With a new Labour government in place, we can expect numerous proposed changes to employment law. One such change is to create a Single Worker Status, under Labour's plan to Make Work Pay. While it didn't receive a direct mention in the King's Speech in July, it is clear that Labour has big plans to reform employment law over the next five years and it is likely a matter of time before the topic of worker status is laid before Parliament.

The rise of the gig economy in the UK has led to a lot of confusion around workers' employment status and has caused instances of exploitation by some employers, who use the uncertainty to save money on employment costs but deny those they hire full employment rights. Introducing a Single Worker Status for all except the self-employed would aim to make employment status clearer and fairer for working people in the UK.

How do current employment statuses work?

At present, workers can be categorised under three tiers based on contractual arrangements and the working relationship with employers:

Employees: Those directly employed by the organisation and on the company payroll. These workers are entitled to employment rights including sick pay, holiday pay, parental rights such as maternity and paternity leave, and protection from unfair dismissal.

Workers: They have a contract to do work or undertake services for a reward, such as payment or a benefit in kind, but are not on the company payroll. Workers have access to employment rights such as getting National Minimum wage, holiday pay, and statutory length rest breaks. Contractors can choose their own projects and hours and work for multiple employers.

Self-employed: Self-employed people run a business and are completely responsible for managing their own tax payments, salary and benefits. They are hired to undertake work through their business, not as an individual worker.

The rise of the gig economy has meant that it can be difficult to differentiate between individuals who are 'employees', 'workers' and 'self-employed'. While some people appreciate this flexibility, others have found that it puts them in a difficult position of determining who is expected to pay taxes and what employment rights and benefits they are entitled to.

What changes would the new government make?

Labour intends to remove the 'grey' area that exists between the three employment statuses by providing a more rigid framework for defining where employees, workers, and self-employed people sit. While no proposals are currently in the pipeline, it's likely the government will seek to open a consultation into the best way to push this forward.

There are benefits and drawbacks to introducing Single Worker Status. Benefits include greater access to employment rights and more security for 'workers', who could gain the right to request family leave and flexible working. It also means workers can be clearer on their position within an organisation and would be entitled to better employer support across a range of scenarios.

However, for those who enjoy the flexibility of worker status, there may be drawbacks. For example, should HMRC determine that the contract and relationship between a worker and their hiring organisation is more akin to that of an employee, then they may be subject to greater restrictions, such as not being able to work for multiple employers or having higher tax liabilities.

With many contractors likely to fall under the 'employee' category under Labour's proposed changes, rather than 'self-employed', organisations may also be disincentivised to hire contract workers due to the increased costs, administrative burden, and liabilities that a single status would involve.

What now?

As yet, no move has been made towards Single Worker Status. Labour will need to undertake a comprehensive review of the status quo, and consult with relevant stakeholders before effective draft legislation can be drawn up.

The key for the Labour government is to keep working people at the centre of their legislation, and address all likely consequences of this change so that any proposals are genuinely beneficial for workers.

The PCA will continue to keep a close eye on Labour's employment policies over the coming months.