UK

After the Employment Rights Bill – give all workers full employment rights

JUNE 2, 2025

By Jeff Slee

The Government’s Employment Rights Bill will probably become law this month. It puts into law some of the commitments made in the ‘New Deal for Working People’ agreed between the Labour leadership and affiliated unions in May 2024. But, while the passing of this bill will be a step forward, there will still be many improvements to employment law that the trade unions should campaign for. A key one is the question of workers’ status, which is not dealt with in the bill.

As theLabour Research Department’s guide The Employment Rights Bill January 2025 said:

“A significant omission from the bill is the lack of any provision concerning the creation of a single worker status, which was a fundamental element of the New Deal.

Many of the employment rights covered in the bill apply only to employees, including changes to unfair dismissal, sick pay, parental leave, bereavement leave and flexible working. And a huge number of workers in the gig economy, who employers allege are ‘self-employed’ will see no advance in their rights as a result of the bill.”

Why this is important

This matters because, while most workers are employees who have a contract of employment and access to all employment rights, there are millions of workers who are not, in law, employees. They have fewer employment rights than employees, or no rights at all. These workers are also often in insecure jobs, on lower pay than employees, on zero-hour contracts, and with no guarantee of hours or income.

This obviously makes life hard for those workers and their families. It also makes it attractive for companies to take on workers without full employee status. It allows them to cut their wage costs, undermine those who are their employees, avoid employer national insurance contributions, give them more control over hiring and firing and hours of work, and undercut their competitors. This is likely to increase with the coming into force of the Employment Rights Act, and the rise in employer national insurance contributions.

Workers who are not employees

In law, these come under two categories.

Limb (b) workers (I don’t know why they are called that) are those who are “in dependent working relationships but are not employees.”

They have some basic employment rights, including the right to paid holiday and to receive the National Minimum Wage. But they have fewer rights than employees – for example, they have no protection against unfair dismissal. Many of the 900,000 agency workers in the UK come into this category. Agency workers are employed by an employment agency, but work under the direction and control of an “end hirer” – the company that wants to use them. While companies will use agency workers for short-term needs, they also use agency workers to fill posts on a longer-term basis that should be taken by full-time employees. We see this in the rail industry, where Train Operating Companies often have agency workers filling posts on station platforms and gatelines for months on end.

Then there are the self-employed. These include those genuinely self-employed, such as painters and decorators, and barristers and freelance journalists. But there are also many in bogus self-employment – as the LRD explains:

“There are many examples of sham self-employment, especially in sectors such as construction and in the gig economy, where rogue employers deliberately draft contract documentation to exclude or minimise employment rights.”

Some unions have taken up legal cases to get more rights for those in the gig economy. The GMB and IWGB campaign for the 31,000 Uber drivers in the UK. They took legal claims for greater employment rights up to the UK Supreme Court, which in 2021 ruled that Uber drivers must be treated as limb (b) workers rather than self-employed,giving them entitlement totheminimum wage and holiday pay. But in a similar claim for Deliveroo workers, the Supreme Court ruled in 2023 that Deliveroo riders are self-employed, not even limb (b) workers.

What should be done?

The Institute of Employment Rights, Labour MPs including Andy McDonald and John McDonnell, trade unions and others, are pressing the Government to bring in a new law to deal with this issue of workers’ status. And quickly. John McDonnell told the PCS conference last month that a second Employment Rights Bill should be brought forward this autumn.

The Director of Labour Market Enforcement at the Department for Business and Trade, Margaret Beels, told the House of Commons Business and Trade Select Committee considering the Employment Rights Bill that:

“We are getting more and more workers who are being shuffled into what are deemed to be self-employment situations, which I do not believe are appropriate for self-employment.”

She said that “the whole business of employment status needs to be addressed”, adding that “you can probably consult until the cows come home on this issue… it is about time to do something about it.”

She also outlined her views in a recent Financial Times article.

The Select Committee, in its report on the Employment Rights Bill on 3rd March 2025 agreed. It said:

“Status of worker does not feature in the Employment Rights Bill, although the Government has committed to a consultation on the issue. The Government has told us that it sees these reforms as a longer-term goal. However, if reforms to employment status are delayed, lawyers and unions have warned that businesses could sidestep the Employment Rights Bill by hiring staff as self-employed contractors, temps or agency workers. This would mean those workers would not be entitled to the reforms laid out in the Bill.”

And the Committee recommended:

“While the Committee welcomes the Government’s plans to reform worker status and bogus self-employment, it must proceed at pace to turn ambition into action. If it does not, it risks more companies adopting a ‘self-employment’ model for their workforces to side-step the measures in the Employment Rights Bill.”

The Government’s response to the Select Committee report pledged only to look at this issue sometime in the future. They said they are “committed to consulting on reform to employment status.… the Government sees consulting on a simpler employment status framework as a longer-term goal. It will take time to adequately develop and consult on such a far-reaching change to employment law.”

This is not good enough. Bills to address this question in legislation have been put forward by Lord John Hendy KC, Chair of the Institute of Employment Rights, in the House of Lords in 2021 and again in 2023.

Unions should press the government to act quickly to bring in a single status of worker, with full employment rights, to cover all except the genuinely self-employed.

Jeff Slee is a retired rail worker and former RMT National Executive Committee member.

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