A Word from the Editor - April 2017

Alex Lock, DAC Beachcroft LLP
Saturday, April 1, 2017

Babies often get thrown out when baths are emptied. That is not to say that accident and emergency departments the length and breadth of the country are stuffed full of bruised and damp children, more that in trying to address one perceived problem, either the benefits of what one is trying to change get lost or the consequences of change are further and greater difficulties. The understandable demands for reform in relation to employment status, arising from a sense of things being abused – workers not paying sufficient tax and National Insurance, employers not either, together with no paid annual leave, maternity leave and pay etc – may not produce all the results people hope for.

When I started out as an employment lawyer, an awful lot of the work I did was TUPE-related. The clients’ general rule of thumb seemed to be that if one lost a contract – catering, security or facilities management – TUPE applied; if one won a contract, it did not. This led to lots of uncertainty and tribunal litigation, with the unfortunate employees stuck in the middle with no one taking responsibility for them.

In 2006 TUPE was updated and reformed. The gold-plated notion of a service provision change (SPC) was introduced, extending and widening the scope of TUPE. This was done with the express intention of providing certainty to all parties in relation to transactions in the grey area where ‘old TUPE’ may, or may not, apply.

I am not sure that result has been achieved. Arguably, the courts and tribunals have taken an excessively technical and narrow approach to the SPC, with the consequence that, more than 10 years on, we still have litigation and appeals on the application of TUPE. This has provided both uncertainty and cost for all parties.

There is clear evidence of abuse by both individuals and organisations when it comes to employment status. There is also clear evidence of benefits to both parties and the wider economy, in terms of flexibility, autonomy, reward and work creation. The Taylor Review underway at the moment will, no doubt, seek to find a way through this rocky path.

Taylor has indicated that ‘control’ is likely to be an important factor in his considerations: where an individual is subject to control by another in terms of the work, the content of the work and the basis of the relationship, ‘that looks like the kind of relationship where the quid pro quo should be that you respect that person’s employment rights and entitlements’.

Leaving aside the issue being that they do not have such rights and entitlements, if the proposal will be to extend some employment rights and entitlements to self-employed people, one needs to consider not just the benefits but also the likely and potential consequences of such a radical change.

It may be that the proposal will not be so radical, being something by way of re-emphasising or clarifying various of the tests we have in employment law for determining status (mutuality of obligation, control, financial risk and so on). In those circumstances one might ask, ‘Why bother?’, as that is really the role of the courts and tribunals. Arguably, in interpreting and applying the law, they are best placed to respond to the changing social and economic context.

Whichever way Taylor jumps, any proposals made will need to be thoroughly analysed by experts (unfashionable as they are these days) in employment law. Rest assured ELA’s Legislative & Policy Committee will be first in the queue.

Alex Lock, DAC Beachcroft  LLP

The legal content in this article is believed to be correct and true on this date.