HR Magazine – Clarify employment status or risk reform failure, says labour market tsar

Speaking to the Financial Times, Margaret Beels, the independent director of labour market enforcement said that employers could sidestep any new responsibilities by hiring gig workers instead of employees. The FT‘s report was published on Monday (20 January).

The Employment Rights Bill, introduced by the Labour government last year, signalled intent to add new legal protections around dismissal, so-called ‘fire and rehire’ employer tactics and flexible working by default. 

But Beels has argued that there could be a potential rise in bogus self-employment as some employers use the UK’s three types of employment status (worker, employee, self-employed) to sidestep rules designed to give employees more protections and rights.

Read more: Avoid the costly pitfalls of miscategorising workers

Employment status in the UK is an ongoing vexed issue. 

Many gig economy employers designate individuals as self-employed, meaning they don’t qualify for holiday pay, sick pay or minimum wage, unlike workers or employees. 

Royal Mail drivers are among the latest to bring a case against the organisation they work for, claiming that they should not be classified as self-employed as they don’t have control over their working hours.

Instead, they are calling to be defined as workers in a similar move as Uber drivers in 2016, a call upheld by the Supreme Court in 2021.

According to Niamh Hogg, an associate at law firm Freeths, if an employer tried to get out of any potential incoming onerous employment law changes by using self-employed contractors it might not be so straightforward.

She told HR magazine: “The classification of an individual as an employee, worker, or self-employed contractor is not solely dependent on the contractual terms but is determined by the reality of the relationship.

“Recent cases have proved that if the reality of the relationship indicates an employment relationship, an individual can benefit from the same protections afforded to those properly engaged as employees.

Read more: Royal Mail sued over drivers’ gig economy status

Connie Cliff, an associate at Gowling WLG, suggests that if employment status is reformed, as has long been in the offing and talked about, then there is a chance that the employment bill will massively change work.

Speaking to HR magazine, she said: “The reforms on making unfair dismissal a day-one right is currently a big change, but introducing a single ‘in employment’ status for employment rights will compound that change, making that big reform a massive reform.

“But it will be a political choice on whether to expand the scope of all current employment protections and therefore the reforms to a larger class of individuals. A move towards a two-part framework for employment status will compound the impact of the Employment Rights Bill reforms.

As part of its plan to “Make Work Pay”, Labour has outlined plans to move to a simpler two-category framework for employment status whereby people are classified as either ‘workers’ or ‘genuinely self-employed’ for the purpose of workplace rights and protections. Currently, people are classified as employees, workers or self-employed and each group has different rights and protections.