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Employment: Taylor targets the self-employed

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Theresa May raised eyebrows when she appointed Matthew Taylor, Tony Blair’s former policy chief, to write a report on employment practices.

Good Work: The Taylor Review of Modern Working Practices was published on Tuesday and its 115 pages make uncomfortable reading for the 15% of the UK workforce who are self-employed.

Taylor argues that they aren’t paying their fair share of tax.

He says the principles behind National Insurance increases proposed in the spring Budget – and then dropped – are correct.

The self-employed do receive more favourable tax treatment but that only reflects the much greater risks they take. They shouldn’t be penalised.

His report says: “The level of National Insurance contributions paid by employees and self-employed people should be moved closer to parity while the Government should also address those remaining areas of entitlement – parental leave in particular – where self-employed people lose out.”

He proposes a pension system for the self-employed along the same lines as auto-enrolment for employees.

Most controversially, he wants the Government to set up accredited cashless platforms for making payments to self-employed workers.

This, he says, would stop them under-declaring cash income and could “reap several billions in additional revenues”.

Rob Johnston, Chief Executive of Cumbria Chamber of Commerce, said: “There are some sensible ideas in the Taylor Review but his proposals on the self-employed are deeply flawed.

“It feels as if the report has been compiled by people who haven’t a clue what it is like to run a business.

“The self-employed do receive more favourable tax treatment but that only reflects the much greater risks they take. They shouldn’t be penalised.

“And we’re highly sceptical that proposals to give self-employed people parental leave are workable.”

Elsewhere, the review aspires to “good work for all”, arguing that pay is only one part of the employment mix.

It says that people are most likely to enjoy what they do if they have job security, predictable hours, a work/life balance, opportunities to progress in their career and a chance to make their voice heard.

Taylor praises the flexibility of the UK labour market and comes out against Labour’s policy of banning zero-hours contracts.

But he does say that those on zero-hours contracts should be entitled to a higher National Minimum Wage rate, and should have the right to request a fixed-hours contract, and he does want to ban unpaid internships.

Other proposals aim to protect agency workers, make it easier for employees to set up workplace consultative committees or works councils, and introduce measures to enforce employment tribunal awards.

Rob added: “It’s good that Taylor has recognised that the UK’s flexible labour market works and has delivered record levels of employment.

We welcome his call to clarify legislation around who is an employee and who counts as self-employed. This is a grey area that causes problems for employers and contractors.

“His proposals here are more sensible and we welcome his call to clarify legislation around who is an employee and who counts as self-employed. This is a grey area that causes problems for employers and contractors.

“We’re delighted that he’s telling the Government to avoid increasing what he calls the ‘employment wedge’ – the non-wage costs of employing staff such as employers’ National Insurance, auto-enrolment and the Apprenticeship Levy.”

The big question is whether Taylor’s recommendations will be taken up.

Theresa May has said the Government will respond to his review “later in the year” but she stopped short of a promise to implement it.

The Government’s ‘supply and confidence’ agreement with the Democratic Unionists does not cover employment legislation, so the Conservatives would need a degree of cross-party support to get it through.

That is unlikely to come from Labour, given that senior Labour and trade union figures believe the Taylor review doesn’t go far enough.

TUC general secretary Frances O’Grady said: “From what we’ve seen, this review is not the game-changer needed to end insecurity and exploitation.”

TAYLOR RECOMMENDATIONS AT A GLANCE

  • The Low Pay Commission to recommend a higher National Minimum Wage rate for workers on zero-hours contracts.
  • New legislation to clarify who counts as an employee and who is self-employed – at present, Taylor says, the law is “so ambiguous that only a court can fully understand the basic principles”.
  • Changes to the tax and National Insurance system to bring the self-employed in line with employees.
  • Accredited cashless platforms for paying self-employed workers such as window cleaners. This could save “several billions” by cutting tax evasion.
  • A pension system equivalent to auto enrolment for the self-employed.
  • A new category of “dependent contractor” for those working in gig economy businesses such as Deliveroo and Uber. They would not be employees but would have some employee rights.
  • A right for agency workers to request a direct contract of employment once they have been placed with the same company for 12 months.
  • Ending the “Swedish derogation” that allows agency workers to opt out of equal pay with directly-employed staff.
  • A right for zero-hours workers to request a fixed-hours contract.
  • Changes to the Information and Consultation of Employees (ICE) regulations to make it easier for employees to set up an on-site joint consultative committee or works council.
  • HM Revenue and Customs to enforce basic employment rights – National Minimum Wage, sick pay and holiday pay.
  • An easy way for individuals to determine their employment status before an employment tribunal hearing starts, with the burden of proof on the employer to show that the individual is not an employee.
  • Government to “name and shame”, impose “robust penalties” and take enforcement action against employers that don’t pay employment tribunal awards.
  • A consistent approach to employability and lifelong learning to cover vocational training, on-the-job learning and development, lifelong learning and informal learning outside work.
  • A careers strategy to help those in low-paid work to progress.
  • A ban on unpaid internships which are “an abuse of power by employers and extremely damaging to social mobility”.
  • Reform Statutory Sick Pay so that it is explicitly a basic employment right, comparable to the National Minimum Wage.
  • Widen the remit of the Low Pay Commission so that it can make recommendations to Government on what needs to change, including National Minimum Wage rates, to improve quality of work in the UK.

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