Autumn Budget is here, unlike far-off Single Worker Status

As many people particularly contractors in IT will be aware, the Labour government has published a new Employment Rights Bill, just ahead of tomorrow’s Autumn Budget 2024. 

The Employment Rights Bill sets out a total of 28 measures that will be introduced to “Make Work Pay,” in the field of employment law over the next few years, writes John Grant, senior associate at law firm Wright, Johnston and Mackenzie.

The unusual roadmap

Somewhat unusually, as well as setting out the steps that the government is going to be taking, the government also produced a further document offering a bit of a roadmap into the future.

This information is contained in a document entitled “Next Steps to Make Work Pay.” Divided into six sections, this document is intended to ensure that the Labour manifesto commitments that were made by the Labour party that are not covered in the Employment Rights Bill can still be dealt with in due course.

None of the four employment rights bill consultations are on Single Worker Status

This ‘Next Steps’ document arguably addresses the fact that despite four consultations since being published by the business department (on October 21st), not one of the four contains Labour’s pre-manifesto pledge to create a single status of worker. 

The pledge to create “Single Worker Status” was made in Labour’s ‘New Deal for Working People’ pamphlet, published in 2021.

In the current ‘Next Steps’ document, much of that 2021 pledge is recycled.

Single Worker Status: A ‘simpler framework’

The relevant section in ‘Next Steps’ addressing  a single worker status, states:

“We will consult on a simpler framework that differentiates between workers and the genuinely self-employed, ensuring that all workers know their rights and have the comfort of protection at work.”

Single Worker Status is clearly intended to address the current uncertainties in the status space.

And it looks designed to remove the confusion caused by the fact that there are currently three categories being applied when trying to analyse the correct contractual relationship.

Today's three categories of contractual relationship

Those three categories are:

1. Employee;

2. Worker; and

3. Self-employed contractor.

The government’s intention is to remove the three categories and to leave only two categories -- one to cover the genuinely self-employed, and one to cover everyone who is not genuinely self-employed.

At the time of writing, ‘workers’ do not have the benefit of all of the protections that employees have. For example, they do not have the right not to be unfairly dismissed, nor do they have the right to receive a statutory redundancy payment.

Labour’s emphasis on the self-employed who are genuinely self-employed

You will note that from the language used by the government in its ‘Next Steps’ document, an explicit reference to “the genuinely self-employed”.

This wording suggests that there would still be quite a lot of scrutiny given to people who are purporting to be independent contractors. And independent or freelance contractors are individuals which the IT and technology sector historically has a high proportion of.

IR35, and case law, won’t vanish overnight

With no Single Worker Status consultation published, it is too early to offer a more detailed analysis of the implications of the introduction of Single Worker Status.

However, in relation to the existing IR35 rule (introduced in 2000 by a Labour government), there has been a very significant body of case law built up, concerning whether someone is an employee or genuinely self-employed.

To our mind, there would seem to be no obvious reason why this test should be any different going forwards, once the category of ‘worker’ has been removed.

Could Autumn Budget 2024 hold more detail on Single Worker Status?

As always, the position will have to be looked at in more detail once the ‘SWS’ consultation begins, or once further details about Single Worker Status are released by the government, potentially even at tomorrow’s Autumn Budget 2024.

Generally speaking, anything that brings a further degree of certainty to a space long-known for its uncertainty is to be supported.

SWS is still a long way off

However, Single Worker Status is a model which we will all need to be patient about. Aside to the complexities of status itself, the government’s timescale for coming forward with this consultation is not clear.

By contrast, the four consultations which have been published are quite widely expected to result in measures being introduced in 2025, or 2026 at the latest. 

In short, despite its potential to both potentially address the ambiguities of IR35 and affect a lot of Free-Work readers, Single Worker Status is not likely to be put in place anytime soon -- as much as further details from chancellor Rachel Reeves in the House of Commons tomorrow afternoon would be welcomed by many.