Government response to the Taylor Review: Good news on zero hour contracts but delay on gig economy

Today the government released their response to the Taylor Review of Modern Working Practices. The government’s recognition that good quality work is important is very welcome. Unfortunately, much of the substance of the government’s response focuses on the need for further consultation and additional consideration. Six months after the publications of the Review’s recommendations, we mainly have a call for further consultation and consideration on many of the most important policy areas rather than concrete policy decisions. For example, altering labour law to ensure that self-employed workers who are dependent on labour platforms have access to legal protections – such as the minimum wage – could significantly improve job quality in the gig economy. Yet the government states only that they will hold consultations on the enforcement of employment rights and employment status recommendations. A wage premium for zero hour contracts, if set at the right level, could discourage the unnecessary and callous use of this practice. But the government will only commit to asking the Low Pay Commission to consider the impact of a higher minimum wage rate for workers on zero-hour contracts. While ending the ability of agencies to employ workers on cheaper pay rates would clearly benefit the 1.2 million UK agencies workers, yet we are told they are only considering repealing these damaging laws.

However, in amongst the delay and indecision, there are some concrete policy announcements which could be important and should be welcomed. These include the quadrupling employment tribunal fines for employers showing malice, spite or gross oversight to £20,000. Also it’s very interesting that the government say they we come up with a definition of work time for gig workers so they can know what they should be paid. This could be very important in shaping the nature of the gig economy and is certainly something to watch.

Perhaps most importantly the government announced that they will create ‘a right for all workers, not just zero-hour and agency, to request a more stable contract.’ That this focuses on all workers, rather than just those on zero hour contracts is important as the most recent data suggests 4.6 million people in the UK experience precarious scheduling 3.9 million more than those on zero hour contracts.

Moreover, alternative policy suggestions such as outright banning zero hour contracts have two serious downsides. The first is that employers would be likely to respond to a simple ban by moving workers onto contracts which only guarantee a few hours of work per week. It’s not clear why a zero hour contract should be considered worse than a one or two-hour contract. Guaranteeing workers a few hours of work per week does little to help them make ends meet. Thus they will still experience high levels of insecurity regarding their pay and how to achieve work-life balance while also trying to get enough hours to survive. To be effective such ban would have to encompass all contracts which do not provide enough hours to survive on. But how many hours someone needs or wants will depend upon their individual life situation. So banning all short hour contracts would mean denying some people, such as students and those with second jobs or caring responsibilities, the jobs and hours they actually want. Secondly, some jobs are highly dependent on changeable conditions external to the business. For example, ice cream sales are heavily influenced by the weather. Therefore, banning zero hour contracts could threaten jobs in some industries with variable demand.

In 2014 a report by me and Brendan Burchell proposed, what we consider, a more sensible approach to reducing precarious scheduling. We argued that the best way to do so was through a ‘right to make statutory applications to work additional core hours and/or to have greater schedule security.’ During 2014 and 2015 we presented this idea to a number of civil servants and government officials, and it is good to see this idea has now been taken up. However, we were clear that given the vulnerable position of those suffering from precarious scheduling, strong enforcement mechanisms were necessary. This is what we proposed:

‘This would work along a similar process to the current ‘right to make a statutory application to work flexibly’. Accordingly, an employer rejecting a worker’s application would have to provide in writing the business reasons for rejecting the application and how the employee can appeal. Employers would only be able to reject an application for one of the following reasons:

  • Extra costs which will damage the business
  • An inability to meet demand

Additionally the business reasons could be challenged if an employer’s subsequent actions contradicted them. For example, hiring new workers or the recurrent utilisation of overtime facilities to cover hours previously requested by existing workers might be likely contradictions of the stated business reasons.

So as to ensure compliance and to encourage employers to voluntarily securely schedule workers in the first place, rejected applications during each financial year would need their business reasons audited (ACAS’ role could be expanded to serve this function) by the end of that year. To cover the cost of this auditing and to create an economic incentive to schedule workers securely in the first place a nominal minimum fee would be charged for each application audited. A fine would be administered for each business case which failed its audit and a public league table created of the worst offenders.’

The government has provided little detail of how their proposed right to stable contracts would work in practice; how they would ensure that workers could make use of it without fear of retaliation and how employers who ignored it would be sanctioned. As the government moves forward in developing this idea its essential that we push for strong and accessible enforcement mechanisms which strengthen the position of vulnerable workers.

Alex Wood

Alex Wood