Modern employment: legislating fast and slow

Matthew Taylor's Review of Modern Employment could not be more timely. Voices are raised about the need for the law to "catch up" with business practices. Let's remember that issues around modern work are not just concentrated in online economies and driven by new technology. They are also driven by the soft technology of business practice such as outsourcing, as the Prime Minister's speech on 14th November reminded us. When we consider what forms legal responses can take, there may be lessons from history – and the history of controversial law.

A bucket, a mop, a basket of rights

When it comes to dealing with disruptive judgments, we have been here before.  The European Court case of Schmidt held in 1994 that the outsourcing of the job of one cleaner at a bank (with very few assets) was within the protection of the EU's Acquired Rights Directive.  It created shock waves in the UK at a time when there was a strong impulse to outsource central and local state functions to benefit from efficiencies and service improvements.  Trade associations rapidly evolved codes of practice for the application of TUPE.  Later, in a more creative or "white collar" profession, the Institute of Practitioners in Advertising promoted a similar approach.  Central government outsourcing required a Fair Deal to avoid rights arbitrage around pensions.  Ultimately the State recognised business practice with the adoption of the concept of the "service provision change", which looked to close disruptive loopholes as the price of certainty.

This history shows how employers can react and then legislators tend to catch up to normalise shocks.  Is this pattern relevant to the highly competitive online economy, parts of which are collaborative and parts driven by fierce competition for market share?

Seeds – of what?

What if platform capitalism carries within it the seeds of its own propagation?  There are practical, mathematical and exchequer-related uncertainties if platform-facilitated drivers and others are "workers".  But the same creativity which could underpin the success of many online models can also be used to create new ways of collecting taxes, saving, retirement provision and "micro wallet" behaviours.  An objection to the idea that a person may have multiple employers, or multiple businesses which owe it duties and rights, is that it is hard to control, monitor and allocate rights and responsibilities: with online platforms, not so much. 

There are evolving models where online businesses seek to help others manage the uncertainties and practicalities e.g.  ShiftPixy in the US.  It may be worth exploring the uses of tech and concepts of co- or joint employment.

And there are some existing UK law examples where employers need to aggregate information so that they can provide rights, such as the laws around shared parental leave, which attach to employees (however many jobs they have) rather than the employer. 

There may be arguments for a suspension of disbelief about the impact of the Uber judgment, and preserving a culture in which new solutions can grow to manage rights, choice and opportunity.

Arguments may be made for various cultural approaches.  They include:

• a presumption of employee (or worker) status;
• a look across to the "dependent contractor" model in Canada– and its differences from worker status;
• arguments for industry-specific treatment e.g. in relation to platform businesses.

Choice

Legislating according to targeted sectors needs careful analysis.  There may open a debate based on "good" self-employed versus "marginalised" self-employed.  In 2004/5 the then government mooted an exception to TUPE rights for "white collar" professionals, so that only "blue collar" staff would be protected.  Often responses discouraged that approach, based on the need for market participants (including unions) to make their own solutions and the realisation that today's professional service may be tomorrow's commodity. 

Some data supports the idea that self-employment is chosen and valued. 

There are experiences where a more choice-based approach could be considered.  Taking another employment status law which has attracted comment, Employee Shareholder (ESS), there could be a model to explore where workers are allowed to make a genuine choice as to the status they want, provided the participant understands the impact of that choice.  Under ESS, employees give up basic unfair dismissal rights for benefits they perceive to be greater.  Would it be possible to enable contractors to choose worker or self-employed status, with different rights and obligations?

Redress

With ESS there is always the possibility for employees to have access to justice, notably around whistleblowing or discrimination rights.  The ability to resolve a dispute efficiently and promptly is at the heart of a debate on Modern Employment.  If a person is not an employee or worker, they likely lack means of redress whether that be through unions or the legal system.  What if, based on discriminatory ratings, a service provider is excluded from a platform?  Any legislative response to the developing work relationship needs to take account of the consumer/service provider balance. 

As the Briggs review into the court system seeks to take account of online solutions for workers and consumers, it could be possible to explore access to justice through laws around unfair contract terms and not just employment law. 

It would be possible also to use existing institutions – HMRC have announced a focus on their oversight role, and The Pensions Regulator could do something similar without necessarily requiring new law.

Any solution needs to be clear about the limits of regulation, and can look at existing institutions to encourage choices that are practical and behaviours that help grow sustainable business. 

_{Sean Nesbitt is Partner at Taylor Wessing LLP}