Single status proposals
How are the proposed changes to employment “single status” going?
The government recently published its consultation paper - Make Work Pay: employment status reform and protections for the self-employed. This paper represents the government’s initial proposals looking at the idea of creating a “single status” for employment replacing the somewhat complicated system in place comprising of a three-tier system currently in existence consisting of employee at the top with most employment rights followed by worker status with some employment protection rights i.e. holidays, right to national minimum wage and whistleblowing etc (‘Limb (b) worker’ as defined in 230(3) (b) of the Employment Rights Act 1996) and lastly the self-employed with very limited rights currently mainly around discrimination protection only.
What are the proposed changes
The changes being proposed in the consultation paper are aimed at tackling the problem of bogus self-employment as well as giving those who are genuinely self-employed some basic additional protection. The consultation is looking at two main proposals for reforming the current law around worker status. These are:
- Need to reduce the importance of personal service when assessing worker status.
- Bringing in a presumption of worker status in employment tribunal claims.
In addition to the above the government are seeking views on those in the category of the genuinely self-employed. The proposals relate to the employment rights of individuals in the different categories not taxation matters. The creation of a new “single worker status” is not on the cards at moment.
The government is looking specifically at the traditional way in which self-employment has been assessed, in particular use of the personal service and control tests. These tests have been used to determine whether an individual falls within the various categories of employee, worker or self-employed for many years now. Much of the emphasis has been placed on personal service and the ability to provide a substitute. As many employment lawyers will be aware this has been subject to judicial analysis in cases involving Uber, Pimlico Plumbers to name but two where individuals providing services have argued worker status as opposed to being self-employed. The requirement in these cases was for the individual to prove they provide their work personally and cannot or do not provide a substitute to perform the work on their behalf (basically sub-contract). A number of cases have been adjudicated and decisions have gone either way. The government proposals are to focus more on the “control test” which concentrates on how much an individual works under the direction or control on an employer in performing their duties, in addition to personal service which looks at worker status. The intention is to reform limb (b) accordingly.
The second proposal is an introduction of a statutory presumption of worker status. This would mean the current need for the individual who brings a claim of having to prove worker status would be reversed with the employer required to show a person is not in fact a worker. This will apply to limb (b) worker status and employment rights associated with this category. Employers could be subject to financial penalties by tribunals if they continuously fail to correctly classify worker status in claims.
The role of the Fair Work Agency
As part of the consultation the government is also asking for views on whether the Fair Work Agency could help enforce compliance with the matter of employment status. This body would have the power to bring cases on behalf of individuals where employers were believed to be infringing the new rules on worker status and self-employment.
Some of the new protections on offer for self-employed individuals
- Rights to a written statement setting out names of the parties to the contract, scope and duration of work, terms of payment and termination arrangements
- Rights to health and safety protections
A changing environment
The above is only a brief summary of the proposed changes but they do represent a major shift in the nature of determining employment status that has been left unchanged for many years. The common law tests for determining employment status based on the main legal tests of personal service, control and mutuality of obligation were set out in Ready Mixed Concrete v Minister of Pensions and National Insurance [1968] (many students of employment law will have that case embedded in their brain). The Employment Rights Act 1996 codified the law and setting out the definitions for both employee and “worker” status under section 230. The Employment Rights Act 2025 is introducing a switch in emphasis within the balance of the employment relationship bringing new challenges for both claimant and respondent lawyers to get their heads around.
Steve Norton
Solicitor