Updated 14th October 2026
Here we go again. Matthew Taylor considered the UK’s three-tier employment status framework – employee, worker and self-employed – in his 2017 report Good Work: The Taylor Review of Modern Working Practices.
The then Conservative Government subequently committed to clarifying the employment status tests but, 5 years later in July 2022 decided against legislating. Its reasons were that the benefits of reform were outweighed by the disruption, cost and uncertainty for organisations still recovering from the pandemic. Instead it published a useful suite of guidance explaining the existing framework, which remains current, and helpful.
Now, under Labour’s Make Work Pay programme, the employment status of your workforce is back under the spotlight. So, what’s happening?
October 2026 Update: Government launches consultation on Worker Status and Self-Employment.
On 14 October 2026, the Labour Government launched a consultation proposing significant changes to how worker status is determined, alongside new protections for genuinely self-employed individuals.
If enacted the proposals would affect any business engaging freelancers, contractors or other individuals on a self-employed basis, not just those operating in the gig economy. The Government is inviting responses to its consultation, (as the Conservative Government did before it) which can be accessed here. No doubt the feedback will be entirely different this time!
The consultation closes on 8 January 2027.
What is the Government proposing?
The consultation coveres five key areas.
1.Personal service and substitution clauses
The Government is considering introducing significant direction or control as an alternative to personal service when determining worker status. This could mean that an individual may qualify as a worker even where they have a genuine right to send someone else to undertake the work.
This is particularly significant following the Deliveroo judgment, where the genuine right of substitution was central to the Supreme Court’s decision.
To recap, in November 2023, the Supreme Court held in Independent Workers Union of Great Britain (IWGB) v Central Arbitration Committee and another that Deliveroo riders were not in an employment relationship with Deliveroo for the purposes of Article 11 of the European Convention on Human Rights. Consequently, the IWGB could not pursue compulsory trade union recognition on their behalf.
The decision reinforced the importance of personal service (where an individual is required to perform the work personally) and the right of substitution (where an individual is permitted to send someone else to undertake the work in their place) when determining employment status.
Labour’s proposed reform could therefore represent a significant change to the existing legal framework, reducing the ability of businesses to rely on substitution clauses where they nevertheless exercise substantial direction or control over how individuals work.
2. Presumption of worker status
The Government proposes introducing a presumption of worker status in employment tribunal claims, such as those for holiday pay or the National Minimum Wage. This would shift the burden onto businesses to prove that an individual is not a worker, making it easier to challenge bogus self-employment and increasing the importance of accurate employment status assessments.
3. Stronger enforcement
Proposals include penalties for repeated failures to recognise worker status, a potential role for the Fair Work Agency in bringing employment status cases and an online employment status assessment tool.
4. New protections for the genuinely self-employed
The Government is considering giving self-employed individuals the right to a written statement setting out the scope of their work, payment arrangements and termination terms, potentially subject to minimum duration or value thresholds.
5. Blacklisting and health and safety protections
The consultation also considers extending blacklisting protections to self-employed individuals and protecting them from detriment where they take action to avoid serious and imminent danger.
What happened to Labour’s proposed single worker status?
Before winning the July 2024 General Election, Labour committed to simplifying the existing three-tier employment status framework (employee, worker and self-employed) into a two-tier system.
However, this was not included in the original Employment Rights Bill.
The Government has now confirmed that the current three-tier framework will remain in place for the time being, with single worker status retained as a longer-term ambition.
Instead, the immediate focus is on tackling bogus self-employment, strengthening enforcement and improving protections for individuals working outside traditional employment arrangements.
What should employers do now
Although the proposals remain subject to consultation, the direction of travel is clear. Businesses engaging freelancers, contractors and self-employed individuals should review their current arrangements to identify potential employment status risks and protect genuinely independent working relationships.
In particular, employers should check that contracts reflect working practices, that substitution rights operate genuinely in practice, and that the level of control exercised is consistent with the intended employment status. Keeping clear records of these arrangements will also help businesses demonstrate and defend their decisions if challenged.
There is no need to change legitimate self-employed arrangements in anticipation of proposals that may yet be amended. However, reviewing them now will help employers address potential risks, preserve appropriate flexibility and avoid unnecessary costs or disputes as the reforms develop.
With the consultation closing on 8 January 2027, employers should keep these developments under review and consider whether their existing employment status assessments remain robust.
If you need advice on auditing and assessing the employment status of freelancers and contractors in your business, please get in touch. Details are below.
A very little bit of case law: What have the courts said about employment status?
Uber v Aslam (2021)
In its landmark ruling in Uber V Aslam back in February 2021, the Supreme Court held that Uber drivers wer workers, entitled to statutory protections including National Minimum Wage and paid annual leave.
The court found that a company’s actual level of control, not what is expressed in the contract, ultimately determines the employment status of its workers. Courts and tribunals must examine the reality of the working relationship, including the degree of control exercised by the business over how work is carried out.
Bandi and Others v Bolt (2024)
In November 2024, an Employment Tribunal similarly ruled that Bolt drivers were workers, granting them rights to paid holidays and the minimum wage. rather than genuinely self-employed independent contractors.
A key factor was the degree of control Bolt exercised over its drivers. Bolt argued that its Bolt Link scheme, which allowed drivers to authorise others to work under their account, removed the requirement for personal service.
However, the Tribunal rejected this argument, finding that drivers were still contracted to provide their services personally to Bolt and could not genuinely delegate their work through the scheme.
The decision further illustrates why businesses cannot rely solely on contractual wording or substitution arrangements when determining employment status.
