Taylor Review recommends access to holiday and sick pay for some self-employed
The recently published review of modern working practices in the UK has recommended that some workers, currently classified as self-employed, should get certain benefits like sick and holiday pay.
The Taylor Review, however, did not recommend these benefits for all self-employed workers.
The report comes after research by cloud accountancy software company FreeAgent and the Freelancer and Contractor Services Association (FCSA) found that sick pay was top of the wish list for freelancers and microbusiness owners.
Their poll took the views of nearly 900 UK contractors and found that sick pay provision was the entitlement they most coveted.
Sick pay entitlement polled far ahead of other benefits like maternity pay, job seekers allowance and pension auto-enrolment.
Taylor review and ‘dependent contractors’
There was some hope among the self-employed community that RSA Chief Executive and former chief of strategy under the Blair government would recommend significant reform of independent employment.
Some hoped he would recommend widespread availability of sick pay and maternity cover.
His final proposals, however, are more nuanced. He didn’t call for a ban on ‘zero hours’ contracts, but he did argue that sick pay and parental leave should be offered to workers who are labelled as self-employed, but are more accurately employees or ‘workers’.
‘Worker’ is an employment category that fits in between ‘employee’ and ‘self-employed’. ‘Workers’ have access to certain benefits like holiday and sick pay, but Mr Taylor believes that many companies, particularly modern tech companies like Uber and Deliveroo, miscategorise ‘workers’ as ‘self-employed’ and so deny them these entitlements.
Here, the terminology is obviously quite confusing. That’s why Matthew Taylor also recommended that the ‘worker’ employment category be replaced with a more distinctive ‘dependent contractor’ category.
To make it easier for miscategorised dependent contractors to seek the benefits they are entitled to, Taylor also recommended that barriers to employment tribunals be lowered and costs reduced.
The RSA chief also said that HMRC should be responsible for enforcing the provision of core entitlements like holiday and sickness pay, in the same way that they police minimum wage entitlement.
Taylor said that self-employed sick pay and pension enrolment were likely to become bigger problems in the coming years.
He said: “In the medium term we need to need to look at how we incentivise self-employed people to save for their pensions.
“It’s a problem for the public as a whole that too many self-employed people will be retiring not being able to support themselves and too many self-employed people are not insuring themselves so when they get sick they have to fall back on benefits.”
The FreeAgent survey found that 76 per cent of respondents do not have any method of providing sick pay, maternity/paternity leave, holiday or redundancy pay in their business.
Ed Molyneux, CEO and co-founder of FreeAgent, says, “The UK government seems determined to ‘level the playing field’ between self-employed and employed workers, but this is actually very unfair on people who run very small businesses, as it does not take into account the huge amount of personal risk that is associated with being self-employed.”
He continued: “The government needs to acknowledge the tremendous financial risks associated with starting and running your own business and bear this in mind when deciding on its future tax policies.”