An Overview of the Single ‘Worker’ Status Proposal

Introduction

As many contractors are already painfully aware, employment status is a source of much confusion, both for self-employed individuals and businesses looking to engage them.

In one of its pre-election promises Labour stated it would look to introduce a single ‘worker’ status.

Three-Tier System of Employment Status

The UK currently has, what is described as, a three-tier system of employment status where people are categorised as:

Employees;
Self-employed; or
Workers.

Labour’s manifesto stated:

“Determining which category you are in – and your access to various employment rights and protections – requires knowledge of complex legal tests and an ‘encyclopaedic knowledge of case law.”

The employment rights, or lack thereof, between the three categories varies widely.

Background

The Taylor Review

Published in July 2017, the ‘Good Work: The Taylor Review of Modern Working Practices‘, the Taylor Review, was commissioned by the previous Government with a remit of exploring the forces shaping the current and future of work in the UK, examining each sector of the labour market – from employed workers, right through to ‘gig economy’ workers and contractors.

As well as analysing UK employment, The Taylor Review deep dived into the role of self-employment in society, highlighting a number of measures it believed the then Government must consider if they were to truly unleash the potential of the UK’s 4.8 million independent workers.

Also, and as expected, the Taylor Review included references to and recommendations around legislation affecting IR35 and employment status.

Among others, the Taylor Review:

Called for greater clarification and simplicity when it comes to determining employment status of both self-employed workers and employees.
Stated that in determining employment status, legislation must be made clearer.
Highlighted the need to include certain factors the Government currently use in determining employment status, into legislation, including:
- Personal Service (whether the individual is required to do the work themselves);
- Control (the level of autonomy the individual has over their work); and
- Mutuality of Obligation (whether there is an assumed obligation to maintain the relationship).

Labour’s Plans

Labour first suggested measures in its Green Paper in 2022, which said it would see a single status of ‘worker’ replace the three existing employment categories. The proposal would also remove qualifying periods for basic rights and protections to give workers day one rights when starting a new role.

The proposal followed a series of high profile cases involving gig economy workers, including Uber v Aslam and IWGB v CAC and Roofoods Ltd t/a Deliveroo, in which the key issue before the courts was whether the claimant was a worker or self-employed. Labour’s proposals aim to abolish “insecure employment” and ensure that all workers have adequate job security.

However, reports highlighted the policy was weakened following the party’s policy forum, with the aim to ‘consult’ on its plans.

As part of its Plan to Make Work Pay, which was published before its election victory and outlined its proposed reforms to workers’ rights, the party said that it would “transition to a simpler two-part framework for employment status” and will consult in detail on a simpler framework that “differentiates between workers and the genuinely self-employed”. Labour agrees with the findings of the Taylor Review.

However, with no detailed proposal, consultation, and no reference in the King’s Speech, we are unsure of whether this is a near or far horizon for Labour (but we estimate a far horizon).

What Might Single ‘Worker’ Status Mean?

A simpler, more straightforward framework for determining employment status should give workers certainty over their rights and protections while ensuring that businesses meet their legal obligations.

Under the proposal, individuals would be considered either employed or self-employed, offering clearer boundaries and distinctions (including rights and obligations) between the two to the benefit of the individuals and the businesses engaging them. It also could have knock effects for IR35.

Practical Implications

Potential implications of the proposal, as it stands, could include:

Altering availability of talent and abilities;
Less autonomy and flexibility of freelance employment;
Uplift in business costs due to upgrading of employment rights;
Employer/employee relationship is deemed less flexible; and
Impact of increased costs on business decisions, for example investment and recruiting.

Business Awareness

People Management states:

“According to new research from BrightHR, the majority (88 per cent) of business owners have concerns about implementing Labour’s HR reforms. In addition, 35 per cent of business owners are unaware of the changes being proposed by Labour, with a further 48 per cent unaware of the employment law risks associated with the proposed changes.” (Mayne, 2024).