The long awaited Taylor Review of Modern Working Practices’ was released this week and its recommendations focus on additional protections for workers and stronger incentives for employers to treat them fairly – to ensure ‘decent work for all’.

The proposals (it will be for the government to decide to take up any of these) that would most directly impact on recruitment payroll include:

  • Approval of practice of holiday pay being ‘rolled-up’ but recommendation to change the pay reference period to 52 weeks to smooth the calculation over seasonal fluctuations in work, for example
  • Prevent the use of Swedish Derogation or pay-between-assignments type contracts
  • Allow agency workers to request direct employment with an end hirer after 12 months in the same role or guaranteed hours
  • Make it easier for workers to determine their employment status and proceed through the employment tribunal process should there be a dispute
  • Require end hirers to publicly declare the number of agency workers they use
  • Maintain the current employment status of employee, self-employed and worker (to be renamed a ‘dependant contractor’)

Unions have lobbied hard against umbrella payrolls and were consulted in this review. But the independent team behind this report stated that removing umbrellas from the supply chain would not be a “proportionate response to the issues faced”.   This is partly in recognition of the important role they play in collecting PAYE and NI generally, and which in their absence may be lost in a migration to self-employment, especially in certain sectors such as construction.

However, the report does recommend that Director of Labour Market Enforcement in BEIS, David Metcalf, should consider whether it would be useful to extend the remit of the Employment Agency Standards Inspectorate to cover umbrella companies. This seems to be a logical suggestion and all compliant umbrellas will no doubt be happy to see more pressure put on those businesses undermining the industry and enjoying an unfair competitive advantage by marketing suspect and non-compliant financial models.

The entire Taylor report can be read here