Policy
The Government wants to transition towards a two-part framework for employment status that will consist of workers and self-employed only (unlike the three-tier category of employee, worker and self-employed that we currently have). These reforms are not included in the Employment Rights Bill but will be part of the Government’s longer-term reform plan.
It is unclear at this stage if this policy would entitle all those who are currently considered workers to have the same level of employment rights as employees currently do, or whether new boundaries between workers and self-employed will be drawn.
Whichever approach is taken may increase the number of individuals that have the fuller set of employment rights that are currently only available to employees. That could mean individuals who were previously considered self-employed workers will gain the right to minimum notice on termination and to unfair dismissal, for example.
If the Government also looks to align the employment law tests with the tax tests, it could also have the effect that those who are “workers” on the new test would be taxed as employees and so employers would have to pay employer National Insurance Contributions – currently, self-employed workers are taxed as self-employed.
The effect of this reform could be significant for employers in terms of cost and their employment or engagement models – particularly coupled with the other reforms proposed (such as day one unfair dismissal rights) which would then extend to all such “workers”.
In addition, the Labour Government also promised to “strengthen rights and protections to help self-employed workers thrive”, including the right to a written contract, action to tackle late payments, and by extending health and safety and blacklisting protections to self-employed workers in addition to potentially extending union rights to the self-employed. These reforms are also part of the Government’s longer-term plan.
Timing and developments
Not included in the Employment Rights Bill.
This reform will be part of its longer-term plan – as the Government recognises that it will take longer to consider how to make changes and implement them. It has committed to a full consultation on both worker status and how to implement its manifesto commitments to enhance protections for self-employed workers. So, it may be some time before this is implemented.
Await developments.
Sources
Plan to Make Work Pay, Next Steps document.