What could Labour’s proposed changes to employment status mean for you?

Labour has previously said it wants to create a 'single status of worker' that gives more protections to those working in the gig economy.

The commitment to creating a 'single worker status' was outlined by Sir Keir Starmer before the general election. (Getty)
The commitment to creating a 'single worker status' was outlined by Sir Keir Starmer before the general election. (Getty)

Labour has indicated it wants to revise the legal definition of what a worker is with a view to increasing their employment protections.

The 'single worker status' proposals were outlined before the general election as part of a large package of amendments dubbed Make Work Pay Keir Starmer said would strengthen the rights of millions of workers in the UK.

The changes would see the UK's complex rules - in which workers are essentially placed into three different categories with varying protections - replaced with a more straightforward approach that would prevent employers from gaming the system.

The Employment Rights Bill, announced on Thursday, will address a number of wider changes - including increased sick pay rights, flexible working and protection from unfair dismissal from the first day of their job.

However, it has fallen short of including any plans to create the 'single worker status' in the bill itself, instead setting out plans to tackle the area in the future after it holds a consultation about its definition and enforcement.

While the plans to term workers under a single category have been praised in abstract, implementing them may prove to be a bit more complicated.

Here’s what it could mean for workers.

The 2007-9 financial crisis was considered to be the most devastating financial crash since the Great Depression. It also changed the way we work at a rapid-fire rate.

Globally, more and more people began working more than one job to get by. With fewer permanent contracts available, many people used to full-time employment were left to pursue short-term contracts or freelance jobs.

The New Yorker coined the term “gig economy” to describe these roles, inspired by gigging jazz musicians in the 1910s who were paid per performance.

Now, the term is commonplace. It defines workers who may have multiple jobs, do not earn an annual salary, and in turn, do not receive workplace benefits like holiday pay or retirement contributions.

Just Eat takeaway delivery cycle courier cycling along Brick Lane on 6th October 2024 in London, United Kingdom. Just Eat Limited is a British online food order and delivery service founded in 2001 . It acts as an intermediary between independent takeaway food outlets and customers, with thousands of cycle couriers delivering food by bicycle and other forms of transport. Gig workers are independent contractors, online platform workers, contract firm workers, on-call workers and temporary workers. Gig workers enter into formal agreements with on-demand companies to provide services to the companys clients. (photo by Mike Kemp/In Pictures via Getty Images)
Delivery drivers make up part of the gig economy. (photo by Mike Kemp/In Pictures via Getty Images)

It's unclear exactly how many people exist in the gig economy.

"Over the last 15 years, if not longer, we've had a big rise in the amount of insecure work," Tim Sharp, the senior policy advisor at the Trades Union Congress told Yahoo News. "We reckon there are 4 million people in various forms of insecure jobs and the growth of the gig economy.

"We've had huge changes in the labour market. And thus far, until now, we've had a government that hasn't been very interested in dealing with some of the outcomes of that."

However, the Chartered Institute of Personnel and Development (CIPD) disputes these numbers, saying their analysis suggests it is closer to 460,000 people.

It is people in these categories who often have an unclear employment status — meaning that their rights at work are also in flux.

Currently, workers in the UK are legally defined by three different categories: as an employee, a worker, or self-employed.

Employees have more employment rights than workers or self-employed people, and additionally, more obligations towards their employer.

A self-employed person is their own boss. They are responsible for how and when they work, and are usually a company owner or a freelancer. Self-employed people have very few employment rights.

It is the third category, the worker category, that is harder to define. While workers belonging to this category have some employment rights, they do not have as many as employees.

If they do work for an organisation, it might be more casual, and less structured. They also may not have a regular working pattern.

“Workers in this category may have some statutory protections, but not all of the statutory protections that employees have. But critically, they may, in certain circumstances, be taxed as though they're self-employed, and so they're in that middle ground," Rustom Tata, the head of employment law at firm DMH Stallard told Yahoo News.

Sharp, from the TUC, brands this an "unusual legal agreement".

"There's a strong incentive for employers to try to prove that somebody is either a worker or completely self-employed so they don't have to honour those rights," he told Yahoo News. "We get this bizarre situation where if people have the theoretical ability to have someone else go and do their job for them, the employer can claim that the they're technically self-employed."

Because of the complex nature of this system - Labour's Make Work Pay document says it "requires an encyclopaedic knowledge of employment law" to understand - the party advocated a single worker status, condensing these three categories.

Under this revision, workers would be considered to be either employed, or self-employed.

Britain's Prime Minister Keir Starmer leaves 10 Downing Street to attend the weekly session of Prime Ministers Questions in Parliament in London, Wednesday, Oct. 9, 2024. (AP Photo/Kirsty Wigglesworth)
Keir Starmer's government wants a simpler framework for workers. (AP Photo/Kirsty Wigglesworth)

To do this, it is expected to consult in detail on a simpler framework that “differentiates between workers and the genuinely self-employed”.

While the plans were first touted in Labour's literature back in 2022, as the government has now announced it is looking into the measure with the aim to ‘consult’ on its plans, it could take several months before any plans are fleshed out.

For precarious workers belonging to this category, the benefits are expected to be manifold.

“Those currently classed as workers, such as the Uber drivers who recently successfully established worker status, would have full employment rights," David Sillitoe, a partner at Ralph Robinson, told Yahoo News. “Arguably, the most important of these would be protection from unfair dismissal (the qualifying period for which is expected to decrease to six months). They would also be entitled to family-friendly rights, such as maternity leave."

And, as many trade unions have argued, attaining worker status before this point has proven to be very challenging.

Being recognised as having worker status can take companies years, with Deliveroo and Uber drivers fighting to attain recognition after taking their cases to the Supreme Court.

Gig economy riders for app-based meal delivery platform Deliveroo demonstrate outside the company headquarters in London, Wednesday, April 7, 2021. The strike coincides with the first day of unconditional trading for Deliveroo shares, which went public last week in a stock market offering.(AP Photo/Alastair Grant)
Gig economy riders for app-based meal delivery platform Deliveroo demonstrate outside the company headquarters in London in 2021. (AP Photo/Alastair Grant)

Like any far-reaching policy proposal, the move does have its critics.

While some worry the proposals risk being watered down, others fear that the costs of increasing employment protections may be passed to consumers.

For Henry Chango Lopez, the general secretary at the Independent Workers Union of Great Britain - which represents workers in precarious employment - the law needs to be properly enforced to be truly effective.

“Legislation that expands accessibility to working rights is always welcome, but this needs to be properly enforced, and if the boundaries of what legally constitutes worker status are disputed then the burden of proof must fall on the employer rather than the workforce," Chango Lopez told Yahoo News UK.

Some have also flagged that the redefinition may in fact disadvantage some workers.

"Some workers and employers who currently benefit from the flexibility of the current ‘worker’ status may not want the more fixed status the employer and employee relationship offers," Debbie Coyne, Partner and Head of the Employment Law team at Slater Heelis told Yahoo News.

"It is likely there will be increased costs for employers as they will be paying more in benefits to individuals, which in turn may be passed on to customers and consumers. Some businesses may not be able to absorb these additional costs which may result in potential redundancies."