Labour 2024 election manifesto set to offer Single Worker Status instead of IR35 reform review or repeal

Labour won’t jump on any off-payroll review-pledge bandwagon in its soon-to-be published general election 2024 manifesto, and nor should it.

Such is the verdict of contracting and Labour party experts, who told ContractorUK that a Labour OPW review is unlikely -- and unlikely to fix the underlying issues.

A Labour pledge to repeal IR35 reform is even more unlikely, yet a Kier Starmer-led government making practical improvements to the OPW rules is today backed by the FCSA.

'What would Labour do?'

To gauge the probability of Labour’s imminent manifesto vowing to review the OPW rules (a vow the Lib Dems have made official), ContractorUK approached legal expert Kevin Barrow.

Barrow co-wrote an April 2024 blog ‘What would Labour do?’ which explored the party’s (pre-election date announcement) plans for temporary staffing, gig working and contracting.

With the UK only exiting a technical recession in Q1 2024, Barrow isn’t betting Labour’s manifesto will pledge to repeal the April 2017/21 rules -- even if they are a Tory creation.

“Any repeal of IR35 reform, however much the principles of fairness may demand that, may not be seen as a priority by any government given the perceived need to maximise tax revenues,” Barrow, a partner at Osborne Clarke told ContractorUK.

This website last week invited Labour’s Policy Forum to specify its plans for the IR35 off-payroll rules, but it is yet to respond.

'Labour's plan for self-employed isn't IR35, it's Single Worker Status'

However based on his own conversations with Labour party officials, Labour Business vice-chair Philip Ross says the plans for the self-employed revolve around “worker status.”

Ross observes that in a Sky News interview on February 3rd 2024, Labour’s deputy leader Angela Raynor revealed that the party’s most IR35-related proposal is ‘Single Worker Status.’

“The SWS will be for all but the genuinely self-employed,” says Ross, a founding member of the PCG (now IPSE), and Labour’s current Ambassador for the Self-Employed.

“[Under a Labour government] there will also be a ban on exploitative zero-hours contracts, and an end to bogus self-employment.”

'Zero-rights employees, a contradiction in the eyes of Labour Business'

But Labour’s focus seemingly being off off-payroll working doesn’t mean Ross is happy with the Apil 6th rules of 2017 and 2021

He says: “Colleagues and I have for a long time been shouting through the Labour movement that there are other inequities in the system.

“For instance, that via the OPW regulations there is [effectively] a framework for zero-rights employees.

“The premise that there can legally be members of the workforce who are taxed as employees, but are provided no employment rights is a contradiction. ‘No employment tax without employment rights’ is what we have [appealed].

'Raynor's SWS proposal addresses our concern'

Speaking to ContractorUK, the Labour Business vice-chair also said a contractor caught by the OPW rules (inside IR35) should therefore "be classified as a worker, and provided with the appropriate rights.”

Ross concluded: “The concept [of SWS] promoted by Angela Raynor – [so] extending worker status -- supports this.”

The Association of Independent Professionals and the Self-Employed (IPSE) goes further, saying Labour’s SWS proposal could spell the end of IR35.

'Could remove the need for IR35 altogether'

“Whilst we’re yet to see any detail on how the boundary between worker and self-employed would look, there are some concerns,” IPSE senior researcher Joshua Toovey has said.

“[That said] if [SWS is] done correctly -- and that will be difficult -- there is a chance that it could remove the need for IR35 altogether.”

IR35 contract review expert Seb Maley, of Qdos, is therefore making an understatement when referring to contractors in wake of the Lib Dem’s IR35 review pledge, he said:

“It will be interesting to see what the Labour [party is]…willing to do to try and win votes from this crucial set of voters.”

'IR35 reform repeal won't solve underlying issue of unclear employment status'

Yet the boss of the UK’s Freelancer and Contractor Services Association says Labour shouldn’t play politics by saying in its manifesto that it would revert to its legislation of 2000, over the Conservatives’ legislation of 2017/21.

“While simply reverting to IR35 might offer temporary relief, it wouldn't address the underlying issues of unclear employment status and inconsistent enforcement,” Chris Bryce, CEO of the FCSA says today in a ContractorUK exclusive.

“Instead of simply repealing OPW, a wiser approach would build upon the strengths of both existing frameworks and address their shortcomings.”

'Quick-wins'

Bryce says “three quick-wins” could be made to the legislation, found at Chapter 10 ITEPA (2003).

And while that sounds like Labour would need to start first with an OPW /IR35 review, the FCSA’s chief executive suggests SWS could be part of the answer.

“Labour's proposal of a ‘single status of worker’ might hold promise”, acknowledges Bryce, albeit guardedly.

“[But the party needs to] develop clear definitions and distinctions between worker categories based on control, supervision, and risk. This framework must be transparent, predictable, and [then] consistently applied”.

'Labour brought in IR35 in the first place'

Tax lawyer Rebecca Seeley Harris says the main focus of Labour’s SWS proposal is the distinction between employed, the current ‘worker’ category and the genuinely self-employed.

“If Labour [wins on July 4th and then] brings in employment rights for freelancers, there will inevitably have to be a raise in taxes to pay for it,” she cautions/

“And Labour have not mentioned those who provide their services through a PSC. Don’t forget Labour brought in IR35 in the first place, so they are unlikely to repeal it.”

Founder of OPW advisory ReLegal Consulting, Seeley Harris says Labour are also planning to extend certain rights in the ‘workplace’ to the self-employed.

"As most self-employed people don't have a 'workplace,' this [expected manifesto pledge] might be difficult to achieve," she mused.

'Contractors won't be in scope'

A ContractorUK reader who worked as an IT contractor for four decades has a few doubts too, about what will invariably be the showpiece of Labour’s manifesto for the IR35-interested.

Alan Watts, a retired service management consultant says: “[Labour’s SWS proposal] is clearly aimed at separating employees from workers, where ‘workers’ are [in effect] defined as independent businesses that make things you can put on a shelf.

“There will be edge cases of course, but I fear contractors as we know them won't be in scope, if only because they are already covered by [the] Chapter 10 [legislation]. Oh, and if SWS does get into the Labour manifesto, don't expect it to be actioned any time soon.”