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Analysis: The Taylor Review of Modern Working Practices

July 19, 2017

The Taylor Review of Modern Working Practices is an ambitious attempt to address changes in the UK economy where more and more people are no longer employed in the traditional way.

This poses a direct challenge to Government policy development and also to protection insurers and advisers and of course to individuals themselves.

As the Report says, many people like the flexibility of working atypically – and we must not lose this.

However, “flexibility must not be one-way with individuals absorbing all of the risk.

“For many, not knowing when work will be offered, or whether they are entitled to protections like sick pay or holiday pay mean they are unable to make informed choices, book a holiday or even arrange a hospital appointment. This is wrong.”

Wherever possible, people should know who they are working for, how much they will earn and what rights they have – including sick pay.

This should be developed further to ensure it is relevant to “dependent contractors” (agency workers etc).

As we know, many “traditionally employed” workers have little idea of their sick pay entitlement either – so the proposal that the Government should specify the format of the written statement so that information is transparent, in plain English, and accessible is very welcome as people will then know to what extent they need to cover themselves in the event of sickness absence.

The insurance industry has been advocating the provision of such information for some time and the publication of the Report gives added impetus to this demand.

Moving from “traditionally employed and dependent contractors”, chapter 10 of the Report recommends a new deal for the self-employed – the Government should focus on encouraging self-employed people to plan for the future, reducing the potential that the taxpayer has to pick up additional costs associated with ill health or inadequate retirement saving.

The Report points out that all self-employed people are not the same.

Like those who are employed, the experiences and vulnerabilities of this group range from billionaire entrepreneurs to taxi drivers working 90 hours a week simply to pay their bills and includes many people who are gaining income from self-employed activity alongside their main job.

While many self-employed people would not expect sick pay, paid annual leave or automatic enrolment to a pension, for others, the availability of this safety net is essential to make sure they can pay their rent, put food on the table or plan for the future.

This can lead to the same levels of anxiety and illness that are experienced by those employed on casual contracts.

So what could be done to address these anxieties?

Here we see some innovative thinking. “Portable Benefits Platforms” provide ways for people who are self-employed or engaging in other non-traditional labour market activity to gain access to a range of benefits and protections.

They also present an opportunity to ‘nudge’ people who are self-employed to set aside money for the long term, e.g. for retirement, in case of injury, or to pursue personal development and training opportunities to further their career.

These are not statutory employment protections. Instead they could allow individuals to move freely between platforms because benefits accrued while working on one platform could be retained and topped up if the individual started working on another platform instead or even simultaneously.

The Report includes an interesting case study. The Black Car Fund is a benefits platform for limousine and black car drivers in New York. It is a not-for-profit insurance provider that provides compensation for drivers that are injured while working.

A 2.5% surcharge is added to passenger’s fares for drivers that are in the scheme, and this entitles the drivers to claim, in case of injury. The Fund also offers safety training for drivers in the scheme.

Although this platform is not portable, it has led to some initial calls for Portable Benefit Platforms for those working in the sharing economy.

Portable benefit platforms can also be third-party vehicles supporting gig economy businesses to make payments on behalf of an individual working through them.

This might cover benefits such as sick leave, holiday leave, occupational illness or injury, pension plans, and further training.

Payments could be costed according to the number of hours worked or as a percentage of gross wages.

It seems to me that portable benefits platforms could be developed in the UK by insurers to support self-employed people and also some dependent contractors.

The vast majority of such people will never have access to group insurance schemes and income protection would form a key component of schemes over here.

There is also the potential to link these schemes to state-based welfare rights and entitlements – so people are financially encouraged to take them up – and not penalised at the point of claim.

The Report recommends that the Government should work with partners to create a Catalyst to stimulate the development of a range of such platforms in the UK.

This would allow new and emerging solutions to develop and grow, in a “sandbox environment” with a view to better supporting self-employed people.

The insurance industry should be actively involved in this innovative work.

While the Report recommends that the Government should reform Statutory Sick Pay so that it is a basic employment right for which all workers are eligible regardless of income from day 1, SSP is a very small element in meeting the range of possible needs of the self-employed and dependent contractors.

And one last point, The Report recommends that the Government should identify a set of metrics against which it will measure success in improving work, reporting annually on the quality of work on offer in the UK and that measurement of success could come in the form of more regular running of the Workplace Employment Relations Study (WERS) as well as other qualitative and quantitative measures both at a national level and across regions or specific sectors.

The Bill to set up the Single Financial Guidance Body currently going through Parliament could be amended to include such metrics that are relevant to access to guidance on financial services which can support individuals in the event of the income shocks – especially sickness.

Written by Richard Walsh, SAMI Fellow and first published in Cover magazine, July 2017.

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