Worker or self-employed? Employment status rules under review

On 14 October 2026, the government published its consultation on employment status reform. The consultation does not seek views on introducing a single worker status, but it considers how the government could improve the existing employment status framework. 

The current position

Employment law recognises three categories of employment status: employees, workers and the self-employed. 

A person's employment status determines which employment rights they have. Employees have the widest range of rights, while workers have more limited protection. People who are genuinely self-employed do not have employment rights. 

Section 230 of the Employment Rights Act 1996 defines a ‘worker’ as someone who works under a contract for service (an employment contract) or who personally performs work or services for another party who is not their client or customer. 

Providing personal service is therefore an important part of worker status. If an individual has a genuine and unrestricted right to send someone else to carry out the work, this may point away from worker status. 

What are the problems with the current framework?

The government believes the current framework can make it difficult for individuals and businesses to determine employment status and, as a result, which employment rights apply. This is partly because the legal tests come from a combination of legislation and a substantial body of case law. 

The government is also concerned that the complexity of the system can allow some businesses to classify people as self-employed when, in reality, they should have worker or employee status. This can deny individuals employment rights while giving businesses the financial benefits associated with self-employment. 

What does the government propose?

1. Placing less emphasis on personal service

One of the key factors in determining employment status is personal service: whether the individual must carry out the work themselves.  

A genuine and unrestricted right to provide a substitute will generally suggest that the individual is not required to provide personal service and is therefore less likely to have worker status. 

The government notes that substitution clauses can be particularly prevalent in the gig economy. An individual may be subject to significant control over how they work but still be treated as self-employed because their contract includes a right of substitution, even where they rarely or never use it.

The government is therefore considering placing less emphasis on personal service, so that a right of substitution does not outweigh other factors that point towards worker status. It is seeking views on the best way to do this and suggests the following approaches. 

One option would be to give greater weight to control. Tribunals could consider not only whether the individual must provide the service personally, but also the level of direction or control that the organisation exercises over them. 

Alternatively, the government could change the legislation to make it clear that a right of substitution should not, by itself, prevent someone from qualifying as a worker. 

2. Introducing a presumption of worker status

At present, an individual has the burden before a tribunal to establish that they have worker status however the government believes that this can place too great a burden on individuals. It is therefore consulting on introducing a presumption of worker status at tribunal. It would then be for the organisation to show that the individual is not a worker.

The consultation also considers how employment status rights should be enforced and what role the new Fair Work Agency could play in tackling bogus self-employment. 

The government also proposes tougher consequences for employers that repeatedly fail to recognise an individual's correct employment status. 

Where a tribunal has already found that workers in broadly similar circumstances have employee or worker status, an employer that continues to argue otherwise in later cases could face an additional financial penalty. The government proposes treating repeated failures to recognise employment status as an aggravating factor, which could lead to an additional penalty of between £100 and £20,000 per claim. 

The aim is to encourage employers to consider the wider implications of a tribunal decision proactively across their workforce.

3. Strengthening protections for the self-employed

The government is also considering whether genuinely self-employed people need greater protection. 

Its proposals include giving self-employed individuals a right to a written statement setting out key information about the terms of their engagement. This could include important information such as how much they will be paid and help provide greater certainty about the contractual arrangement. 

The consultation also seeks views on: 

• protecting self-employed people from blacklisting because of trade union membership
• whether rights and protections should be extended to the self-employed to better protect their health and safety; and
• the benefits, challenges and business impact of introducing additional protections for the self-employed.  

Next steps

The consultation closes at 11:55pm on 8 January 2027. 

Once it closes, the government will consider the responses before deciding whether to take any of the proposals forward. 

Although any changes are likely to be some way off, the consultation serves as a useful reminder of the complexities of employment status. Getting it wrong can leave individuals without the rights they are entitled to and expose employers to potential claims. 

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