The Status of Workers Bill, which has its Second Reading in the House of Lords on Friday 10 September 2021, will abolish a widespread form of employment exploitation in which employers use casual labour to avoid their tax and employment law obligations.
Currently, people in employment can be legally defined as ‘employees’, ‘limb (b) workers’ or ‘self-employed’. While employees enjoy the full suite of workers’ protections, limb (b) workers – many of whom are on zero-hour contracts or working in the gig economy – are eligible for only the most basic of rights. Self-employed individuals have no workers’ rights.
Employers exploit this division of labour by staffing their organisations with limb (b) workers, who have no redundancy rights or protection against unfair dismissal, and are therefore easy to hire and fire. With their livelihoods at stake, insecure workers are more vulnerable to poor working conditions. In one high-profile inquiry, it was discovered that the – mostly agency – workers at a Sports Direct warehouse were sacked for being ill and punished for taking breaks to drink water.
An increasing proportion of the workforce is being misled as to their employment status. In the recent case of Uber, drivers were told by the company they were ‘self employed’ when they were actually ‘limb (b) workers’ and therefore entitled to the National Minimum Wage, holiday pay and rest breaks.
This form of exploitation has been on the increase over the past decade and is expected to worsen still more due to the economic uncertainty created by the Covid-19 pandemic and the removal of the furlough safety net.
In July, the Labour Party officially adopted the Institute of Employment Rights’ proposal to create a universal status of ‘worker’ to replace both the ‘employee’ and ‘limb (b) worker’ statuses. Doing so would create a binary system in which people in employment are all eligible for the full suite of employment rights, while those who are genuinely in business on their own account, with their own clients and customers, would continue to be defined as self employed.
The Status of Workers Bill legislates to make this proposal a reality. It also puts the onus on the employer to prove those working for them are self-employed when there is a dispute over employment status. Currently, workers who suspect they have been misled as to their employment status are forced to initiate court proceedings against the employer to prove their entitlements to employment rights.
Lord John Hendy QC, who is Chair of the Institute of Employment Rights, said:
“I’m delighted the Labour Party has given its backing to the proposals laid out in this Bill and look forward to the support of my colleagues as it progresses through Parliament.
“Times of economic hardship and recession are known to accelerate the growth of precarious work and the impact of the Coronavirus pandemic is no exception – we have already seen several major retailers fall into the hands of employers known for using insecure contracts.
“Without urgent action, we can expect to see even more workers in the extraordinary position of never knowing when they will be working or how much they will earn, still less how much they will be paid (or when) if they do work.
“For years, this state of affairs has been justified in the name of ‘flexibility’ but there will be nothing to prevent employers from negotiating flexible conditions with their workers under the terms of this Bill.
“Instead, the proposals laid out in this Bill will provide for true flexibility, for both workers and employers. The reality is that a casual worker is unlikely to turn down a shift if they risk never being offered another, but when a worker has rights, they can make flexibility work for them too.”
1Employment Practices at Sports Direct, House of Commons Business, Innovation and Skills Committee
2Uber BV and others (Appellants) v Aslam and others (Respondents) 
3 Status of Workers Bill 2021
Notes to editor
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About the Institute of Employment Rights
The Institute of Employment Rights is a think tank for the trade union movement and a registered charity.
The IER exists to inform the debate around trade union rights and labour law by providing information, critical analysis, and policy ideas through our network of academics, researchers and lawyers.
We were established in February 1989 as an independent organisation to act as a focal point for the spread of new ideas in the field of labour law.