Global menu

Our global pages


UK HR ebrief: Government responds to the Taylor Review: potential workplace implications

  • United Kingdom
  • Employment law - HR E-Brief


Last year, the Taylor Review considered how employment law and practices need updating to keep pace with modern business models. The Government has published its response today.

While the press reports suggest that the Government has announced sweeping changes to employment law, in fact there are few immediate changes. Instead, it has published four new consultations on aspects of the Review’s recommendations relating to enforcing employment rights, protecting agency workers, defining employment status and increasing transparency.  Importantly, the Government confirms that changes to tax and national insurance are not included in today’s announcements.   

Given the political realities of a minority Government, a Parliament focused on Brexit and complex issues raised by some aspects of the consultations, it seems unlikely that they will deliver actual change for some months, or even years, to come. As a result, for gig and platform businesses, of more immediate interest are the many ongoing employment tribunal claims raising employment/worker status issues, including the Uber and Pimlico Plumber hearings in the Court of Appeal this year. In addition, the EU proposed last year new legislation to improve the rights of on-demand and other non-standard workers which, if it becomes law, could require legislative change in the UK over and above today’s announcements (depending on the terms of any Brexit transition period - see further below).

A summary of the Government’s response to the Taylor Review recommendations
Following today’s announcement by the Government, we have set out below the next steps for each of the Review’s recommendations and potential implications for employers:

Proposals for new and enhanced workplace rights and protections

Written statements and payslips
Extend to ‘workers’ the current right for employees to receive a written statement of their terms and make it a day one right. This would be as a single document and include what statutory rights ‘workers’ are entitled to, when exactly they are required to work, how they will be paid and how long the job will last. Currently, only employees working for at least a month must receive a basic written statement within two months of their start date.

The right to an itemised pay statement will also be extended to workers (it currently only applies to employees) and will require employers to state the hours being paid for on the payslips of time-paid workers.

The Government is consulting on a new standalone right for individuals to bring a claim for compensation where an employer has failed to provide a written statement


A day one statement right has received some support from business groups on the basis that providing greater clarity may avert later disputes born out of misunderstandings

As regards payslips, unlike many of the proposals announced today, the Government has committed to introducing legislation “shortly”. Organisations will need to prepare for this imminent change and apprise their payroll departments and providers accordingly.

Holiday pay reference period
Increase the holiday pay reference period from 12 to 52 weeks.

The consultation seeks views on how this can be best implemented. It is also seeking views on ways in which atypical workers might be able to benefit from flexibility in how they receive their holiday pay (but not rolled-up holiday pay due to it being unlawful).

This will be welcomed by employers engaging seasonal and casual workers



Agency workers
Amend the  agency conduct regulations to ensure agency workers receive a clear breakdown of who pays them and any costs or charges deducted from their wages, such as PAYE and agency fees. Although the statutory regulations governing agency workers require agencies to disclose details of the individual’s contractual terms in writing, including pay, involvement of umbrella companies and pay can be obfuscated.

The Government is consulting over how this change should be introduced, including whether a standard template may be appropriate.

In legal terms, implementing this change is likely to require little more than a tweak to the existing agency conduct regulations. However, for employment businesses, the change will require a more robust approach to their contracts, with the insertion of some form of “key facts” page and transparency over intermediaries and pay mechanisms.

Right to request contract change
Introduce a right for all employees and workers, including agency and zero hour workers, to request a change to a more predictable and stable contract.

The Government is consulting on the detail, including whether there should be a qualifying service period with this new right

The right to request a contract variation already exists for employees with qualifying service. As with today’s proposal, it is a right to ‘request’ change, not demand it. Any extension to all workers would require changes to policies and new training if and when introduced.

Calculating continuous service
Amend the law on how continuous service is calculated to make it easier for people on atypical contracts to qualify for rights such as unfair dismissal protection and redundancy pay.

The details are being consulted upon.

This involves technical changes to employment law but the effects can be significant in practice. For example, currently casual employees may continuously break their qualifying service with small gaps between assignments, with the result that they never accrue unfair dismissal rights


Proposals for better enforcement of workplace rights

State enforcement
Move towards state enforcement of statutory rights to sick pay and holiday pay.

It could be some time before we see any real change on these issues. For although the Government has said it intends to ‘move in this direction’, before it does so it plans to ‘evaluate the extent of the problem’ and ‘examine the best way to ensure the most vulnerable receive the level of protection they deserve, bearing in mind feasibility and cost-effectiveness for the taxpayer.’

Unpaid Interns
Increase targeted enforcement by HMRC to ensure that interns are paid the minimum wage if they qualify as workers

All employers offering unpaid internships should check that interns are genuinely engaged in short-term work experience or shadowing and are not working. Those working, whether or not they are labelled interns, qualify for the minimum wage from day one, and employers risk financial penalties and naming and shaming for non-compliance.


Naming defaulters
Introduce a new naming scheme for employers who fail to pay employment tribunal awards

Again, the Government is consulting on the details so change is not imminent.

Increased penalties for aggravated breaches
Increase potential penalties where a breach of employment rights has ‘aggravating features’. At present an Employment Tribunal can order an employer to pay a penalty to the State of up to £5000 in such circumstances. The Government says it will increase this to £20,000 as soon as practicable.


Since their introduction in 2014, only 20 aggravated breach financial penalties have been imposed on employers. Part of the reason for this under-use may be concern that an employer may prioritise a state debt over an award owed to the claimant. This change is unlikely to alleviate those concerns.

Agency workers
Bring enforcement of the Agency Worker Regulations (AWR) and the activities of umbrella companies within the regulatory scope of the Employment Agency Standards Inspectorate (EAS). 

Providing a vehicle for enforcement of the AWR, which currently lies with the worker, is something the Government is exploring. Umbrella companies are increasingly under scrutiny but the Government will now consult on whether their regulation should be more closely aligned with that of employment agencies and businesses, Specifically, if they were to come under the control of the EAS in due course –which seems likely, their activities will be subject to minimum standards and enforcement. This would inevitably drive up costs but where those would be absorbed is less clear.





Matters being given further consideration

Minimum wage
The Low Pay Commission is being asked to consider what the impact would be if minimum wage rates were to be increased for workers on zero-hour contracts

The suggestion of a higher minimum wage rate for non-guaranteed hours would have major cost implications for organisations reliant on low-paid zero or short hour workers and would be expected to result in more guaranteed hours where commercially feasible

Employment status
The Government is consulting on how to introduce greater clarity into employment status (whether an individual is an employee, worker or an independent contractor). The consultation considers how different status is defined and where the lines between them are drawn. It explores: the possibility of codifying into legislation the main case law principles applied by employment tribunals when deciding employment status (as recommended by Taylor) including what those principles are and how they could be best set out in legislation and the role of secondary legislation in providing further detail on these main principles. It also considers a completely different approach: replacing the current tests and case law with a different, simpler test. This could involve a set of precise criteria such as length of engagement and the percentage of income derived from one employer (such tests are used in other countries). Alternately, the current case law principles could be radically slimmed down to achieve greater simplicity. Finally, the Government asks whether tax liabilities should still depend on being an employee


If the outcome of the consultation delivered a better understanding of status, there could be an increased readiness by workers to enforce their rights resulting in more status claims. Employers would need to risk assess engagements to limit exposure to such claims. However, the very wide ranging nature of the consultation and the complex issues it raising suggests that nothing will change for some time to come

Worker status
The Taylor Review recommended that those intermediate individuals who qualify for workplace rights as ‘workers’, but not employees, should be renamed ‘dependent contractors’ to provide greater clarity. The Government is consulting on whether: to use the name ‘dependent contractor’; to restrict ‘worker’ status to just ‘workers’ (currently, and confusingly, employees are also ‘workers’); to set a clearer boundary between the employee and worker statuses and, if so, how; the current definition of a ‘worker’ needs improving and updating for the modern workplace, in particular, whether there should be more emphasis on control when determining worker status.

As above, any change appears a long way off. However, changing the legal test for a ‘worker’ to focus more on control could mean that substitution clauses in contracts would have less legal weight and could make it easier for some individuals currently working as independent contractors to claim ‘worker’ status (with resulting minimum pay, holiday pay, pension and other rights) creating significant new costs and complexities for some organisations

Defining working time and the NMW
Reflecting emerging difficulties around how to apply, and to calculate, the national minimum wage to gig and other on-demand workers, the Government is consulting on a number of related issues in an attempt to gather information to decide how best to respond. The Taylor Review recommended that NMW legislation be amended to adapt existing piece rates provisions to accommodate NMW calculations in ‘pay per task’ business models

Adapting the NMW to reflect new working practices would be welcomed by some employers, given that a failure to do so may stifle innovation. However, any change would have to be subject to comprehensive review to avoid introducing new cost barriers and complexities

Deemed employees
In some instances, individuals can be deemed employees for tax purposes but not be granted any employment rights (such as where a person works through a personal service company). The Government is consulting on whether such deeming provisions for tax should be reflected in employment rights legislation

A complex and problematic proposal and, as such, one that may not go beyond the consultation document

The Government has launched a consultation exercise seeking views on the following:

  • whether employment tribunals should be or required to consider, and impose, sanctions to deter employers from repeated non-compliance with employment law, including aggravated breach penalties, cost orders and uplifts in compensation;
  • the detail of the proposed naming scheme outlined above; and
  • existing proposals to improve enforcement of tribunal awards.


Few will argue with the need to ensure that employers comply with tribunal judgments but the concept of ‘repeated non-compliance’ could prove tricky to define in practice.

Agency workers
A consultation on agency workers seeks views on the following by 9 May 2018:

  • how best to introduce clearer pay information at the outset;
  • regulation of umbrella companies;
  • whether the ‘Swedish derogation’  or “pay between assignment contracts” (PBAs) should be removed from the Agency Worker Regulations (AWR).

It seems highly likely that greater control will be introduced for umbrella companies. What is less clear is what to do about PBAs. These contracts have been controversial from the start, criticised by some as artificially supressing engagement costs and agency worker pay, whilst defended by others as guaranteeing minimum employment rights. Even so, they are relied upon extensively in certain business sectors and their abolition would be expected to meet business opposition. The consultation merely seeks information to aid understanding of the extent of the problem. However, it acknowledges that, were enforcement of AWR to be brought under the authority of EAS, this in itself may enable reasonable use of PBAs to continue. Organisations relying on PBAs would need to ensure their paperwork and paper trails are in order.

Involving staff
The Government is gathering evidence on the effectiveness of the Information and Consultation Regulations (ICER) in improving employee engagement in the workplace before deciding whether to take any further action, for example, whether to make it easier for employees to request a statutory staff forum under ICER, as recommended by the Taylor Review

ICER has had very little take-up in the UK to date. However, given separate Government proposals to require listed companies to report on employee engagement, some employers are already reviewing their employee engagement strategy. An ICER compliant forum could therefore be assessed as potential option as part of such a strategy

EU legislation on transparent and predictable working conditions

In December 2017, the EU Commission adopted a proposal for a new Directive which promises more “transparent and predictable” working conditions across the EU. If it were to become law, it would give workers the right to receive a written statement of their key rights on day one (in line with the above Taylor Review recommendation) and, importantly, it would align the definition of worker to the case-law of the Court of Justice. The Government is currently seeking clarification on this redefinition, given its potential to widen the meaning of ‘worker’.

The Directive would also provide for on-demand workers to have reasonable advance notice of their hours, restrictions on exclusivity clauses and, as in the Taylor Review, for the right to request a more stable form of employment. It also proposes stronger redress for employers failing to comply with the written statement duty, including the option for Member States to introduce a presumption against the employer: such as a presumption of an open-ended relationship if no information is provided about the duration of the employment relationship or a presumption of a full-time position if no information is provided on the guaranteed paid hours and so on.

Given that the Directive could, if EU agreement is reached, be adopted before the end of any Brexit transition period, it is one that employers should not ignore.