended to workers, and if they are time-paid workers, the payslips will need to include details of the hours worked to encourage transparency and ensure that people are paid correctly. The government is consulting on how to define working time in order to address the issues faced by those in the gig economy, and the reference pay period for calculating holiday pay entitlement will be extended to 52 weeks. However, it has declined to re-introduce the concept of rolled-up holiday pay.

A fair deal. In order to ensure that unscrupulous employers do not exploit flexibility in the labour market by transferring business risk to their workforce, the government will take a number of steps to ensure that the balance is fairly struck. The LPC will consider whether some workers should be entitled to a higher minimum wage to act as an incentive for employers to provide more guaranteed work where possible. The government intends to introduce the right to request more predictable contracts, and goes further than the review’s recommendation in this regard: all workers will be given the right to request, including workers on zero-hours contracts and agency workers.

The government is considering abolishing the so-called Swedish derogation that allows employers to avoid some aspects of the Agency Worker Regulations 2010 (SI 2010/93) but has asked for more evidence as to whether it is being widely abused.

More regulation relating to transparency will be introduced, partly through changes to corporate governance, and possibly through lowering the thresholds required to trigger the Information and Consultation of Employees Regulations 2004 (SI 2004/3426). Self-employed workers will be given additional protection through “workertech”, which allows for information to be shared.

The response recognises that some rights are enforced by individuals through the employment tribunal but others, particularly those that relate to the most vulnerable workers, should be the state’s responsibility. The Employment Agency Standards Inspectorate’s powers will be extended. The government is consulting to understand the scale of non-compliance with certain responsibilities, such as payment of sick pay and holiday pay, and will then decide how best to effectively target enforcement activity.

Unpaid internships are targeted as being potentially exploitative, unless the interns are genuine volunteers.

More stringent penalties will be imposed on repeat offending employers, with the penalty for aggravated breach being raised from £5,000 to £20,000 as soon as possible. If an employer has been found to have mislabelled someone’s status, it will be expected to amend the contracts and relationships with anyone in a similar position unless there is a good justification for not doing so.

Employers that fail to pay tribunal awards will be named and shamed on a government website. Significantly, the response includes an indication that the government appears to be considering the re-introduction of employment tribunal fees (see News brief “Employment tribunal fees: Supreme Court brings the curtain down”).

Security of opportunity. This section deals largely with the training and development of workers through apprenticeships, the National Retraining Scheme, and the development of a unified framework of employability skills. The response also promises to look into the introduction of a right to return to the same job for those on long-term sick leave, and to make statutory sick pay a basic employment right. It also acknowledges that while the number of self-employed people is increasing, there is a decline in the number of people saving for their pensions.

Many employers will be largely unaffected in the short term. Some may find that they will face increased administrative costs, such as itemising payslips and providing written statements to workers. National Minimum Wage changes may be more expensive for employers if they are implemented, but equally they may allow employers to avoid paying a flat hourly rate to gig economy employees who are on call, even when they are not working.

If implemented, introducing a right to return for those on sick leave could be problematic for many employers. Some employers will no doubt be caught by the changes to atypical workers’ contracts, in circumstances where workers have been employed for more than 12 months. But this would not necessarily result in any increased financial burden, providing that employers act within the law.

The tone of the consultations is largely a call for evidence, designed to canvass more views rather than to discuss plans. The consultations are scheduled to close in May or June 2018. This means that concrete proposals are unlikely to emerge before late autumn 2018, and draft legislation is unlikely to be forthcoming until 2019. While the response promised that the “changes proposed in the review relating to employment status would represent the single largest shift in employment status since the Employment Rights Act 1996”, some commentators have suggested that, on this timeline, the reforms proposed in the review may never be implemented, particularly if there is a change to the political landscape.

The consultation on employment status, authored jointly by the Department for Business, Energy and Industrial Strategy, the Treasury and HM Revenue & Customs (HMRC), explores the options for reforming the tax system and raises the possibility of aligning the different tests for self-employment that are currently used by HMRC and the employment tribunal. However, the government has shied away from addressing the rates for National Insurance contributions (NICs). The difficulties it faced leading to the u-turn on NICs for the self-employed in Budget 2016 has meant that this remains off limits in the response.