Employment status reform

The government is consulting on what it calls ‘targeted reforms to the employment status framework for employment rights’ aimed at tackling bogus self-employment and the misuse of substitution clauses.

The measures outlined in the consultation (which closes on 8th January 2027) are narrower than those set out in Labour’s election manifesto. The current three-tier framework of employee, worker and self-employed remains in place – but the government will consider a single worker status as a longer-term goal. The consultation focuses solely on employment status for employment rights, and not tax status.

The government is now seeking views on plans to:

  • lower the legal test for worker status to reduce the emphasis on the need for personal service and instead elevate the importance of control - so that a valid right of substitution does not automatically prevent someone from qualifying as a worker where significant control exists. Alternative proposals are to lower the bar for what counts as personal service or to legislate that substitution rights should not be the sole or overriding factor in determining status
  • create a presumption of worker status so that the burden of proof is on the employer to demonstrate that the person they engage is not a worker
  • make clear that repeated failures to recognise employment/worker status could result in the award of additional penalties by a tribunal
  • use the Fair Work Agency’s powers to bring tribunal claims on behalf of individuals to determine their employment status
  • develop a new online assessment tool for employers and individuals to check likely employment status, and
  • bolster protections for self-employed independent contractors by, for example, requiring businesses to give basic written statements to self-employed individuals and extending certain blacklisting and health and safety protections to them