On 14 October 2026, the government launched a long-anticipated consultation on reforms to the employment status framework. The consultation focuses on proposals to:
- reduce the emphasis on personal service when determining worker status and instead focus on control;
- improve compliance with employment rights by tackling “bogus self-employment”, making it harder for employers to deny employment rights to individuals who are properly characterised as workers or employees; and
- strengthen protections even for genuinely self-employed individuals.
Although Labour’s 2024 manifesto promise to create a single worker status has been shelved in the short term, it is worth understanding the wider context behind the consultation and what to expect from the proposed changes.
01 How did we get here?
The UK currently has a three-tier framework for employment status: (i) employees, who benefit from the full suite of statutory employment rights; (ii) self-employed individuals, who have no statutory employment rights; and (iii) workers, treated as an in-between status benefiting from certain specified employment rights (e.g. the right to the national minimum wage and protection against discrimination, but not statutory parental leave or unfair dismissal rights). The legal test for determining employment status has long been criticised as uncertain and over-complicated.
In 2017, the (then Conservative) government commissioned the ‘Taylor review of modern working practices’ to examine how employment practices should adapt to keep pace with modern business models. Despite an initial commitment to clarifying employment status in line with the Taylor review findings, the Conservative government decided not to legislate in 2022.
Employment status reform was then resurrected as a 2024 Labour party manifesto commitment. In its ‘Plan to Make Work Pay’, the Labour party promised to simplify the legal framework by streamlining the entitlement to all statutory employment rights (such as sick pay, parental leave and protection against unfair dismissal) under a single worker status. However, this was ultimately not included in the Employment Rights Bill that followed.
Now, the new employment status consultation arrives against the backdrop of nearly a decade of anticipation. Has it delivered?
02 The key proposals
- Reducing emphasis on personal service. A key part of the legal test for worker status is whether the engagement requires ‘personal service’. Under the current law, a genuine, unrestricted substitution right would mean that an individual is not a ‘worker’, even where other factors point towards worker status. To combat the use of “misleading substitution clauses” for a workforce who may otherwise be considered ‘workers’, the government’s main proposal involves de-emphasising personal service. Instead, the government proposes tweaking the legal test to place more weight on the degree of direction or control exercised by the employer/engager.
- Introducing a presumption of worker status. To help ensure that employers respect the employment rights of individuals who are properly characterised as workers, the government proposes to create a new presumption of worker status. This would mean that, in claims for any rights which derive from worker status, the burden would lie with the employer/engager to prove that the claimant was in fact genuinely self-employed. This would mirror the presumption already in place for national minimum wage entitlement. The proposed change would also bring UK law into closer alignment with the EU Platform Work Directive, which creates a similar presumption where the facts indicate direction and control by the digital labour platform, such that the platform then bears the burden of proving that no employment relationship exists between itself and the worker.
- Other measures promoting compliance. Employment Tribunals already have the power to impose penalties (payable to the Secretary of State) on employers found to be in breach of the law, where the breach has ‘one or more aggravating features’. The government now proposes that, in claims where an earlier Employment Tribunal decision has already found against the employer on broadly similar facts, the employer’s repeated failure to recognise employment status should be an aggravating factor, triggering penalties between £100 and £20,000 per claim. In parallel, the government is seeking views on how the new Fair Work Agency’s power to bring civil proceedings (on which, see our previous blog) could be used in cases where it suspects that “bogus self-employment” is being used (or abused). The consultation also asks whether an online employment status assessment tool, similar to HMRC’s Check Employment Status for Tax tool, would be helpful.
- Strengthening protections for the self-employed. At the (admitted) risk of further muddying the waters, the government is considering whether the meaning of ‘worker’ should be extended for some statutory rights, to allow a broader range of individuals to benefit. It is also consulting on a new right to a written statement for certain self-employed individuals, (setting out key information including the engager’s name, scope of the work to be performed, expected period of work, payment terms and termination rights). This right to a written statement could be subject to qualifying criteria, such as contract length or value. Finally, the consultation seeks views on whether statutory health and safety protections at work, which currently only protect workers, should also apply in a self-employment context.
03 Some reflections
The proposals outlined in the consultation could mark a significant shift in how employment status disputes are decided, particularly in industries which rely on a “gig-economy” model to provide services. Businesses that rely on self-employed contractor models will be watching closely, as the changes could make it more difficult to rely on that model in future, as well as making it easier for individuals to challenge their status. As ever with employment status reform, the detail will be critical.
The government rightly acknowledges that employment status is “inherently complex” and there have been several attempts to resolve this complexity. While these consultation proposals may be the government’s attempt to “grasp the nettle”, the proposals fall short of what the Labour party committed to in its 2024 manifesto, with its promise to create a single status of worker. It seems that a broader structural fix is off the table, at least for now, and has been shelved as a “longer-term goal”. What’s left is narrower: tackling the power imbalance between workers and the businesses that engage them, rather than rebuilding the legislative framework.
The government’s proposal for “control” by the employer/engager to play a greater role in the primary test for employment status is sensible and would go some way towards addressing any perceived abuse of substitution clauses by employers/engagers to defeat claims of worker status. However, the impact of the proposal to shift the burden of proof on status to the employer will remain to be seen. This will need to be tested in Employment Tribunals and such enforcement would only be reactive. With the current backlogs, that may well take many years.
It is also not clear that the proposals would reduce pressure on the Employment Tribunal system in the way the government believes, since the main proposed legal reforms would still rely on Employment Tribunals for enforcement. Expanding the Fair Work Agency’s role and providing further resources (such as the proposed online tool) could go some way towards helping resolve uncertainty or disputes about employment status at an earlier stage, but, on their own, these measures are unlikely to tangibly reduce the Employment Tribunal caseload.
Ultimately, the latest proposals seem to function as more of a reactive, intermediate step, rather than any final word on the future of employment status. Significant further changes may be on the horizon if the government is still committed to, eventually, introducing a single worker status.
04 Next steps
Several of the consultation proposals, including on the proposed revised test for worker status and shifting the burden of proof onto employers/engagers to disprove that an individual is a worker, would need to be brought into force by primary legislation in Parliament. As such, there are no immediate changes that organisations need to prepare for.
Nevertheless, any changes to the employment status framework would have a particular impact on employers that rely significantly on varied employment models. As such, this consultation (closing on 8 January 2027) could be a valuable opportunity for employers to have an early say on the trajectory of future changes.
If you have any queries on this topic, please get in touch with a member of the Linklaters Employment team.
For further information, please contact:
Laurie Ollivent, Partner, Linklaters
laurie.ollivent@linklaters.com
