BHA comments on the Taylor Review on Modern Working Practices

Shortly after becoming Prime Minister, Theresa May, asked Matthew Taylor (the CEO of the RSA and a former Political Adviser to Tony Blair) to lead a review into modern employment practices and recommend changes. The main reason for the review has been the rise of the ‘gig economy’ and the increased use in recent years of zero hours contracts.

Responding to the report, the Prime Minister stated that ‘the Government will be engaging with stakeholders across the country ahead of publishing a full Government response later in the year.’ At the moment, the parliamentary timetable for the next two years is full with Brexit-related legislation and it seems improbable that the Government will want to publish a Bill to give effect to the report’s recommendations.

Reaction from the leading employers groups has largely been restricted to a welcome by the recognition in the Taylor review that the British economy has benefited hugely from very flexible labour markets with unemployment at its lowest level since 1975. However, there are suggested changes to the employment of agency workers which would be damaging.

Our biggest concern is the recommendation that the Low Pay Commission (LPC) be tasked ‘to consider the design, and impacts of, the introduction of a higher National Minimum Wage Rate for hours that are not guaranteed as part of the contract.’ (page 44 of the Report). The report goes on to say:

‘This new higher rate should be set at a level which incentivises employers to schedule guaranteed hours as far as reasonable within their business. Businesses would still have the ability to offer zero or short hours contracts…..but would have to compensate the most vulnerable workers (those on low wages) for the additional flexibility demanded of them.

Our view is that, presently, we are in Year 2 of a 5 Year Plan to raise the National Living Wage (NLW) to 60% of median earnings by 2020. Whilst we know it is placing considerable stress on companies’ margins, the effect on employment will only become clear as we progress through the cycle. When the NLW was announced in 2015, the Office for Budget Responsibility forecast that it could cost 60,000 jobs. To add further increases to the NLW/NMW to those planned would be reckless. Because such a remit to the LPC would not require legislation, we will be writing to the Minister on this point as a matter of urgency.

Click here to view the Taylor Review: