‘Waiting for Godot’ – The Employment Rights Bill 2024 and the ‘single status of worker’ omission

1. Hamlet without the Prince of Denmark

Mark Freedland likes to recall his doctoral supervisor’s fondness for the expression ‘Hamlet without the Prince of Denmark’. Sir Otto Kahn-Freund would use this metaphor both to point at a glaring omission in one’s argument and also to suggest that some particular endeavour was destined to fail due to a missing logical passage (he would then say ‘like trying to understand Hamlet without the Prince of Denmark’).

Regrettably many labour lawyers are reaching the conclusion that, by producing the Employment Rights Bill 2024 (ERB) without including a new and comprehensive ‘worker’ definition, the Labour government may well have strayed into a ‘Hamlet without the Prince of Denmark’ situation. During one of the sittings of the House of Commons Public Bill Committee scrutinising the ERB, Prof. Simon Deakin unequivocally stated that ‘this issue absolutely has to be addressed. […] Many of the measures contained in the Bill would not be effective, unfortunately, if this issue was not grappled with’.[1] Politicians appear to be equally aware of this particular pitfall. In the course of the 3^rd of December 2024 sitting of the Committee, Chris Law MP pointed out that ‘without clarification on the legal status of all those who work, the rights in the Bill are allocated piecemeal’, and proceeded to identifying some of the incongruences arising from this omission.

2. Labour’s Plan on worker status

In its 2021 policy document A New Deal for Working People  the Labour Party that they would create ‘a single status of “worker” for all but the genuinely self-employed.’ Labour’s 2024 policy document Labour’s Plan to Make Work Pay: Delivering A New Deal for Working People echoed that commitment by promising to ‘move towards a single status of worker and transition towards a simpler two-part framework for employment status’.^[2] Crucially, and unlike the 2021 New Deal paper, in 2024, Labour’s Plan subjected this reform to a  ‘full and detailed consultation …within the first year of a Labour government’.

From the few paragraphs dedicated to employment status reform, it is possible to identify three key elements of this pledge, and one important qualification.

• A new binary divide.

Firstly, Labour’s Plan envisages a ‘two-part’, ‘simpler framework that differentiates between workers and the genuinely self-employed’. One can assume that there will no longer be an intermediate category of ‘limb-b’ workers, as – we are told – UK labour law will move away from the current ‘three-tier system for employment status’. In reality the UK statute book contains more than three employment status definitions. Section 230(3)(b) Employment Rights Act (ERA) 1996 and section 296(1)(b) Trade Union and Labour Relations (Consolidation) Act (TULRCA) 1992 each provide  ‘worker’ definitions which are  similar but, on closer inspection, not identical, the TULRCA definition being arguably a bit broader.  Other labour law statutes, for example the National Minimum Wage Act (NMWA) 1998, introduce additional, ad hoc, definitions such as the ‘home worker’ definition, that either do not require strict ‘personality’ in the provision of work and services, or offer an extended ‘worker’ definition, for example s. 43K ERA 1996 for the purposes of whistleblowers’ protection legislation. Case law has further fragmented worker status definitions, with judgments such as National Union of Professional Foster Carers v The Certification Officer [2021] EWCA Civ 548 arguably suggesting that for certain Convention rights a broader and more ‘relational’ employment status may be appropriate. The new ‘single status’ definition will have to rationalise this fragmented landscape and unify it into a single concept and definition of worker.

• Capturing the breadth of employment relationships

Secondly, Labour’s Plan suggests that this new definition must be broad and flexible enough to be both future-proof and cheat-proof. It must ‘capture the breadth of employment relationships in the UK, adapt to changing forms of employment and guard against a minority of employers using novel contractual forms to avoid legal obligations’ (page 7). This is an important element of the pledge, and suggests that what is required is more than just tinkering with existing definitions. The new category of worker must include the bulk of all existing employment relationships and those that may emerge in the future. From ‘casual and as required’, to ‘zero-hours contracts’ and ‘gig-workers’, there are no shortage of widespread examples of novel contractual forms deployed to avoid employment obligations, all of which will need to be reined in. The new worker definition must be endowed with a strong gravitational force of attraction, perhaps one that relies on technical ‘centripetal’ legal devices such as general or specific presumptions of worker and/or employer status. It should be particularly capable of dealing with the most prevalent ‘defeat devices’ used by unscrupulous employers, such as spurious substitution clauses and the prevalence of ‘personal service companies’, in addition to other similar corporate structures that hide the reality of predominantly personal work as the dominant element of the relationship, where the worker’s contribution of capital is merely marginal or ancillary.

• Dealing with the ‘genuinely’ self-employed.

Thirdly, Labour’s Plan also suggests that some employment rights will have to be offered to those that the document refers to as ‘genuinely self-employed’ (page 7). This is an important parameter to bear in mind, but potentially also one that requires caution. The pledge is as follows:

‘We will strengthen rights and protections to help self-employed workers thrive in good quality self-employment, including the right to a written contract, which for example would benefit freelancers, action to tackle late payments, and by extending health and safety and blacklisting protections to self-employed workers. Our plans to strengthen trade union rights will also benefit self-employed workers. ’

Neither statute nor case law offers a legal definition of who is a ‘self-employed’ person, let alone who is  ‘genuinely’ self-employed. In the UK, as in other countries, self-employment is a ‘residual category’. If a judge is unable to classify a working person as an ‘employee’ on the basis of the various tests courts have developed, then they will typically classify them as ‘self-employed’ (and it is now clear, and has been clear for a while, that ‘limb-b workers’ are a ‘species’ of the self-employed genus). It is almost a game of very round holes that will only accept equally very round pegs, any other shape or form ending in that ‘default basket’ that is ‘self-employment’. That residual category ‘basket’ essentially contains all those who are not ‘employees’, an extremely heterogeneous array of working people, ranging from ‘giggers’, to barristers, to journalists, to medical practitioners, and share fishermen. Being a ‘residual category’ is essentially shaped by (the breadth and shape of) the ‘employee’ category – whatever does not fit into that category falls into self-employment.

But if the new single worker definition were defined and shaped in sufficiently broad terms, the logical consequence is that very few employment relationships should be able to escape its reach. In fact Labour’s plan expressly says that it must include ‘the breadth’ of employment relations in the UK, so none of them should escape. That means that those that escape this definition should not be workers at all. They should not be people who live predominantly off their labour, but, instead, they should be businesses that live predominantly off other people’s labour, or through the use of capital and assets. But then if they are businesses, it is not clear why they should attract any of the rights envisaged in the passage quoted above. And, vice versa, if it were deemed necessary that they attract these protections, logically these persons should be classified as ‘workers’ under the new broader definition.

There is a risk that approaching the ‘genuinely self-employed’ exclusion in the wrong way may lead policy makers to reduce the breadth and force of attraction of the new ‘single worker’ definition by saying, in essence, that the ‘self-employed’ on the other side of the new divide will get some rights anyway. The reference to ‘freelancers’ lends itself to this worrying interpretation and there will be several ‘freelancers’ in the entertainment industry or journalism that would raise an eyebrow at the suggestion that they will fall outside the new ‘single worker’ definition. Most of them want the protections afforded by labour law but also need the tax status that is associated with self-employment (and the tax deductions that come with it), not because they want to ‘free ride’ the system, but because without those deductions they can simply not make ends meet, and risk being pushed further into poverty. A new, broad, single worker status could be introduced without affecting tax or social security status. This is common knowledge among legal experts. For example, Article 5 of the new EU Directive 2024/2831 on platform workers introduces a legal presumption of employment status, but also clarifies that ‘the legal presumption shall not apply to proceedings which concern tax, criminal or social security matters’.

Unless the ‘genuine self-employed’ conundrum is addressed sensibly, the Government’s idea of granting some labour ‘rights and protections’ to some self-employed could lead to the emergence a new de facto intermediate category of ‘self-employed plus’, attracting certain trade union, payment protection, health and safety (and presumably anti-discrimination) rights, while still not being classified as workers and enjoying the full panoply of labour rights.  This would also defeat the purpose of moving to a new ‘two part’ system, as surely some genuinely self-employed that run proper businesses and are perhaps employers in their own right would not want or need any such rights.

The best way to give labour rights to the self-employed is to include them, wherever possible (i.e. when they are not proper businesses), in the new ‘worker definition’.

3. Hostage to a consultation process.

The important qualification of Labour’s plan is that it now subjects the adoption of a new single worker status to a consultation process that should take place in the first year of government, although now government officials have gone on record before the Business and Trade Committee to say that they see ‘these reforms as a longer-term goal’. As noted above, this qualification is a departure from previous policy documents such as the 2021 New Deal, that did not mention a consultation. It is worth pointing out that the UK already had a long consultation process discussing ‘worker status’ that resulted in the Taylor Review.

This new hurdle explains why a new worker definition was not introduced in the ERB.  Regrettably, however, in the absence of a new, unified, definition, some of the Bill’s provisions, at the moment, either do not make much sense, or fall short of expectations, or would be hard to enforce. As noted by Margaret Beels OBE, the Director of Labour Market Enforcement, ‘the Government needs to act to stop sham self-employment if it wants the Employment Rights Bill to succeed,  having told the Committee that the Government can ‘consult until the cows come home’ on this issue’.

A distinct lack of clarity emerges in the context of the key rights and protections that Part 1 of the ERB grants to ‘zero hours workers’ (including the right to be offered guaranteed hours, following a qualifying/reference period). The Bill provides that these rights apply to ‘workers’ (new s. 27BA(3)(a)(i)), a term that we can assume is the one currently defined by s. 230(3) ERA 1996 (i.e. including ‘employees’ and ‘limb-b’ workers). But in reality, the majority of zero hours workers are unlikely to meet the stringent employee/contract of employment tests, and especially the mutuality test, so in practice these provisions would apply at best to some limb-b workers. But even they may struggle, as ‘limb-b worker’ status is not entirely free of the contract of employment tests albeit, typically, at a lower threshold (or ‘lower passmark’ as some court decisions have put it).

The Bill is cognisant of this problem, and appears to want to address it by introducing another worker category, that it refers to as a ‘zero hours arrangement’ (new s. 27BA(3)(a)(ii)). This new term is loosely defined in the proposed s. 27BV(1) as an ‘arrangement under which […] an employer and an individual agree terms on which the individual will do any work where the employer makes it available to the individual and the individual agrees to do it, but […] the employer is not required to make any work available to the individual, nor the individual required to accept it’. This definition (ostensibly designed to deal with situations where ‘there is insufficient mutuality of obligation’) is likely to cover many casual workers, but it is also likely to flounder on questions such as ‘substitution clauses’ and  the opacity of provisions such as ‘agree terms’. In other words, it is an additional worker definition, and as such is likely to raise more questions than answers.

The absence of a new and comprehensive worker definition severely diminishes the impact of various other rights, from ‘harassment’ protection to the new ‘day one’ unfair dismissal protections. Even once the removal of the qualifying period demanded by clause 21 of the Bill comes into force, it will only apply to ‘employees’. While amendments have been added by the Public Bill Committee to ensure that termination rights in the Bill also apply to zero hours workers (see new s. 27BD(12)), it is clear that the ‘reference period’ would be an impediment to action such rights from ‘day one’ especially for those ZHC workers employed on ‘limited term contracts’. Similarly, the ‘fire and rehire’ rights envisaged by clause 24 would also be limited to ‘employees’, begging the question of whether it may be possible to fire and rehire ZHC workers, very much an option, one would think, when they were hired on a ‘limited-term contract’.

4. What should a new single status look like?

There are some key mischiefs that a new single worker status definition would need to address in order to move beyond the current sorry state of affairs.

Firstly, it needs to move beyond ‘contractualism’. It should not be expressly or exclusively based on the idea of ‘contract’ (though of course it should cover contracts), but should also cover other arrangements for the provision of labour that fall short of stringent and unnecessary contractual doctrines, that have been used (and in the case of ‘mutuality’ have been developed) as ‘exclusionary’ devices to deny employment or worker status under the current (contract based) definitions. From ‘mutuality of obligation’, to the ‘necessity test’ to imply contracts, there is a long list of such examples. We know UK employment law (and certainly EU and ECHR jurisprudence) is capable of ‘relational’ definitions that include non-contractual forms of ‘engagements’ and ‘arrangements’. These concepts ought to be at the core of a new definition.

Secondly, it should part with the fetish of the ‘strict personality’ requirement that is proving to be the Achilles heel for workers in the gig-economy, most of them employed on ZHC, whose work (as seen in the Deliveroo case) can be easily managed by algorithms regardless of whether it is performed personally or by others. While the Bill is still going through Parliament, it would be essential for the words ‘whether personally or otherwise’ (drawn from s. 43K ERA 1996 and s.35 NMWA1998) to be added so that new s. 27BA(3)(a) read  that ‘A worker is a qualifying worker of an employer in relation to a reference period if— (a) during the reference period the worker was employed by the employer under one or more worker’s contracts (whether or not continuously and whether personally or otherwise)…’. But more radical and far-reaching reforms are necessary. Alan Bogg has already suggested to the Committee that in ‘any review of employment status, a key thing that will need to be addressed is the problem of substitution clauses as a way of avoiding either employee or worker status. There is quite a simple way to do that, which is to treat personal work as an indicative rather than a conclusive factor, because it then just drops back into the range of things that the tribunal will look at’. This is a very valuable suggestion, but perhaps it would be helpful, when elaborating on this ‘indicative’ factor also to make it explicit that work should be further defined as ‘predominantly’ (or ‘mainly’ or ‘primarily’) personal, and acknowledge that some degree of substitution in the performance of one’s labour has always been, and should be accepted, in most workplaces.

Thirdly, and finally, we should note that most current statutory worker definitions are composed of three elements key elements (‘contract’, ‘personal’, and ‘employment/work’). Once the new definition has addressed the question of contractuality and strict personality, the only thing left to clarify would be whether we should retain the idea of ‘employment’ or embrace the broader ideas of ‘work’ or ‘labour’. The idea of ‘employment’ is perhaps irremediably tainted by the ‘contract of employment’ legacy, and is evocative of all the strictures that – from mutuality, to personality, to the ‘necessity test’ for implying contracts – that have developed by judges around that concept. It would be best to part with it. The idea of ‘work’ is broader and arguably more suitable to shaping a new single ‘worker’ status. But human ‘labour’ is constantly evolving and will continue to evolve with technological progress and the acceleration of the green and digital transitions. So perhaps we would be best advised to come up with new concepts, and new terms, that are indeed – as Labour’s plan seems to expect – genuinely ‘future proof’.

It is worth noting that there has long been a Bill in Parliament, the Status of Workers Bill introduced by Lord Hendy, that already contains all of these elements and a few more. It:

1. Provides that all rights contained in the Bill should apply to workers defined as ‘any individual who is engaged by another to provide labour and is not, in the provision of that labour, genuinely operating a business on his or her own account’
2. Provides that any right attributable to employers should apply to ‘(i) every person or entity who engages or engaged the worker, and (ii) every person or entity who substantially determines terms on which the worker is engaged at any material time’

• Establishes that ‘It is for a person who is claimed to be the employer and contests that claim to show in any legal proceedings that— (a) he or she is not the employer, or (b) the person providing the labour is not their worker.

1. Establishes that ‘For the avoidance of doubt, where a worker provides labour through a personal service company or an umbrella company, the employer is the third party for whom the labour is performed’.

The Worker Status Bill has served as a basis for the amendments suggested by IER to the ERB in the domain of employment status.

5. Conclusions – Waiting for Godot?

As this blogpost is being published, we are still awaiting news regarding the government’s consultation on worker status. As we continue to wait, we run the risk that the Shakespearean metaphor mentioned in the opening paragraphs of this blog post could soon need to give way to a more solemn metaphor drawn from Samuel Beckett’s work. Employers and businesses have already expressed their dislike for the Bill in general, and for worker status reform in particular. Yet reform is more pressing and urgent than ever, especially since the last budget’s National Insurance contributions hike may have increased employers’ appetite to misclassify workers as self-employed in order to reduce their employment law and tax liabilities.

The Government may find some inspiration in Vladimir’s exhortation for action in the second act of Beckett’s masterpiece ‘Waiting for Godot’: ‘Let us not waste our time in idle discourse! Let us do something, while we have the chance! It is not every day that we are needed’.

Prof Nicola Countouris

London, 5 March 2025

* Professor of Labour Law and European Law at UCL Laws, Vice President of the Institute of Employment Rights. I am grateful to Lord Hendy KC and Professor Keith Ewing for comments on this blog, and to Andy McDonald MP and Ben Folley for allowing me to present them at Portcullis House, Houses of Parliament on 14 January 2025. The opinions expressed are solely my own and do not express the views or opinions of any of the organisations or people mentioned above.

[1] Sitting of  28 November 2024, transcript available at https://publications.parliament.uk/pa/bills/cbill/59-01/0011/PBC011_EmploymentRights_1st-17th_Compilation_09_01_2025.pdf

[2] Labour Party, Labour’s Plan to Make Work Pay: Delivering A New Deal for Working People (2024), page 7, available at https://labour.org.uk/wp-content/uploads/2024/06/MakeWorkPay.pdf