Companies that want to employ people on zero hours contracts could face a hike in the minimum wage rate, the author of a review into modern working practices has proposed.
Matthew Taylor, former adviser to Tony Blair, told the Financial Times (FT) that a premium on the minimum wage could discourage “lazy employers” forcing workers to accept risks that were once shouldered by businesses.
“The problem in the labour market is not security of work, it’s security of income,” he said.
Taylor was commissioned by Theresa May in October 2016 to lead the Independent Review of Employment Practices in the Modern Economy, which reports this summer.
Zero hours contracts
He believes that if employers had to pay a premium on “non-guaranteed” hours, they would be incentivised to promise more hours in advance.
“I think we can encourage employers to be a bit less lazy about transferring risk, even if it means [an employer] offers 15 hours a week rather than one hour, at least that’s 15 hours that I can know I’m going to be able to pay my mortgage,” he told the FT.
Taylor added that the idea of a different minimum wage for zero hours contracts was still up for debate: “The drawback is we don’t want a proliferation of different minimum wages, because there’s something good about the fact the minimum wage is simple and everyone understands it.”
Employment status commentary
Figures last month showed that the use of zero hours contracts is slowing. Nevertheless, the number of people on zero hours contracts hit a record high of 910,000 in the last three months of 2016. For the decade up to 2011, fewer than 200,000 people were engaged on zero hours contracts.
Taylor, who is chief executive of the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA), also commented on the UK’s current three-tier approach to employment status. His modern working practices review will also tackle the current debate surrounding “employees”, who have full employment rights, “workers” who have some and the “self-employed” who have none.
Recent months have seen an increase in the number of tribunal cases – involving employers such as Uber, Deliveroo and Pimlico Plumbers – where the status of employment has been the key issue in the case.
“The law should do more of the work and the courts should do less of the work,” Taylor told the FT. He wants primary legislation to define the principles that distinguish the self-employed from workers.