Labour flexibility is a value, and it has a price (scarcity principle)
Work review eyes pay premium for zero-hours contracts
Stopping ‘lazy’ bosses shifting risk to employees a priority
Requiring companies to pay a premium wage on zero-hours contracts could discourage “lazy employers” from pushing risk on to workers, according to the man reviewing employment rights for the government.
“The problem in the labour market is not security of work, it’s security of income,” Mr Taylor, Tony Blair’s former policy chief, said in an interview.
Mr Taylor was appointed by Theresa May in October to lead an independent review of whether “employment regulation and practices are keeping pace with the changing world of work”.
Employment in Britain is at a record high, but the rise of self-employment; of the “gig economy” of short-term, freelance work; and of zero-hours contracts has sparked debate about whether the changes to the way people work bring welcome flexibility or worrying insecurity.
Mr Taylor told the FT he wanted to discourage employers from forcing workers to accept new burdens that were once shouldered by businesses.
Forcing companies to pay a top-up on the minimum wage for hours not guaranteed in advance is one idea he is considering to redress employers’ demands for “one-sided flexibility” from workers. It would not apply to workers who choose their hours.
According to official data, there were 905,000 people on zero-hours contracts in the final quarter of 2016, 101,000 more than the previous year. Some of these workers are free to turn down the work offered by employers, but Mr Taylor has heard evidence that others do not have that flexibility.
“We’ve been hearing today about people in the social care sector who are told ‘be ready to leave the house at 7 in the morning’, then a phone call [comes to say] ‘no we haven’t any work for you today’,” he said.
He believes that if employers were made to pay a higher rate for every “non-guaranteed” hour the person had to work, they would be incentivised to guarantee more hours in advance.
“I think we can encourage employers to be a bit less lazy about transferring risk, even if it means [an employer] offers 15 hours a week rather than one hour, at least that’s 15 hours that I can know I’m going to be able to pay my mortgage.”
However, he stressed the idea was only a possibility and was still “up for debate”. “The drawback is we don’t want a proliferation of different minimum wages, because there’s something good about the fact the minimum wage is simple and everyone understands it.” It might also be difficult to distinguish between two-sided and one-sided flexibility and to define how much notice must be given.
The CBI employer’s group, said it was “vital” that the success of the minimum wage was not “put at risk by complexity or the unintended consequences . . . [of] trying to reshape employment contracts using a wage rate”.
Mr Taylor and the three members of his expert panel are halfway through a series of regional visits across the UK, where they are meeting employers, unions, experts and workers in town-hall style events. They will publish their recommendations in mid-June. The government will then respond.
Not long after Matthew Taylor was appointed by the government to review the changes to the UK labour market, a barrister sent him a copy of a recent speech about UK employment law. It was 64 pages long. “Dear Matthew,” the barrister wrote, “here’s my speech — I’m afraid it’s a rather superficial account.”
Mr Taylor won a ripple of sympathetic laughter in Cardiff this week when he told this anecdote to a room of academics, trade unionists, employers and members of the public.
Over the course of the next two hours, their debate gave a taste of the wide-ranging and complex issues on Mr Taylor’s plate: a supply teacher complained she was earning half what she should be; a Deliveroo employee said couriers did not want to lose their flexibility; a trade unionist had a spat with the leader of a recruitment trade body over a wrinkle in employment law relating to agency workers’ pay, which is known as the “Swedish derogation”.
Mr Taylor’s ideas for policy recommendations are similarly wide-ranging. They vary in scope from employability skills to zero-hours contracts to longer-term recommendations about the direction of tax and benefit policies.
The UK’s growing “gig economy” is one of the thorniest issues on his agenda. Legal battles have broken out across the UK over whether workers for companies like Uber and Deliveroo are truly “self-employed”. So far, these questions are being settled very slowly by employment tribunals.
Uber lost a test case last year after judges ruled the company had misclassified two drivers as “self-employed” so owed them the minimum wage and holiday pay. However, Uber continues to treat drivers as self-employed while the company appeals against the decision.
If people think good work is impossible, or they think it’s incompatible with business competitiveness, then we’re in trouble
“We all agree in the review, the law should do more of the work and the courts should do less of the work,” Mr Taylor said. He wants to “define in primary legislation” the principles that distinguish “self-employment” status from “worker” status — people in the latter group have more rights than the self-employed but fewer rights than full “employees”.
He is also considering the idea of reversing the burden of proof so that individual workers do not have to go to court to settle disputes over their employment status.
Instead they could ask an intermediary organisation such as Acas for a judgment. The onus would then be on the employer to challenge that decision in the courts.
Mr Taylor and his team have been unusually open about their ideas, even when they are only on the drawing board. “There’s virtually nothing I’ll say to you that I didn’t say last time I met my Number 10 minders,” he said. “[It] means we may float ideas that don’t end up in the report, but I think that’s a price worth paying for openness.”
Mr Taylor, now the chief executive of the RSA — the Royal Society for the encouragement of Arts, Manufactures and Commerce — is a savvy political operator who led the Number 10 policy unit for several years under Mr Blair. He has seen independent reviews fail in the past, their policy recommendations left to languish on dusty shelves. As a result, he wants to build support for the Taylor Review before it is published. Next month, he will launch a national campaign to encourage people to discuss the notion “good work” and what it means to them.
“If people think good work is impossible, or they think it’s incompatible with business competitiveness, then we’re in trouble,” he said. “So I want to have that conversation and win that argument.”