Yesterday, the government released a consultation on proposed changes to the employment-status framework for employment rights.
If the proposed changes become law they could make it harder for businesses to classify people as self-employed where they are effectively working under the business’s direction and control, reduce the impact of contractual substitution clauses when deciding whether someone is a worker, place more responsibility on businesses to demonstrate that an individual is genuinely self-employed, increase the consequences where businesses repeatedly misclassify workers, and provide some additional protections for genuinely self-employed people, including clearer written terms and possible extensions to health and safety and blacklisting protections.
The consultation is open until 8 January 2027.
Alan Price, CEO at BrightHR, says,
“Employers may welcome the opportunity to clarify the rules around employment status, but the proposed reforms could create additional uncertainty and compliance risks for businesses using contractors, freelancers or platform-based workers.”
“Greater emphasis on direction and control, and less reliance on contractual substitution clauses, means organisations may need to reassess existing engagement models and ensure that contractual terms reflect working practices in reality. The proposed presumption of worker status could also place a greater evidential burden on businesses.”
“It is important that reform tackles bogus self-employment without undermining genuine commercial independence or legitimate flexibility. No changes have yet been made, but employers should engage with the consultation and review where potential risks may arise.”
