Single worker status: what is it, why is it planned and what might it mean for the self-employed?
We explore Labour’s plan to consult on the simplification of the UK’s employment status
Two months on from Labour’s electoral success, the dust has settled and – following the summer parliamentary recess – the wheels of government are turning once more.
In due course, it’s likely the government will look to make headway on some of its pre-election promises. One of those was the plan to consult on the introduction of a single ‘worker’ status – a move which could seriously shake up the current employment status regime.
On the face of it, such a change would be no bad thing. 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.
While a consultation had been promised under the previous government, it was never delivered, despite the findings of the Taylor Review. So, while somewhat overdue, the consultation is welcome.
Naturally, there have been lots of questions about what this consultation might mean. Here, we answer some of them.
What has Labour promised?
In short – to consult on the introduction of a single ‘worker’ status, in a bid to simplify the UK’s current three-tier system (consisting of ‘employees’, ‘self-employed’ and ‘workers’).
There’s no guarantee that the change will go ahead, but with many across the industry likely to be receptive to the proposal, a solution may be adopted quickly following the consultation’s conclusion.
It is also worth noting that Labour’s pledges have focused on employment status relating to employment rights, not employment status for tax. These two areas are currently completely independent of one another, which creates an element of confusion in itself. Whether or not the Government will seek to address this remains to be seen.
What are the timeframes?
As yet, there are no concrete timeframes in place. But the commitment to strengthening workers’ rights was a key pillar of the Labour Party’s election campaign, and consultations can run for quite some time.
Kicking the process off sooner, rather than later, would be consistent with the way the party campaigned, and would be a signal of intent from the new government.
What are the reasons for this consultation?
Enough of the what and when – let’s look at the why.
Essentially, the Labour Party
agrees with the findings of the Taylor Review – that the current three-tier employment status system has led to a considerable grey area between what constitutes employment and self-employment.
This fact has been illustrated by a number of high-profile legal cases, including one brought by gig workers against
Uber, among many others.
Is this necessary, and are self-employed workers calling for this change?
While not necessarily at the top of the agenda for contractors, the UK’s self-employed sector is diverse – so the move may well be welcomed by gig workers, who have often campaigned for employment rights and greater protection.
Of course, even the best-intentioned policies can have unintended consequences, and that’s something the government must remain mindful of throughout the consultation process.
Not every self-employed individual needs or wants these changes, namely genuine contractors – and so, if the change is agreed, the policy needs to be designed so it works as intended.
What might single ‘worker’ status mean?
Ultimately? A simpler, more straightforward framework for determining employment status; one that should give workers certainty over their rights and protections while ensuring businesses meet their legal obligations.
Under the proposal, people would be considered either employed or self-employed, offering clearer boundaries and distinctions between the two – for the benefit of the individuals and the businesses engaging them.
And it could have knock effects for IR35, too…
Tell me more…
These changes are intended to simplify the distinction between employment and self-employment – potentially in primary legislation.
A legally agreed definition of each employment status could make it easier for businesses to confidently make accurate decisions about the IR35 status of the contractors they engage.
A final thought…
So, clear legal definitions for employees and the self-employed and potential improvements where IR35 is concerned. Sounds like a win-win.
However, there are concerns over potential unintended consequences and the scope of the changes. The consultation process should help to reduce those risks, by inviting experts from across the industry to share their opinions on the proposal.
While the finer details will need to be ironed out during the consultation, on the face of it the intended change could be good news for vulnerable self-employed workers.
