15th January 2025
The Labour government has committed to modernising the work environment by 2026. Their ‘Make Work Pay’ manifesto points out that current employment laws have resulted in unsecure jobs and have disadvantaged good employers by creating an uneven playing field.
The government plans to implement a single worker status, giving all employees identical rights regardless of their contract type.
Employment expert, Sarah Everton, comments: “The introduction of the single worker status represents a significant shift in employment policy. Reclassifying workers and changing contracts will affect the day-to-day practices within organisations.
Clear communication and compliance are key to a smooth transition to ensure that everyone’s rights and responsibilities are upheld under the new laws.”
Below, Sarah outlines the key points of what this means for employers and what new protections for employees could look like under the new policy.
The change to a single worker status is being introduced to categorise employees under one classification and one set of employment rights.
Currently, there are three main classifications of employees, all of which are protected under different employment rights:
The new policy would align employees, limb workers and bogus self-employed people under a single status and provide them with the same rights. Meaning those that are considered casual workers or those that are bogus self-employed will be entitled to holiday and sick pay, redundancy rights and protection from unfair dismissal.
The idea of the single worker status is to create a clear legal definition for workers with the long-term aim of creating a more productive and secure workforce. This single worker status should make it easier for both employers and employees to understand their rights and obligations. However, businesses may need guidance through a transitional period to make sure they remain compliant.
The government are set to strongly enforce compliance to make sure that these changes are put into practice across all areas of a business. Employers must prepare to spend time training and monitoring managers to ensure this is implemented correctly.
As all workers will be entitled to sick pay and holiday pay, some businesses may see an increase in costs to comply with providing these rights. This could mean a change to payroll and other HR systems to provide access to those who previously fit under the ‘limb (b) worker’ and ‘self-employed’ status but are now considered employees.
The positive implication is that these changes will create a secure working environment, leading to higher employee satisfaction and reduced turnover due to having a more stable and positive workforce. It is believed that limb workers and self-employed workers will feel secure in their job positions and are likely to be more productive and engaged, knowing that their rights are protected and that they have essential benefits such as sick pay and holiday pay.
The main drawback to the new policy comes from the impact to self-employed contractors, who benefit from the current framework of the ‘gig’ economy. Self-employment is diverse and if some self-employed workers become employees, they may not be able to work for more than one employer and may also have higher tax liabilities.
Hiring someone who is self-employed offers many benefits and flexibility for both the employer and the contractor. For the employer, the advantage of hiring a contractor means they can use the expertise and skillset of an expert to solve specific problems on a short-term basis, whilst ensuring high-quality outcomes and efficient use of company resources.
For the contractor, the self-employed status allows them greater autonomy over their work-life balance. They can choose which clients to work with, set their own hours, and often negotiate better pay rates compared to permanent positions. Developing long-term relationships with select employers can lead to consistent work opportunities and a stable income stream, without the constraints of traditional employment.
Whilst independent workers gain new protections and rights with these contracts, there is concern that the new legislation may not maintain the flexibility currently enjoyed by self-employed workers. A more mindful and granular approach may be needed by both the government and by employers to look at what definition someone should fall under. Without this, self-employed contractors may shy away from less flexible clients, and it may be that some employers will then revert to hiring via agencies to help with their bespoke business needs, which presents its own set of costs and challenges.
The new policy represents a significant shift in employment law, and whilst this is a blanket policy affecting all sectors and businesses, the government need to be mindful of how this is implemented to benefit all employers and their workforce. Businesses must adapt to these changes by investing in training, updating payroll systems, and fostering a culture of compliance.
The transition will not be easy for businesses, as it will come with an initial increase to costs and the need for more robust management practices. However, the long-term effects of this are to create a more secure and productive workforce. By striking the right balance, the new worker status could deliver a fairer, more transparent employment landscape that benefits both employers and employees alike.
The new single worker status and other changes to employment law are not expected to come into effect until 2026, however it is important for employers to be prepared to implement these changes ahead of this shift. For further information on what these changes mean for you and your business, please contact Sarah Everton, Head of the Employment team on 01782 491025 or email sarah.everton@myerssolicitors.co.uk.
Myers & Co has offices in Stoke-on-Trent, Staffordshire.
