The Taylor Review – should the Low Pay Commission be given more to do?
The Taylor review of modern working practices contains some important recommendations on low pay, the National Minimum Wage (NMW) and the Low Pay Commission (LPC).
Taylor’s broad aim of empowering the LPC to do more to promote decent work is the right one, so the short answer to the question in the headline of this blog is “yes”. Now let’s talk about the detail of the proposals in the review that relate to the NMW.
Proposal 1: The LPC to consider a higher minimum wage for hours worked that are not in the employment contract, and the introduction of penalties for late notice of shifts and cancellations.
The TUC has long argued that, in order to ensure that flexibility cuts both ways, employers should compensate their workforce for non regular hours, and unreasonable changes in work patterns.
To achieve this, the LPC might simply set a premium rate for any hours worked above what is required in the employment contract. For example, extra hours might attract, say, £9 per hour for over-25s rather than the £7.50 standard minimum wage.
However, a premium should be applied to all workers who have to work above their contracted hours. This would mean that those on higher rates are not left with the uncertainly of zero-hours working.
In addition, we’re arguing for a new penalty for late notice of shift changes and shifts that are cancelled when the worker has already left home or arrived. Under this model, a worker required to fulfil a shift with too little notice would get extra pay in compensation
While we believe these measures should go beyond the NMW, we still think that the LPC should play a leading role in developing them, building on its success as a social partnership body with significant expertise in understanding the dynamics of wages.
Proposal 2: Expanding the role of the LPC:
The Taylor review recommends that the LPC should
- Make recommendations on the quality of work across all regions and sectors
- Make recommendations on the legal framework to ensure that fair and decent work is delivered.
- Work with employers and worker representatives to ensure sector specific codes of practice and guidance are developed.
- Promote what works and encourage greater collaboration to improve quality in low paying areas.
The TUC has previously argued for the LPC to have a role in establishing sectoral Modern Wages Councils bringing together employer and trade unions to bargain better wages above the basic NMW, and better conditions and measures like training and productivity that would contribute to business success.
The LPC has been a success story, and now has a duty to rise to a broader challenge of lifting terms, conditions and the quality of work. This implies that the LPC would need a substantial injection of funding and resources.
Proposal 3: The creation of a new “dependent contractor” status and relabelling workers as dependent contractors
The TUC does not agree that a new, separate “dependent contractor status” is required.
Unions have brought a number of successful cases, which have confirmed individuals working for firms such as Deliveroo, Uber, Pimlico Plumbers etc., are “workers” and entitled to basic rights at work, including the NMW. The Taylor proposals on “dependent contractor” could risk undoing the gains made through these cases.
Even relabelling workers as dependent contractors could create negative uncertainty. Any changes to legislation – even changed labels – will lead to new litigation.
Proposal 4: Government to consider adapting NMW Fair Piece Rate system to apply to gig economy workers.
This is simply a bad idea. If people working in the gig economy are “workers” for the purposes of the NMW then a new system is not needed.
Employers can use Fair Piece Rates in cases where workers are paid only on the basis of what they produce. Employers can still choose to pay their workers by the hour rather than use the official piece rate system, and that is what the most have them have done. Rather than being a great success, the current NMW Fair Piece Rate arrangements are used very rarely indeed, to the extent that we can only know of one employer who uses these measures properly.
In sharp contrast, employers have used unfair piece rates on a large number of occasions to obfuscate pay rates and deny workers the NMW, as in contract cleaning in the hotel sector. In such cases, employers take no account at all of the FPR rules. Rather, targets are set without any reference to what is achievable and without the time-trial specified in the FPR regime. Thus more piece rates would be very unwise
What should happen next?
The Taylor report is not the game changer that we were hoping for, but there are ideas in there that could make a real difference. The responsibility now lies with government to get on with the work needed to make better pay for those in insecure work a reality.