Written evidence from Prospect (WOW0054)

 

Introduction

 

 

  1. Prospect is an independent trade union currently representing over 112,000 members in the public and private sectors. In January 2017 the union BECTU is transferring engagements to Prospect and we will have a combined membership of over 138,000. Our members work in a range of jobs in a variety of different areas including in aviation, agriculture, defence, education, energy, environment, heritage, industry, scientific research, telecommunications and, with the introduction of BECTU, in broadcasting, entertainment and media.

 

  1. Prospect welcomes the opportunity to comment on the inquiry into the future world of work and rights of workers inquiry. Prospect represents thousands of professionals and mangers with atypical working arrangements, a third of our members in education and children’s services are self-employed and following the merger with BECTU, from the January 2017, a further 12,000 freelancers will become part of the union.

 

 

Executive Summary

 

 

 

Question 1

Is the term 'worker' defined sufficiently clearly in law at present? If not, how should it be defined?

 

What should be the status and rights of agency workers, casual workers, and the self-employed (including those working in the 'gig economy'), for the purposes of tax, benefits and employment law?

 

 

  1. Prospect believes the term worker is not sufficiently defined in the law presently and leaves too much scope for employers to abuse their position and deny basic employment rights.

 

 

Full employment rights for economically dependent workers

 

  1. We consider that there should be a statutory presumption that all economically dependent workers are recognised as employees with full employment protection rights.

 

  1. The current distinction between worker and employee is too uncertain and open to abuse, which leads to a great number of workers being denied any basic rights, including those more limited rights that currently workers should be entitled to. The two tier system of employee or worker is leading to abuse and should be ended. We consider that all workers who are not genuinely in business on their own account should be treated the same under employment law, this would include many who are currently working as 'zero hours', 'casual' or 'sessional' workers. It should also cover agency workers.

 

  1. There should also be greater protection to ensure that continuity of employment is maintained. The current definition in section 212 of the Employment Rights Act is helpful, and it should be clear that this applies to all types of contract, including temporary, zero hours, or casual. This provision could be strengthened by applying an assumption that periods of working for the same employer will be continuous, unless the employer can show reasons of a genuine break in employment which is not a temporary cessation of work or a break by custom or arrangement.

 

 

Complexity of the law

 

  1. The law is extremely complex and the amount of case law demonstrates how uncertain determining employment status is. There is an exceedingly grey area between the definition of worker and employee. This leaves scope for employers to argue sham distinctions, such as including clauses in contracts providing for substitution, which is on paper only and not feasible to be used by the worker.

 

  1. Similarly employers seek to argue that there is no mutuality of obligation, by putting clauses in the contract which purportedly allow the worker to refuse work when offered, whereas in reality if the worker refuses a shift or job they are likely to be penalised by not being offered further work. All too often the so called 'flexibility' only works for the employer and not the worker.

 

 

Employment tribunals

 

  1. Cases challenging employment status are brought before employment tribunals. But this means of challenging employers is wholly inadequate where workers lack job security and many will be fearful that by seeking to assert legal rights they will be further victimised by the employer. There needs to be an independent enforcement body which can raise complaints and investigate abuse (such as we have currently for failures to pay the minimum wage and non-compliance with working time provisions).

 

  1. Additionally the excessive fees for bringing a tribunal, of up to £1,200 for unfair dismissal or Equality Act claims, mean that many low paid workers are being priced out of access to justice. Prospect strongly believes that fees for tribunals should be abolished.

 

  1. When cases come before employment tribunals the employment status will depend on the findings of fact made by the Judge and this is often very finely balanced. Unless the substantive claim behind the tribunal application is one of unfair dismissal or discrimination law, the case will be heard by a Judge sitting alone. Many of these cases will be seeking declarations for a statement of particulars of employment and or bringing claims for holiday pay and all these types of cases will be heard without the benefit of lay members of the tribunal. We believe these cases are ones where the benefit of experience of lay members is very important and we would like to see these cases heard by a full tribunal panel.

 

 

Genuinely self-employed and tax

 

  1. There will be a number of genuinely self-employed workers, for example people working as freelancers, with specialist skills. Within our BECTU sector there are 12,000 members working as freelancers in the broadcasting and entertainment industry and Prospect represents several hundred self-employed professionals in the education, children's services, early help, commissioning and children's social care field. It is important that the tax position does not penalise these workers.

 

  1. Restrictions announced in the Autumn Statement have now been published as draft Regulations, putting "limited cost traders" in a position where any VAT they charge customers is all handed over to HMRC, with no facility to offset it against VAT they have paid on bills that the business has incurred. This means that fewer will remain on the flat rate VAT. We are concerned that these provisions will act to the detriment of many self-employed workers who have low turnover. 

 

 

Prospect cases in the civil service

 

  1. There are a number of shocking and high profile cases of employers denying workers' rights in such areas as Sports Direct and Uber. However it should be noted that similar abuse is occurring across other sectors, including within staff employed directly by the Government.

 

  1. Prospect brought a case to the employment tribunal in 2013 for a member who was working as a prison chaplain in the Prison Service. He had been told he was a 'sessional' worker with no employment rights (not even as a worker with rights to paid holidays etc) and his hours could be varied as the employer saw fit (and indeed his hours were cut considerably). An employment tribunal in Cardiff held that our member was an employee and should have full statutory protections.

 

  1. Despite the ruling in that case, the prison service continued to employ people on the same type of 'sessional contracts' and to deny them any employment rights, including rights for workers such as holiday pay. Prospect took a second case to the employment tribunal in 2015 for five members who were working as teachers in the prison service. Again the tribunal in Cardiff found that the five members were indeed employees with full employment rights. The Judge rejected the Secretary of State for Justice's submissions that there was no mutuality of obligation.

 

  1. After the judgment was issued, and shortly before the remedy hearing, the prison service conceded the point on worker status, and agreed to pay holiday pay to the five members. But the Secretary of State has appealed to the Employment Appeal Tribunal on the finding of employee status. The Secretary of State contends that even if the members are held to be employees on the facts of the case, the contracts of employment are illegal and unenforceable as they had not been recruited under the civil service recruitment principles of fair and open competition.

 

  1. These cases demonstrate that insecurity through lack of employment rights applies in many sectors, including professionals working for the civil service.

 

 

 

Question 2 - For those casual and agency workers working in the 'gig economy', is the balance of benefits between worker and employer appropriate?

 

  1. Prospect does not believe that the balance of benefits between worker and employer for casual and agency workers is appropriate.

 

  1. The 'flexibility' of such work is almost entirely one sided, leaving workers without any security in terms of income or future. This has a massively detrimental effect on workers and their families, leaving many facing poverty wages and the inability to secure decent housing.

 

 

Question 3 - What specific provision should there be for the protection and support of agency workers and those who are not employees? Who should be responsible for such provision – the Government, the beneficiary of the work, a mutual, the individual themselves?

 

  1. As stated above we believe that all those workers who are economically dependent should benefit from full employment rights. By creating a level playing field and providing a floor of minimum statutory rights, the widespread abuse of temporary and casual workers could be avoided. The Government should legislate on this basis, so that employers would no longer be able to benefit from the lack of rights and insecurity of their work forces.

 

  1. Particularly we believe that the equal treatment provisions for agency workers should be applied fully. The current right to equal treatment only after 12 weeks work can lead to abuse by agencies and employers setting arbitrary placements at just under the 12 weeks. We believe that equal treatment provisions should apply from the start of any placement.

 

  1. We are also concerned about the exemption from the right to equal treatment on pay, where an agency worker is employed directly by a temporary work agency on a permanent contract providing for pay between assignments.  This exemption is often referred to as the ‘Swedish derogation’.   There is concern that hirers and agencies will seek to exploit these contracts.

 

Question 4 - What differences should there be between levels of Government support for the self-employed and for employees, for example over statutory sick pay, holiday pay, employee pensions, maternity pay?

How should those rights be changed, to ensure fair protection for workers at work?

 

What help should be offered in preparing those people who became self-employed (with, for example, financial, educational and legal advice), and who should be offering such help?

 

  1. A majority of Prospect members who are currently self-employed contractors used to be engaged as professionals in education and children’s services working for Local Authorities. The decision to become self-employed was often as a result of budget cuts or restructuring. Work patterns for the self-employed are dependent on funding for children’s services by local government which continues to be hit by spending cuts in recent years; this has a consequential impact on pension income. Therefore Prospect believes that protections for those in employment should be extended to the self-employed.

 

  1. Prospect provides career support to members that are considering becoming self-employed and offers indemnity insurance for consultants in education and children’s services, which takes into account the earnings of members. In addition to this support Prospect provides engagement with professionals in the education sector through our publications and representational structures.

 

Question 5 - Is there evidence that businesses are treating agency workers unfairly, compared with employees?

 

Question 6 - Should there be steps taken to constrain the use by businesses of agency workers?

 

Question 7 - What are the issues surrounding terms and conditions of employees, including the use of zero-hour contracts, definitions of flexible contracts, the role of the Low Pay Commission (LPC), and minimum wage enforcement?

 

  1. The main employer where Prospect is aware of zero hours contracts being used extensively is in the National Trust. There are approximately 7,000 staff on regular contracts and the remainder of the circa 12,000 staff employed during peak times on zero hours contracts, usually with a fixed term.

 

  1. The number of issues raised with Prospect is often low. The main reason for this is that many zero hours staff are non-members because of the short term nature of their contracts.

 

  1. Those engaged on zero hours contracts include those seeking seasonal work during holiday periods. Our main concern is with the fairness of the contractual relationship, staff are obliged to accept work when it is offered to them, but the National Trust has no obligation to offer work. This can become an issue when work is paid at different rates, for example a supply teacher can earn £140 per day doing supply teaching, or £36 per day working in the tea-room. If someone is on a zero hours contract and wishes to choose which work to accept this can mean that the National Trust may subsequently not offer any more hours if some work is refused.  Currently this cannot be challenged.

 

  1. Prospect agrees with the TUC that the government needs to take action to prevent abuse zero hours contracts and other forms of agency work. We support a substantial increase in resources for all the enforcement agencies.

 

  1. In addition the imposition of tribunal fees of up to £1,200 acts as a deterrent from individuals taking cases of abuse to an employment tribunal. Therefore government should abolish ET fees.

 

  1. Prospect supports the TUC’s call for an extension of GLA licensing model to high risk sectors as a way of tackling labour market exploitation. This will enable staff working for the inspectorate to develop strategies that identify areas of the economy where there are risks of abuse and provide businesses with lines of communications to ensure that there is a level playing field for all companies within a sector.

 

 

Question 8 - What is the role of trade unions in representing the self-employed and those not working in traditional roles?

 

  1. Prospect represents thousands of members who are either self-employed or working in atypical working relationships. Prospect has developed specialist advice and support which is appropriate for members concerned.

 

  1. It is difficult to estimate how many Prospect members work in atypical working relationships. Nearly a third of Prospect members in the education sector are engaged as self-employers contractors by local authorities. According to our most recent all members survey, 10 per cent of respondents in our regional branches (those not working for employers where Prospect is recognised for collective bargaining) said they are freelancers.  Both these groups of members are spread over a wide geographical area. This means that this group of members is more reliant on full trade union officers for advice and representation.

 

  1. In part response to members demands for greater support from Prospect the union is investing in a Contact Centre that will provide a centralised helpline for members. The Contact Centre is an extension of the helpdesk that already provides support to our members in education children’s services and telecommunications sectors.

 

  1. Prospect will also gain new expertise as a result of our merger with BECTU, who have a substantial freelance membership. BECTU has developed specialist support and advice to self employed technicians in the entertainment sector on tax (including VAT), company law and copyright law. BECTU also provides expert advice to the Home Office on applications to use migrant labour in specialist trades.

 

  1. Experience shows that self-employed workers, and those operating Personal Service Companies, value the benefits of belonging to membership organisations like trade unions. One key service provided by our BECTU sector to members in the media and entertainment sector is recovery of monies owed, in other words fees for services that have not been paid by clients. This reflects the continuing difficulty of small businesses obtaining timely and full payment from customers.

 

  1. Our BECTU sector also offers the procurement of discounted services for members operating small businesses, the most significant of which is Public Liability Insurance. Over two-thirds of its members insure against this risk by using a group policy that the BECTU sector purchases from an insurance provider, at significantly lower cost than could be achieved on an individual basis.

 

  1. Members of the BECTU sector have access through their union to advice on a wide range of employment and business issues, including tax, company law, employment status, health and safety, and pensions, whilst benefiting from collective advocacy on matters that affect them. Recent lobbying work on behalf of freelance members has covered access to Universal Credit for the self-employed, re-allocation of electromagnetic spectrum for wireless devices like radio microphones, application of health and safety legislation to the self-employed, and changes to IR35 tax rules in the public sector.

 

  1. In addition BECTU has been prominent in organising workers employed on zero hours contracts in cinemas, focusing on low pay in the sector with a prominent campaign for a Living Wage for those working for Picture House cinemas, winning substantial pay increases.

 

 

 

 

 

 

19 December 2016