Labour’s Green Paper “New Deal for Working People” set out numerous proposed changes to employment law, including reforms for employment status to combat sham contracts.
One of these is to create a singular “worker” category for all, except for those who are genuinely self-employed. This would remove any ambiguity around employment status and extend all employee statutory rights to both workers and employees, including gig economy workers.
In addition to this, Labour proposes to scrap the qualifying times for basic rights such as protection from unfair dismissal, parental leave, and sick pay, thereby strengthening the protections afforded to those who would fall under the new, singular “worker” category.
Labour claims the introduction of the single status would work to eliminate the prevalence of bogus self-employment, as unless an employer can prove an individual is genuinely in business on their own account and properly self-employed, they would be considered a worker (in the new Labour-world definition of the term) and would be fully protected under employment law.
The Trades Union Congress and Chartered Institute of Personnel and Development (CIPD) also recommends simplifying the employment status tests to create a single worker/employee category, with everyone else being considered self-employed.
However, there are drawbacks for removing the three-tier employment categories:
• It would limit the choice of flexible working options that employers and individuals have available to them.
• Extending employee rights to workers would be costly for employers, as workers would have access to rights such as maternity/paternity/adoption leave /pay and also the right to request flexible working.
• There is the potential that more individuals will be found to be self-employed, and therefore lose access to worker rights such as holiday pay.
• If rights in unfair dismissal accrue from day 1, how do employers fare when a new starter fails their probationary period – will they typically be facing claims for unfair dismissal from someone patently unsuitable or incompetent? With the potential for increased claims from those dismissed below the current 2 year guillotine, how will this affect an already straitened tribunal system?
Additionally, it does not follow that, by introducing a single employment status, it would reduce bogus self-employment. The likelihood is that employers would continue to try to shoehorn those who are properly workers into being self-employed in order to limit their access to statutory rights, causing individuals to bring claims to challenge their employment status.