CBI response to Taylor review on Modern Working Practices

The CBI has responded to Matthew Taylor’s review, and the Prime Minister’s speech introducing the report. 

Neil Carberry, CBI Managing Director for People and Infrastructure, said:

“The Taylor Review rightly recognises that labour market flexibility is a key strength of the UK economy, driving better outcomes for everyone. Businesses agree that flexibility must be matched with fairness, but building on our current approach, as the report concludes, is the right way forwards. The CBI is ready to work in partnership with the government to address the challenges the report raises. 

“Spreading good practice, not just focussing on new laws, is something the CBI has long supported given the link between good employee relations and higher productivity, which is the only sustainable route to rising wages and better living standards. There is much for firms to like, as well as some valid challenges, in the seven steps the Taylor team has outlined. 

“A number of proposals in the report will be of significant concern to businesses, however. Changes to the application of the minimum wage, rewriting employment status tests and altering agency worker rules could have unintended consequences that are negative for individuals, as well as affecting firms’ ability to create new jobs.

“The Government will need to consider these aspects extremely carefully, alongside proposals for any future tax changes, to ensure our labour market retains the flexibility and entrepreneurship that has made it the mainstay of the UK economy.”

On employment status, Neil said:

“Businesses will welcome the Review’s commitment to maintaining our three forms of employment relationship. This established approach is already well-adapted to the modern economy. 

“Firms agree that more should be done to help businesses and individuals understand their rights – and welcome the proposal for a day one statement of terms and a fast-track tribunal process to establish status, which the CBI has recommended to the Review.

“However, proposals to rewrite employment status tests will ring alarm bells in many firms. Starting from scratch will increase uncertainty and make the law less able to respond to new ways of working in the future. 

“Reversing the burden of proof will also increase uncertainty. Individuals would be better protected by enforcing existing legislation and increasing understanding for employers and labour market participants.”

On the Agency Workers Rules, Neil said:

“Businesses will be deeply disappointed by the stance the review team has taken on agency temps who are paid between assignments as part of the so-called “Swedish Derogation”. Firms are ready to look at any evidence of poor practice around these rules – but abolition is not the answer. 

“The Swedish Derogation is not a loophole, but a key part of both the EU Directive and the UK deal that brought in the regulations, allowing workers a stable relationship with one agency and therefore greater security. The Government should reject proposals for its abolition.”

On Information and Consultation reform, Neil said:

“Companies believe in high quality employee relations and collective consultation is a key part of that. We agree with the review team that this needs focus in every business – not just the law, though regulations underpin rights. Businesses are open to reform, though any changes must be practical, and ensure requests for formal bodies are genuinely collective in that they demonstrate a sufficiently broad base of support across the workplace.”

On skills and employability, Neil said:

“Progression is vitally important in helping people progress to higher skilled, and therefore higher-paid roles. Therefore companies will welcome the call to work with education providers on employability, and will be delighted the Review agrees with the CBI that the Apprenticeship Levy system needs to evolve to be more flexible if it is to properly raise skills and boost progression across all parts of our workforce.” 

On proposals for greater transparency by firms on labour input, and rights to request a new contract, Neil said: 

“New reporting requirements must avoid metrics which give a misleading impression of what it is like to work in a company, must be simple and aimed at larger businesses who have the capacity to comply more easily.

“The CBI has always held that after a year in a company it is reasonable to assume workers have a strong relationship with that firm. The right to request suggestions made in the Review team’s report are worthy of serious consideration – and are supported by the CBI. It is important, however, that substantial changes to status like these are subject to the longer qualifying periods than currently suggested by the Review.”

On sick pay changes, Neil said: 

“Businesses are ready to consider how to make sick pay protections more effective for individuals. This is the right thing to do, though it should continue to reflect the nature of engagement of each individual. Employees have an ongoing commitment to the employer, and so there should be greater expectation of ongoing support on sick pay.”

On tax, Neil said: 

“It is right that tax is considered part of the equation when looking at the rights and benefits that individuals receive. Any reforms should not be rushed and be part of a long-term holistic review to ensure that the tax incentive for entrepreneurial activity is enhanced rather than lost. The CBI has set out six principles that should underpin any future review of the tax system.”

On Minimum wages and the Low Pay Commission, Matthew Percival, CBI Head of Employment, said: 

“A sustainably rising National Living Wage is at the heart of our system for protecting workers. Firms strongly support the work of the independent Low Pay Commission on this. They will be concerned that proposals for variable minimum wages dependent on whether hours are guaranteed or not will make enforcement of the wage more difficult, when the great strength of the present system is its relative simplicity. 

“Such a change may have the unintended consequence of encouraging the creation of a large number of fixed, short-hour jobs, leading to fewer people getting the work that they want. 

“Businesses will also need to be reassured that any changes to the wider remit of the LPC, for instance looking at sector by sector performance and the quality of work, do not undermine the Commission’s core purpose and its consensus-based decision making. 

“The review rightly raises concerns about how fair piece rates might apply to platform workers and this is a question that merits further consideration.”