The Government consults on employment status reform and protections for the self-employed in the UK

The Government is consulting on proposed changes to the current employment status framework, as well as additional protections for the genuinely self-employed.

For employment rights purposes, individuals are grouped into one of three categories: employees, workers and the self-employed. However, from the gig economy to new technology, it is clear that the world of work has changed. The Government is concerned that this means it can be difficult for individuals to determine their employment status and therefore the rights and protections to which they are entitled.  

The consultation focuses on three main areas:

Placing less emphasis on personal service

 One of the key tests to determine an individual's status as a worker is whether they provide 'personal service' (ie whether the work must be carried out personally by the individual). Some businesses make use of broad substitution clauses in contracts, which state the individual can be substituted by other(s) and can make it difficult for them to meet the personal service test, even where significant control is being exerted over how they conduct their work. The Government is proposing to rebalance the worker test to place less emphasis on the requirement for the individual to provide personal service and to elevate the important of control. An alternative approach suggested is to legislate so that the right of substitution does not outweigh all other factors pointing to worker status.

Placing less emphasis on personal service

One of the key tests to determine an individual's status as a worker is whether they provide 'personal service' (ie whether the work must be carried out personally by the individual). Some businesses make use of broad substitution clauses in contracts, which state the individual can be substituted by other(s) and can make it difficult for them to meet the personal service test, even where significant control is being exerted over how they conduct their work. The Government is proposing to rebalance the worker test to place less emphasis on the requirement for the individual to provide personal service and to elevate the important of control. An alternative approach suggested is to legislate so that the right of substitution does not outweigh all other factors pointing to worker status.

Improving compliance by creating a presumption of worker status

Currently, the 'burden of proof' is on claimant(s) to show they are a worker. The Government proposes to change this by introducing a presumption of worker status, requiring an employer to demonstrate that the individual is not a worker.

Strengthening protections for the self-employed

The Government has stated that "more needs to be done to support the genuinely self-employed". It proposes the introduction of a written statement of key terms, which would provide key information about their contracts; protection from blacklisting for being a member of a trade union; and an extension of health and safety protection.

The Government is also seeking views on the enforcement of employment status judgments, including whether there is a role to be played by the new Fair Work Agency and whether repeated failures by an employer should be penalised.

Comment

Determining an individual's status can be complex and there are understandable concerns about bogus self-employment and unscrupulous employers exploiting this. Previously, there had been discussion about moving towards a single worker status, but that appears to have been abandoned. However, changing the balance of factors to place more emphasis on control and less on personal service together with a presumption of worker status could still be a significant change for businesses.   

The consultation closes at 11.55 pm on 8 January 2027. If you have any views that you would like the employment team to express on your behalf, please don't hesitate to get in touch. If you would prefer to respond directly you can do so using the link above.

This article is authored by Melissa Paz, special counsel in the UK employment team.