F26: Employment in the 21st Century

Submitted by Federal Policy Committee

Mover: Baroness Kramer | Summator: TBA

Application: Federal.

Summary:

Until a few years ago, most people with jobs were employed directly by an organisation, with all the employment rights that that confers. A much smaller number of people were officially self-employed. In recent years the nature of employment has changed significantly, with the growth of different employment arrangements including those in the 'gig economy' such as Uber taxi drivers, as well as zero-hours contracts with other employers.

It has been widely recognised that the existing law does not relate well to the existing situation. The government has commissioned Matthew Taylor to conduct a review and recommend appropriate changes to update the law.

Liberal Democrats have already committed to help people on zero hours contracts, including a formal right to request a fixed contract.

This motion welcomes the recommendations of the Taylor report, notably to create a new legal status of 'dependent contractor', which recognises the semi-independent status of some workers, but also some of the companies’ responsibilities to them. People with this status would then acquire some employment rights, depending on the extent of the employer's control of them, the number of hours worked and other factors.

The motion supports new forms of unionisation and worker cooperatives relevant to this employment market, and greater enforcement by HMRC and employment tribunals of employment rights. Finally it calls for some reforms to make Universal Credit more supportive of the self-employed.

Full text of the motion:

Conference notes:

1. That in the modern economy, alternative forms of employment such as self-employment, zero-hours contracts and agency/temporary work have expanded significantly.
2. That some of this is associated with the growth of the Ôgig economyÕ, characterised by the prevalence of short-term contracts and freelance work as opposed to permanent jobs, but that traditional companies also make use of these arrangements.
3. That the autonomy and flexibility enabled by these arrangements is often valued by both businesses and individuals and can underpin innovative new business models.
4. That self-employment often acts as a springboard to more ambitious forms of entrepreneurship, and that according to surveys the self-employed and zero-hours contractors get as much if not more job satisfaction than employees.
5. The ambiguity raised by some modern work, particularly in the gig economy, that properly fits neither the definition of employment or self-employment.
6. The legitimate concerns that these arrangements have raised around job insecurity, weakened employment rights and low pay.
7. That the recent introduction of tribunal fees poses a barrier to workers challenging their employers on their employment rights and/or status and the at the Supreme Court recently ruled them to be illegal.
8. That the current tax and employment law framework incentivises so-called 'bogus self-employment', where employers categorise staff as self-employed to avoid paying national insurance and granting workplace benefits.

Conference recognises:

1. The important work undertaken by the Taylor Review on modern employment practices, and broadly endorses its recommendations to increase the quantity of 'good work'.
2. Existing Liberal Democrat manifesto commitments to address these issues, including: (for those on zero-hours contracts) introducing formal rights to request a fixed contract; bringing together employment enforcement agencies, and scrapping employment tribunal fees; strengthening worker participation in company decision-making.
3. Action taken by the Liberal Democrats in government to ban exclusivity clauses in zero-hours contracts, enabling those on such contracts to seek additional work.

Conference calls for:

1. The introduction of a new "dependent contractor" employment status in between employment and self-employment, as recommended by the Taylor Review, to better reflect the diversity of modern employment.
2. Updating the current legal definitions of 'employment' and 'self-employment' to ensure that these too are adapted to the 21st century economy and modern technology.
3. Alongside updated legislation, new legal tests to determine the employment status of workers, based on factors such as the degree of employer control or thresholds (in terms of hours or income) above or below which employment status changes.
4. Increased public support for new forms of unionisation and worker cooperatives adapted to the transient and dispersed nature of non-traditional employment.
5. Greater enforcement by HMRC and employment tribunals of employment rights, and credible penalties for organisations that engage in abusive and deceptive employment practices.
6. Reversing the burden of proof in tribunal hearings on employment status, so that the employer must prove the individual is not eligible for the employment status/rights he or she is claiming, rather than the other way around, though with exemptions for businesses below a certain size.
7. The development of financial products - including pensions, mortgages and insurance - tailored to the needs of those in non-traditional forms of employment, in partnership with leading providers.
8. Reform of Universal Credit to be more supportive of the self-employed, by extending the "Minimum Income Floor" exemption period from 12 to 24 months to give businesses more time to establish themselves, and by making UC more sensitive to the fluctuating incomes of the self-employed.
9. Hours that are not guaranteed as part of a contract to have a higher minimum wage rate, in order to incentivise employers to offer fixed hours when possible, with the size of the wage rate increase to be determined by the Low Pay Commission, as suggested in the Taylor Review.

Conference calls on FPC to further develop these ideas in its planned policy paper on the 21st century economy.