A proposed presumption of worker status would put the burden of proof on businesses.
The UK Government has published a consultation on reforming “worker” status for employment rights purposes. The proposals could materially change how organisations engage self-employed individuals. They could also change how easily those individuals can establish entitlement to worker rights.
The consultation follows the Supreme Court’s decision in the Deliveroo case, where a genuine right of substitution was sufficient to prevent the individuals concerned from being treated as “workers” of the organisation. The Government is now considering whether the legal framework should place less emphasis on substitution and more on the degree of control over the worker in the relationship.
Employee, worker or self-employed
Employment status matters because it determines the rights available to an individual. Employees benefit from the widest range of statutory protections, including unfair dismissal rights, redundancy payments, equality and anti-discrimination protections, holiday pay, sick pay, parental leave and other family-related rights.
Workers (sometimes called “limb (b) workers”, reflecting the wording of the legislation which introduced this term) have a more limited package of rights. These include holiday pay, rest breaks and protection from discrimination.
A familiar status problem, with one important omission
The consultation draws on the Taylor Review of Modern Working Practices. However, as Matthew Taylor observed, it is difficult to review employment status for rights purposes without also considering status for tax. The consultation expressly excludes tax status, leaving the two regimes on separate tracks. This is disappointing to note, as a world of unintended consequences follows as a result.
What could change?
The central proposal is a presumption of worker status. In practice, that could make it easier for self-employed individuals (sometimes described as sole traders) to pursue claims for holiday pay, pension contributions and other worker protections, including whistleblowing protection. The engager would need to rebut the presumption, or face significant increases in the costs of such hires of as much as 15 to 20%.
Will a substitution clause still be enough?
Potentially not. The consultation proposes reducing the weight given to a contractual right of substitution and placing greater emphasis on the degree of control exercised over the individual.
This will be familiar territory for the recruitment sector. Supervision, Direction and Control (SDC) has
been a key tax test since 2014, under section 44 of ITEPA 2003, which restricts gross payments to self-employed agency workers. Many recruiters and umbrella companies already have SDC processes built into their operating models, so existing infrastructure may provide a useful starting point. It will still need to be reviewed against the final proposals, however.
The six proposals to watch
In summary, the Government is seeking views on:
- A presumption of worker status, which the engager would need to rebut.
- Less emphasis on substitution, with greater scrutiny of control.
- Enforcement by the Fair Work Agency.
- A written statement for the self-employed setting out matters such as pay, payment terms, scope of work, notice and termination rights, and the engagement period.
- Protection against blacklisting for the self-employed, including detriment connected with trade union membership or activities.
- Additional health and safety protections for the self-employed, including provision for health and safety representatives.
Why should engagers pay attention now?
The proposals could increase the risk of coordinated claims, particularly if enforcement falls within the Fair Work Agency’s remit. Organisations engaging self-employed workers should therefore monitor the consultation, tighten their SDC assessment processes and enhance their records to evidence the true nature of each engagement. There is likely to be more skin in the game from all parties in the supply chain, so now is the time to get things right.
And one final point: the Government is also inviting suggestions for a better name than “limb (b) worker”. Responses are requested before the consultation closes on 8 January 2027. Answers on a postcard…
How Brookson Legal can help
If you engage self-employed individuals and want to check your contracts and processes against these proposals, our team is here to help.