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Love for Labour Lost? The Taylor Review and the Gig Economy

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About The Author

Keir Baker (Former Editor in Chief)

Keir is a Trainee Solicitor currently in the fourth and final seat of his training contract at a major US law firm. He is a law graduate from Selwyn College, University of Cambridge. Outside the law, Keir is an accomplished goalkeeper in both football and hockey, as well as a keen actor and pianist. He is a long-suffering supporter of Middlesbrough FC.

All work in the UK economy should be fair and decent with realistic scope for development and fulfilment.

The Taylor Review

The impact of the so-called ‘gig economy’ has been a growing talking point in recent years. An estimated five million people are employed in jobs that might fall under the concept: instead of being paid a regular wage, these workers get paid for each of the ‘gigs’ they do.

Shadowing the concept has been high-profile cases and prominent discourse surrounding those working for companies like Uber and Deliveroo, as well as discussions about zero-hour contracts and agency workers. From this have come calls for a new approach to defining working relationships in employment law. However, for every person who raises concerns that the ‘gig’ economy facilitates worker exploitation and allows employers to dodge the provision of workplace protection, there are those who defend the flexibility it offers to both employers and employees alike.

Earlier this year, a report entitled “Good Work: The Taylor Review of Modern Working Practices” was published. Written by Matthew Taylor, a former aide to Tony Blair, it aimed to outline a number of proposals to ensure increased levels of fairness in the world of work. The response towards it has been mixed: TUC General Secretary, Frances O’Grady, welcomed some of the review’s recommendations but described it as ‘not the game-changer needed to end insecurity at work’ while – from the opposite end of the spectrum – Neil Carberry of the CBI noted:

The Taylor Review rightly recognises that labour market flexibility is a key strength of the UK economy [but] a number of proposals in the report will be of significant concern to businesses.

Much of the discourse surrounding the Taylor Review has been of a general nature. With this in mind, this article aims to examine in more detail two of the report’s key proposals. Though suggesting the proposals could have gone further, it welcomes the report’s ideas as a step in the right direction to changing how work is viewed in the 21st century.

Proposal One: A ‘Dependant Contractors’ Category

The Current Law – The Problem to be Fixed

Three potential categories of working relationships are delineated by the current law. At one end of the spectrum are employees, who receive the greatest level of protection: only they benefit from the full range of employment rights, including key entitlements such as the right to bring a claim for unfair dismissal or to recover redundancy payments. At the other end are self-employed contractors, who receive the lowest level of protection. Somewhere in between the two are those individuals who fall into the ‘worker’ category. 

Statute does not define an ‘employee’ with absolute clarity: the judiciary have had to develop upon the wording of Section 230(1)(2) of the ERA 1996 by creating a number of heuristic devices to define when an individual is engaged as a employee.

Provided that there is actually a contract between the employer and the person performing the work (which there may not be, for example, in the case of agency worker), case law has established three main tests to establish an employment relationship. The first of these, which holds primacy, is the mutuality of obligations test set out in O'Kelly v Trusthouse Forte plc [1983] ICR 728. At its most basic, this holds that a contract of employment will be found where it can be shown that there has been an exchange of mutual undertakings such that the employee has agreed to be available for work and the employer has agreed to ensure work is made available.

As well as being the primary test in this area, the idea of mutuality of obligations is one of three factors referred to as the irreducible core minima of the employment contract. If these are not present, a contract of employment will not be found. The other two factors are an obligation to perform the work personally (as held in Express and Echo Publications Ltd v Tanton [1999], if the person is unable or unwilling to do the work personally, they must not have the right to send a substitute) and control, such that the person must be subject to the employer’s orders and directions.

Other factors will also inform the courts’ decision, including the extent to which the person is integrated into the employer’s business (as identified in Market Investigation Ltd v Minister for Social Security [1969] 2 QB 173) and the arrangements in terms of pay, tax and National Insurance contributions. For example, in Stringfellow Restaurants v Quashie [2012], a lap dancer who negotiated her own fees with clients such that the employer was under no obligation to pay her and took no responsibility for providing her with sick pay or holiday pay was denied employee status.

Crucial for most cases was the confirmation in James v Redcats (Brands) Ltd [2007] that the label which the parties give their relationship is not determinative as to the existence of a contract of employment.  

In reality, these tests – which have their roots in the master-servant conception of employment  – seem increasingly unsatisfactory in the modern era of work. Indeed, by creating models such as zero-hour contracts and tripartite agency working relationships, employers have manipulated the doctrine of freedom of contract and the traditional employment relationships to bypass completely the protection enshrined within employment legislation.

Taylor’s Proposal

To counteract this, one of the Taylor Review’s main proposals was to introduce a new category of working relationship – the ‘dependent contractor’ status. This is intended to replace the current ‘worker’ category outlined in Section 230(3) of the ERA 1996 that currently fills the gap between those who are fully-employed and self-employed. This would capture casual working relationships, such as those working for ‘gig’ economy companies like Uber and Deliveroo, and allow them access to basic protections like holiday and sick pay, as well as the minimum wage. 

This proposal's key feature is the use of economic dependency as the key method of determining when an individual should be entitled to protection. The inquiry therefore examines whether the individual is economically dependent for the majority of their income on the company in question; if so, this triggers the duty to provide access to the basic protections.

This proposal to utilise economic dependency as the main heuristic device – and the curtailing of the primacy afforded to the mutuality of obligations – should be welcomed for a number of reasons. For one thing, it accords with recent case law in this area: in the recent Aslam v Uber [2015] decision, an Employment Tribunal identified 13 factors that showed why Uber drivers were dependent workers and not self-employed mini-businesses.

Furthermore, unlike the current system – in which focus is almost exclusively placed on the ideas of bilateral relationships and control – the use of economic dependency recognises a different set of vulnerabilities can characterise a working relationship, whereby the actions of the company in question can cause significant harm to an individual over whom they have economic influence, even despite the fact there is no a traditional employment relationship. As Philip Paget of Gordons LLP notes:

the recommendations seek to provide increased protection for workers… who due to the nature of their employment are not autonomous and can only work when they are given instructions from a customer.

This proposal also only denies protection to those acting on the labour market entirely independently, invariably with contracts of sale, who are typically self-sufficient and thus capable of estimating and managing their risks.

Some have expressed concerns that the proposal does not go far enough. Nigel Mackay of Leigh Day, the law firm which represented the Uber drivers in Aslam v Uber [2015]argues that the introduction of the new ‘dependent contractor’ status is:

[E]ssentially a relabeling of the current “worker” status with few additional rights. Introducing new terminology in this way may only serve to confuse individuals as to what rights they do have.

This could be rejected, however, on the basis that Taylor’s proposed redrawing of the existing typologies has several advantages that the current system has failed to fully seized. For example, Taylor’s ‘dependent contractor’ status recognises that employment is increasingly multilateral and involves several entities acting in contractual chains, systems like those identified in Abbey Life Assurance Company Ltd v Tansell [2000]Furthermore, it counteracts the threat – created by the influences of ‘flexicurity’ and post-industrial forms of employment – of a two-tiered workforce against which Mummery LJ cautioned in James v London Borough of Greenwich [2008] by extending comprehensive legal protection across a wider range of individuals.

Finally, it gives effect to the idea that those who go out to work – in whatever form or capacity – should be entitled to at least a degree of protection. This accords well with current government policy in this age of austerity by providing further incentive to seek employment and lessen any reliance on social security.

That said, it might also be argued that the report could have gone further. By merely tweaking the current employment status tests, it missed an opportunity to completely overhaul common law precedents that fail to reflect modern business models. Indeed, it seems about time that the historic ideas of control and integration are rejected once and for all: these concepts have roots in the 18th century master-servant conception of employment that cannot be considered as validly retaining relevance in today’s society.

Proposal Two: Maintaining Zero-Hour Contracts 

Calls for the banning of zero-hour contracts – previously discussed by Georgia Mitchell and further by Edmund Day for Keep Calm Talk Law – have been vociferous, with the Labour Party’s election manifesto including such a policy. However, the Taylor Review rejects such an approach, instead recommended giving those on zero-hour contracts the right to request guaranteed hours, with employers under a duty to respond seriously to the request and give reasons for their decision (much like the current right to make a flexible working request). 

This has been heavily criticised – Torsten Bell of the Resolution Foundation expressed his concern that this ‘timid right’ could ‘all too easily be rejected by employers’ while Frances O’Grady has argued that the right ‘is no right at all for many workers trapped on zero-hours contracts.’

But, as Matthew Taylor himself explained in an interview with The Daily Telegraph, these criticisms overlook that many individuals on zero-hours contracts ‘choose to work in these ways and it works for them.’ This is shown by the experience of McDonald’s: the fast-food chain offered all its staff on zero-hours contracts the chance to move onto fixed hours but, as reported by the BBC, only about 20% of employees took up that offer.

Students particularly benefit from zero-hours contracts: the Office for National Statistics has found that 33% of people on zero-hours contracts are aged 16 to 24. This is not to deny that zero-hours contracts are capable of facilitating exploitation. But it is perhaps Sir Brendan Barber, Chair of ACAS, who captures the current situation best when he noted that:

Whilst these types of working relationships can offer flexibility, it is clear that there can be a lot of confusion around employment status and the rights within them.

Indeed, often overlooked is how those on zero-hours contracts are better protected by the law than is often realised. After all, existing alongside the age of precarious work is also the age of hyperbolic media coverage that invariably eclipses the law’s nuances. The media has shrouded the fact that in many instances, the law can already deal with some of the challenges presented by the ‘gig economy’.

Certainly, on the whole, the current conception of the sham doctrine stemming from Protectacoat Firthglow Ltd v Szilagyi [2009] has generally managed to effectively cope with employers taking advantage of the inequality of bargaining power in this context by drafting contacts to deny employment rights. This has been evident in recent case law such as Aslam v Uber [2015] and Pimlico Plumbers v Smith [2017], in which the courts have successfully applied the sham doctrine to give proper and due effect to working relationships notwithstanding contrary contractual terms.

As well as such devices proving successful, the courts have been laudably alert to employers attempting to unfairly deny their employees protection by citing the existence of zero-hours contracts: in Pulse Healthcare Ltd v Carewatch Care Services Ltd [2012], the courts inferred mutuality of obligation in a zero-hours contract case where the business reality of the relationship so allowed. In fact, it is arguable that such successes have been eclipsed by a damaging media narrative that suggests individuals in such working relationships with such companies will struggle to enforce their rights.


The Taylor Review has proved controversial – it was described by the General Secretary of the IWGB union as ‘wishy-washy and full of fluff’ – but these criticisms seem unfair. In relation to the two issues identified in this article, it seems to strike a balance between preserving the highly-valued flexibility of the labour market and strengthening the protection of workers who undoubtedly deserve and need it, particularly in what is effectively a new age of employment.

Furthermore, it is important that the Taylor Review was not produced in a vacuum, and that the protections which many workers already benefit from are not overlooked. Indeed, if a concerted effort were made to improve public legal education of workers’ rights – particularly in light of the Supreme Court’s decision in R (UNISON) v Lord Chancellor [2017] that the introduction of employment tribunal fees was unlawful – workers could be better empowered to assert a number of the potent rights which they already have.

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Tagged: Contract Law, Employment Law, Gig Economy, Uber

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