The proposals are intended to address "bogus self-employment", improve access to worker rights and support enforcement through changes including a revised worker status test, a presumption of worker status and a greater role for the Fair Work Agency. The government is also seeking views on introducing a written statement for some self-employed individuals and extending certain protections, including in relation to blacklisting and health and safety. The consultation closes on 8 January 2027.
Background
For employment law purposes, individuals generally fall within one of three categories: employee, worker (often referred to as a "limb (b) worker") or self-employed contractor. The status of an individual determines the statutory rights available to them.
Employees benefit from the widest range of employment protections, including protection from unfair dismissal and redundancy rights. Workers are entitled to a more limited set of core protections, including the National Minimum Wage, paid annual leave and protection from unlawful deductions from wages. Self-employed individuals generally have the fewest statutory employment law protections.
The government says that the current framework can be difficult for individuals to understand and enforce, particularly as status often depends on complex legislation and case law. The consultation notes concerns about "bogus self-employment", where individuals are treated as self-employed despite the reality of the working relationship suggesting otherwise. According to the government's accompanying press release, external estimates suggest that as many as 900,000 people may be affected and could be missing out on core employment rights.
The consultation is limited to employment rights and does not propose changes to employment status for tax purposes.
The consultation proposals
Rebalancing the worker status test
A central theme of the consultation is the government's concern that broad contractual substitution clauses can be used to support arguments that an individual is self-employed, even where substantial control is exercised over how the work is carried out.
The government is seeking views on reducing the significance of personal service within the worker status test. It proposes that the existence of a substitution right should not automatically outweigh other indicators that an individual is a worker. Instead, factors such as the degree of control exercised over the individual could play a greater role in determining status.
The consultation outlines a number of possible approaches, including restructuring the worker test, changing how tribunals assess personal service, or legislating to clarify that a right of substitution should not be the sole or overriding factor in determining worker status.
Presumption of worker status
The government is also consulting on introducing a presumption of worker status.
Broadly, under the current framework, the burden is on the individual to establish that they are a worker. The proposal would reverse that position, requiring the employer or engager to demonstrate that an individual is not a worker and is genuinely self-employed. The government's stated aim is to make it harder for businesses to misclassify individuals and deny them statutory protections.
Enforcement and the Fair Work Agency
The consultation seeks views on measures intended to improve compliance and enforcement. These include whether repeated misclassification of status within a workforce should be treated as an aggravating factor when tribunals consider financial penalties, and the future role of the Fair Work Agency in supporting the correct classification of individuals and tackling systemic non-compliance. The government is also consulting on whether an online employment status assessment tool, similar to the tax status CEST tool, would be useful.
Renaming "limb (b) worker"
The consultation notes that existing terminology can be difficult for individuals to understand. The government is therefore seeking views on whether the term "limb (b) worker" should be replaced with an alternative description.
Additional protections for the self-employed
Alongside measures aimed at tackling bogus self-employment, the consultation considers further protections for individuals who are genuinely self-employed.
Proposals include:
- introducing a right to receive a written statement of key terms;
- extending protection against blacklisting; and
- improving health and safety protections, including seeking views on extending certain existing protections and allowing self-employed trade union members to act as health and safety representatives.
Comment
The consultation focuses on what the government describes as the most pressing issues within the current employment status framework, particularly the use of substitution clauses and the misclassification of individuals as self-employed. The most significant proposals are likely to be the suggested rebalancing of the worker status test and the introduction of a presumption of worker status, both of which are intended to make it easier for individuals to access worker protections where the reality of the relationship supports that outcome.
Although the government reiterates its longer-term ambition of considering a simpler framework, potentially involving a single worker status, the consultation does not propose immediate structural reform of the existing three-category system. Instead, it concentrates on targeted changes aimed at improving the operation and enforcement of the current regime while introducing additional protections for the genuinely self-employed.
