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Government Responds to Gig Economy Review

Background

Last week, the Government published its response to the Taylor Review of Modern Working Practices (Taylor Review) from July 2017.

In his review, Matthew Taylor recommended changes to the status and rights of workers. The Government’s response sets out proposals to increase workers’ rights and awareness of these rights. Amongst other things, proposals include day-one rights for all workers such as the provision of itemised payslips and a right to request a “more stable contract” as well as the requirement to provide clearer financial information to agency workers.

Whilst it appears that changes are on the horizon within the gig economy, the Government has made no solid proposals on changes to the law and has instead opted for further consultations in the following areas:-

  • Enforcement of employment rights;
  • Agency workers;
  • Measures to increase transparency in the UK labour market; and
  • Employment status.

Agency Workers – the Consultation

One of the proposed consultations is a review relating to agency workers following the Taylor Review’s recommendation for changes to improve the working conditions of individuals working within the gig economy. In the consultation, the Government is obtaining opinions on the following recommendations:-

  • Amending Legislation to Improve Transparency for Agency Workers.

Responses are sought on improving transparency for agency workers in relation to their contracts and pay, including clarity on pay rates and the use of umbrella companies who charge an administration fee for processing wages.

There is the proposal for a key facts document to be contained within any contract between work-seeker and employment business at the time of registration with the employment business. Opinion is sought on how such a document could work in practice and how to ensure work-seekers understand its content.

The document will include information on who is responsible for employing the work-seeker, how much the work-seeker will be paid by the umbrella company and fees payable, what statutory deductions will be made to pay and any additional benefits of the work-seeker.

  • Increased Regulation of Umbrella Companies

Another Government proposal is to bring the activities of umbrella companies within the remit of the Employment Agency Standards Inspectorate (EAS) which enforces the Employment Agencies Act 1973 and Conduct Regulations, potentially bringing a huge regulatory change to the way umbrella companies are managed. This could require umbrella companies to meet a set of minimum standards which are already required of employment agencies and businesses. The consultation seeks opinions on the merits of this proposal.

  • Abolition of the Swedish Derogation

Regulation 10 of the Agency Workers Regulations 2010 (AWR) is commonly known as “the Swedish derogation” and provides an exemption to the right to equal treatment with regard to pay in the AWR, provided that certain conditions are met. An aspect of these conditions is the need to give an agency worker a permanent contract of employment with certain provisions in it and pay a certain sum between assignments where certain requirements are met.

The Taylor Review recommended the abolition of the Swedish derogation as a consequence of abuse of the exemption, meaning workers were being paid less than permanent workers for the same work. In response, the Government are seeking feedback on how widespread any abuse of the Swedish derogation is and whether this abuse is best confronted through abolition of the exemption or extending the remit of the EAS to cover the AWR.

Comment

Although at present the Government has not made any changes to employment law it is clear that changes to the law in the future are being considered. While not conclusive, the content of the consultations provides insight into what those changes could be and appear to include both legislative and practical changes to how gig economy businesses operate. The agency worker consultation is open until 9 May 2018 and responses can be made either by email to awconsultation@beis.gov.uk or online.


This bulletin is for general guidance purposes only and should not be used for any other purpose.

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