Starmer omitting Single Worker Status in his TUC speech means expect the best, but prepare for the worst
There was no mention of Single Worker Status, or IR35, yesterday by prime minister Sir Keir Starmer in his speech to the TUC, writes Nikola Nowak, senior consultant at Markel Tax.
Deadline is the 13th; unlucky for some?
But back on August 14th 2024, there was a meeting between government officials (including deputy PM Angela Rayner) and business leaders – with unions present -- to discuss Labour’s ‘Make Work Pay Plan’.
Among other things, this plan includes getting rid of zero-hour contracts and improving employment rights.
The plan has been set to be delivered within 100 days of Labour entering government -- and that deadline falls on Sunday 13th October.
Nods in Starmer’s TUC speech but still no detail on Single Worker Status
And yesterday to the TUC in Brighton, Sir Keir nodded to the plan. The PM promised “the biggest levelling up of workers’ rights in a generation.”
Starmer also said: “Business leaders are not knocking on my door saying they want to rip up employee rights. They don’t tell me the problems they face will be solved by coming for trade unions. They want fair taxes, high skills and the long-term stability to invest.”
Maybe we should all just take the hint?
The August 14th meeting came a month after the King’s Speech in July, which confirmed that the government’s Employment Rights Bill will aim to introduce “day-one rights for all workers.”
The King’s Speech did not explicitly confirm or deny any movement towards the introduction of Single Worker Status (SWS).
So then, a bit like now, the contractor industry found itself in limbo.
Are these omissions of SWS, yesterday to the TUC, and in July, a hint that we should all just take?
If they’re not a hint (and what I’ll look at here), how is Labour likely defining ‘worker’ in the context of day-one rights?
What status do labour market individuals have today?
Currently, due to the complexities of legislation, there are three categories an individual could fall into (for employment law purposes):
1. True employees -- these individuals are afforded the highest level of protection by law, and are entitled to holiday pay, sick pay, parental leave, protection from unfair dismissal, and bereavement leave. After two years of service, these individuals receive additional rights such as redundancy pay.
2. Workers -- a category of individuals who don’t fall into the definition of an employee (above), but who are not self-employed (below), either. Such ‘workers’ are entitled to basic rights such as breaks, holiday pay and the National Minimum Wage.
3. Self-employed -- these individuals are not entitled to employment rights or protections from their engager (save for basic statutory provisions such as health and safety and protection from discrimination).
Which category an individual falls into depends on the specifics of their engagement.
The challenge of borderline cases
It is not always easy to determine whether an individual is an employee, a worker, or self-employed. Indeed, any engager would need to be well-versed in years of case law, as well as legislation, to be able to make a decision in so-called ‘borderline’ cases.
As well as differing levels of protection by statute, the categories of individuals in the UK labour market pay taxes differently; employees being subject to PAYE deductions at source, for example, while self-employed individuals pay income tax on their profits.
How might Labour Single Worker Status change the status quo?
Single Worker Status, as put forward by the new Labour government (albeit not yesterday), would merge the first and second categories (above) into one, so that there would only be the binary option of ‘employed’ or ‘self-employed’.
The former class would be entitled to employment rights from the first day of service, including protection from unfair dismissal from day one. The new Labour government claims that this will prevent exploitative practices in certain industries. Those exploitative practices include ‘Fire and Rehire’ and ‘Fire and Replace’.
The intention of Sir Keir’s Make Work Pay plan is to kickstart economic growth by “empowering” people and making sure that workplace rights are “fit for a modern economy.”
We absolutely welcome moves like this to aid economic growth and increase protections for employees from exploitation.
Caution is what we’d urge
However, there needs to be careful consideration before an overhaul of this magnitude is imposed.
We know many industries rely on flexible labour. Numerous businesses only need an individual for a finite period, and even then if a project is cut short, they may need to let people go at short notice.
Labour’s seismic shift in the shape of Single Worker Status is undoubtedly causing uncertainty to many businesses which rely on flexible resources.
Single Worker Status still hasn’t been put out to consultation
Single Worker Status, with protection from unfair dismissal, may not necessarily affect flexible resourcing -- as long as a notice period is served, a project finishing early (causing a change in the client’s requirements), is not grounds for claiming unfair dismissal.
That said, at this point and without clarification, we can’t be entirely sure how SWS will work in practice, because the idea of Single Worker Status hasn’t been put forward in a formal consultation.
Following the King’s Speech in July; the meeting in August and the non-mention of SWS yesterday (despite reported noises about single worker status behind Whitehall’s closed doors), the hope is that there is an action plan – and it may be underway but many, many of us are not privy to it.
Might Labour just present a ‘finished’ product of Single Worker Status at Autumn Budget 2024?
At this stage, we cannot be 100% certain that SWS is going ahead.
Other than the mention within Labour’s Green Paper back in 2022 (see page 7), which set out the introduction of “single status of worker,” there has been no indication of a consultation.
Optimistically (or maybe naively), I am not inclined to believe that the government is small-minded enough to upend legislation that will have such profound implications for many thousands of people without doing their ‘due diligence.’ If the plans don’t work, the consequences could be grave for businesses and organisations alike across the country. We remember all too well how the previous government’s indecisiveness regarding the off-payroll working rules caused havoc -- and hopefully it was taken on board by Labour.
Final recommendations ahead of Autumn Budget 2024
Nonetheless, businesses should be prepared for the possibility that Single Worker Status is unveiled on October 30th. We recommend contractors’ recruiters and end-clients remain informed about upcoming employment law changes, and to pencil in some time in the third week of October to look at how to potentially absorb any possible status reforms that may be introduced then. Expect the best, but be prepared for the worst.