Today the government will unveil their proposals following a review carried out by Matthew Taylor (former Labour policy advisor) into how employment practices need to change and adapt in order to keep pace with modern business models, now referred to as the gig economy.
Whilst there is much focus on the Ubers and Deliveroos of the British economy, like most government legislation affecting the labour market there are unintentional consequences.
The major proposal to be put forward is the creation of the ‘Dependent Contractor’, an area of the labour market occupied by most associate dentists.
There is also a proposal to have definition/criteria of ‘employee’ set out in law, with the report suggesting that the factors such as control and mutual obligation (to provide and accept work) in determining employment status should be part of the updated legislation.
The proposals go as far to say that this new category of workers under the control andsupervision of a business should be given rights to statutory sick pay and holiday pay. It is suggested that individuals would have the right to roll up holiday pay and have it added on to their weekly/monthly pay rather than having paid time off like an employee would.
In addition, the fact that a substitute (locum) clause is in a contract may no longer be a determining factor in making somebody self-employed and therefore denying them workers rights (such as the rights detailed in the previous paragraph). The removal of a requirement for workers to have to provide personal service would significantly increase the number of people being afforded employment rights protection.
Another recommendation is that dependent contractors should have the right to a written statement at the start of their engagement, with a right to claim compensation for failures to comply, much like those rights enjoyed by employees already.
There may also be an obligation on companies to prove that workers earn 1.2 times the national living wage. This is less likely to raise eyebrows in the dental industry but it is worth noting that by 2020 that could mean having to guarantee an associate £11 per hour worked.
In isolation, this would have considerable consequences for dental practices who engage associate dentists who do not enjoy such rights at present. We have written before about striking the balance between the need to have a functioning practice but equally allowing the associate the clinical freedom to carry out their work as they fit, the flexibility to bring in a locum and the right for them to choose the work which they undertake.
The review also touches upon the tax implications of these proposals. Most importantly, there is a suggestion of bringing employees and independent contractors together and being treat as ‘employed’ for HMRC tax purposes. This would mean national insurance contribution and PAYE implications for employers, something which businesses would have to plan for in setting aside funds or reorganising their business to account for these additional financial obligations. I would anticipate extensive commentary following on this point from accountants and business development consultants.
The following principles have been set out to secure ‘fair and decent work’ for the UK labour market:
- Government accountability to provide “good work for all” for which we all must take responsibility.
- Clarity on how to distinguish workers and those who are legitimately self-employed.
- Not to impose national regulation but to encourage responsible and good management, strong employment relations with organisations as well as good corporate governance.
- Strategy in each sector to engage both employers and employees in ensuring that people are not trapped facing insecurity which prevents progress in their current and future work.
- Develop a more proactive approach to work in recognising the shape and content of work being linked to health and well-being of workers.
- Enhance the ways in which everybody can develop their skills and input through formal and informal learning both ‘on the job’ and away from their work.
- The law should be promoted and enforced to help individuals understand and exercise their rights and organisations make decisions.
If these proposals make it on to a bill and through parliament (which may need cross-party consensus) then the balance will be even more important to strike or even a complete change in the nature of the practice owner/associate dentist relationship and therefore the terms which govern the engagement.
In turn, practice owners may have to sacrifice the degree of control they exert over associate in order to avoid the financial implications of engaging the ‘dependent contractor’.
The review suggests that individuals may be able to have their employment status determined by an employment tribunal with having to pay a fee, with the burden of proof placed on the business/employer. This could potentially change the landscape of how dentists are engaged by practices across the country whether a small practice or multi-site corporate.
There is some good news in this for practice owners, it has already been stated and is likely to be echoed today, that these proposals will not be underpinned by ‘overbearing regulations’ and that there will be incentives for businesses to treat workers fairly. That said the detail remains to be seen on what this will entail.
These proposals may find support in the centre of the ‘cat and mouse’ politics which is ensuing, but is more likely to anger business and trade unions for different reasons.
This initial take on the proposals and recommendations should be taken as such, they are being proposed in the midst of Brexit negotiations which will take priority in the government’s legislative agenda.
There is one thing which is certain, employment law will and must adapt to the rapidly changing economy and therefore at least some of these proposals will make come into effect.