Our response to the government's consultations on modern working practices

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27 Jun 2018

Charlotte Zealley, Research Analyst

When the government set out its response to the Taylor Review of Modern Working Practices in February, our institute director, Nigel Meager, described it as a step in the right direction, albeit a small one. In responding to two of the government’s subsequent consultation on proposals (Increasing Transparency in the Labour Market and Employment Status) we have reiterated and expanded on this view.

These proposals move in the right direction, but are also unlikely to have a significant positive impact. Promotion of better employment practices must be accompanied by an effective enforcement strategy, and an understanding of the diversity of the growing self-employed workforce will be essential to cracking down on misuse of this categorisation.

The limitations of rights without enforcement

Proposals to extend the remit of the written statement to all workers and to introduce a right to request a more stable contract are, in principle, both good ideas. We particularly support the principle of encouraging progression for lower-paid workers that this right to request suggests. However, a worker on a zero-hours contract who fears that their hours may be cut by their employer seems unlikely to find a right to request alone a sufficiently powerful lever to access more stable work. We drew on our appraisal of the Right to Request Time to Train to support this view, which showed that a right to request could be better than nothing, but did not result in major change.  

In the case of all these proposals we stress that enforcement will be key to their success, and, on this, we welcome David Metcalf’s recently published Labour Market Enforcement Strategy.

Platform-based working is a small part of self-employment

As our recent research has highlighted, the self-employed workforce is very diverse and incorporates a spectrum of individuals - from those in highly independent and secure work to those who have insecure and dependent work. Some of those who are self-employed are working in the platform-based economy but this is a small proportion of the overall self-employed. Platform-based workers are themselves a diverse group, whose experience varies greatly depending on whether or not this is their only source of income.

As such, it seems clear that the proposals put forward in the consultation on employment status, such as considering whether the minimum wage should be enforced for platform-based working, are likely to affect individuals in a variety of ways. Blanket regulation may disadvantage some individuals as much as it benefits others.

Additionally, in our consultation response, we put forward a strong view, as recommended in our research on the self-employed, that those in genuine self-employment should be supported by government with a formal statutory definition. Additionally, the tax and employment rights regimes should be aligned to reduce confusion. This may also go some way to tackling the issue of ‘false’ self-employment, an issue that has recently been receiving significant media attention.

The long-term impact of new forms of working needs consideration

As self-employment grows, we need to consider what the long-term impacts, positive or negative, may be of having a larger proportion of the workforce in this category. Self-employed workers may receive less training, save less for their pensions and are disproportionately likely to move onto Employment Support Allowance than other types of workers. This could increase the burden on the state when it comes to their retirement or ill health.

On the other hand, our research has found that the flexibility of self-employment is valued by many individuals working in this way and that self-employed individuals tend to be highly satisfied with their work. It may even be the case that self-employment, and the gig economy in particular, is helping individuals who might not otherwise be able to work, through illness or caring commitments, access employment.

In order to retain these benefits while protecting individuals at risk from exploitative working practices, more tailored measures based on an understanding of the diversity of the labour market may be required.

You can read our consultation responses in full via the following links:

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Any views expressed are those of the author and not necessarily those of the Institute as a whole.