The single worker status consultation and ‘Make Work Pay’ initiative

It feels like consultation after consultation at the moment! Having seen Joint Several Liability become a reality after the Umbrella consultation in 2023, there are plenty more on the horizon and we will share our thoughts in due course. Here though, we shed light on one that is inbound later this year.

The single worker pledge, proposed by the Labour Party during the run up to the general election in their ‘Make Work Pay’ manifesto in 2024, outlines a proposed new unified categorisation for UK workers. This comes as a small part of a massive overhaul of UK employment law. With the ‘Employment Rights Act 2025’ being granted royal ascent, Labour is determined to enact the rest of their manifesto.

With the single status of workers being again debated last week on the 15th April in Parliament, this consultation is moving slowly and will most likely take place in the first half of 2026 (potentially later on in the second half of the year). Simply put, the single worker pledge aims to merge three categories of workers in the job market, with particular focus on those operating in the ‘gig economy’. These categories include the following:

· Employees – individuals engaged within a contract of employment, having employment rights including SSP, maternity pay, holiday pay, pay parity (when applicable to agency workers), unfair dismissal protection and protection under protective characteristics outlined under the Equality Act 2010.

· Workers – individuals engaged on an alternate contract that are limited in their protections. They lack protection from unfair dismissal and are not entitled to SSP.

· Self-Employed – individuals that run their own business (or operate through the construction industry scheme/sole trader) and receive no employment rights.

The implementation of a rigid definition for employment status has a clear aim to simplify worker status by changing it to a two-tier status system, streamlining the classification between genuinely self-employed and employee. In the process of implementing this two-tier system, those workers who previously had limited protection will soon enjoy the same rights as their employee counterparts.

Now, the effect this new two-tier status system will have is purely speculative, as we do not currently have enough information to provide a comprehensive breakdown of its impact. For the sake of argument, we will examine the potential changes this could have for the future of worker status. Assuming the definition and framework of what it means to be ‘self-employed’ is suitable following the consultation, it could have the potential to uproot the need for IR35 (or at least reduce the reliance on it). Having a key framework of this definition could remove any ambiguity, potentially reshaping the way we conduct due diligence on subcontractors. By way of having a framework that is more digestible, identifiable factors for worker or self-employed workers can streamline the engagement process and remove any uncertainty, while also having the knock-on effect of reducing employment tribunals disputing this status.

For any questions you may have relating to this topic, or any other queries regarding umbrella payroll, feel free to reach out and we’d be happy to chat!