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Is the Taylor Review a warning or an opportunity?

Martin-Christian Kent - Executive Director, People 1st

The Taylor Review - the much-awaited independent report on changing working practices in the UK – is finally here.

Commissioned by government, and on the back of a spate of negative publicity over modern working practices in businesses like Sports Direct, Uber and Deliveroo, the report sets its sights on the changing world of work; the so-called ‘gig economy’ and the increased use of flexible contracts.

It’s received a mixed reception, with the CBI and some industry organisations criticising the recommendations for adding additional burdens onto businesses, while trade unions have accused them of not going far enough.

The visitor economy – which includes hospitality and retail - is certain to be caught up in the changes of the evolving workplace. So what implications could the Taylor Review have for its businesses?

Quantity and quality

The report’s authors are clear that job creation is something to celebrate, with UK unemployment at a record low and many businesses investing in their staff. They stress that their recommendations shouldn’t stop this growth, nor the flexibility it brings, but that the quantity of jobs should go hand-in-hand with ‘quality jobs’, which they measure against six factors:

  • Wages
  • Employment quality
  • Education and training
  • Working conditions
  • Work-life balance
  • Consultative participation and collective representation

Our latest research into performance and talent management in hospitality and tourism highlights that, as a whole, the sector doesn’t necessarily perform well against all of these measures. However, we’ve also found that an increasing number of businesses are on a journey to address this.

In hospitality alone, labour turnover costs the sector £1.1bn annually. At the same time, rising costs, recruitment difficulties and changing employee attitudes mean that businesses are striving to increase retention and, in turn, performance and productivity.

Making flexibility work for everyone

Although the majority of UK workers are in full-time work, the Taylor Review shows there has been a slight increase in those working in ‘atypical work’, such as:

  • Part-time working
  • Self-employment
  • Agency work
  • Temporary work
  • Zero-hours contracts
  • Multi-jobs
  • Gig-economy work

Again, many of these atypical workers are found in the visitor economy. For example, 47% of the retail workforce is part-time, along with 46% in hospitality. Hospitality also has the second highest number of zero-hour contracts of any sector and, as our forthcoming report explores, businesses are becoming even more dependent on agency workers as they try to cope with the chef shortage.

Both retail and hospitality are increasingly reliant on the ‘gig economy’, as home and work deliveries become an essential part of modern consumerism. However, the report’s authors are concerned with atypical workers in conventional work settings too.

They make a number of recommendations to improve the quality of work, including creating a new employment status for ‘dependent contractors’ and adapting piece rate legislation to ensure those working in the gig economy are eligible for the National Minimum Wage. They also want to reduce the differences in the tax framework between ‘employee’ and ‘dependent contractor’.

In addition, they recommend giving agency workers more transparent information around holiday entitlement and increasing the pay reference period to 52 weeks to take seasonal workers into account. Companies above a specific threshold would also have to make their model of employment and use of agency services public.

The report wants to see the cost of resolving employment disputes reduced too, and makes a number of recommendations to make the process simpler, more transparent and fairer for employees.

It acknowledges that many workers like the flexibility of being on zero-hour contracts, but that, in some cases, zero-hour employees are working the equivalent of a full-time role. It recommends that staff should be able to request a contract that better reflects the hours they work after 12 months of employment.

The impact on businesses

Underpinning the report’s analysis and recommendations are the reasons why businesses are currently offering varied contracts, and the consequences of doing so.

The report’s authors are concerned with increasing productivity in sectors with large proportions of low-skilled, low-paid workers.  Matthew Taylor himself has stressed that the government’s industrial strategy should focus on these sectors, which means the report could have important consequences for the visitor economy.

Our latest research shows that increasing number of hospitality businesses are already shifting their focus to ensure they can offer a quality job environment. For some, this means a considerable change in their approach. For others, it builds on their current practices.

Some larger businesses are moving away from relying on zero-hour contracts, instead offering a variety of packages to suit employees’ needs. There is also a clear shift towards offering robust and transparent career opportunities with strong progression routes, rather than short-term job opportunities.

The recent changes to apprenticeships in England are supporting this shift. Our latest survey of levy-paying visitor economy businesses found that 83% see the new employer-led apprenticeships as a means to help retention and progression, as opposed to 51% who see them as a recruitment tool.

The Taylor Review stresses that ownership is vital in influencing whether businesses are motivated to make these critical people-related changes, and this is something our own research corroborates.

Businesses purely looking at short-term profitability are less likely to have long-term people strategies, and as a consequence, are less likely to tackle these important issues.

But rising costs, recruitment difficulties and changing employee attitudes mean that these people-related issues can’t be ignored for long, as they will undermine profitability in the medium to long-term. It also means that HR teams are centre stage in helping driving change, performance and productivity.

If the government accepts the review’s recommendations, it will add more pressure on those businesses who have yet to make the decision to change the way they invest in their staff. The authors of the report have walked a thin tightrope in their recommendations, balancing a wide range of disparate views.

However, the report only hints at some of the radical implications that greater automation might have on the future workplace and the implications this will have for skills and the economy. Our own research in hospitality suggests that automation is unlikely to eliminate large numbers of staff, as has been the case in some sectors, but it is likely to change the way they work as businesses re-design jobs to take advantage of new technology.

This provides some exciting opportunities for the sector, as it has the potential to create greater job variety and innovation. How businesses take advantage of these changes is yet to be seen, but the Taylor Report provides a snapshot of the opportunities available to those businesses that want to think differently - and a warning for those that don’t.

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