Single Status of Worker

Wednesday 15th April 2026 Westminster Hall

[Clive Efford in the Chair]

14:30

[Justin Madders (Ellesmere Port and Bromborough) (Lab)]

I beg to move,

That this House has considered the potential merits of creating a single status of worker.

Good afternoon, Mr Efford; it is a pleasure to see you in the Chair. I am grateful for the opportunity to draw attention to an issue that has the potential to transform the world of work for millions of people up and down the country.

The Government’s plan to make work pay was one of our central policy commitments at the last general election. I was proud to play an important part in shaping the package and begin delivering on it in government. As a result of changes that this Government have made, the lives of working people are already improving. Minimum wage rates now take account of the cost of living, which is massively important to people on low incomes in this time of rising energy and fuel costs. Fathers are now entitled to paternity leave from day one; they no longer have to wait months to accrue that important right. Statutory sick pay is also now an entitlement from day one, and the lower earnings limit and the waiting period have been removed. This transformation of the world of work will continue as measures in the Employment Rights Act 2025 come into force over the coming months and years.

However, noticeably absent from that list is the promise that we made to the electorate to move towards a single status of worker, on which we committed at the election to launch a consultation in the first year of government. We are approaching the end of the second year with no further indication of when there will be a consultation or, indeed, whether there will be one at all. I understand that the focus of most of our time in office has been the mammoth process of passing and implementing the Employment Rights Act. I know only too well how significant an undertaking that has been and I commend the work of officials in the Department for Business and Trade to pass that transformative Act within less than 18 months of our entering office.

Although the Act has been implemented, we must not forget that a number of commitments in the plan to make work pay fall outside its scope. They include changes to the parental leave system and carer’s leave, reform of TUPE, the review of health and safety guidance, changes to allow collective grievances, and what we are debating today—the commitment to move towards a single status of worker. I know that steps have been taken to implement change in some of those areas, and I would welcome a substantive update from my hon. Friend the Minister on the progress being made to deliver on all the commitments in the plan to make work pay.

The need to deal with worker status has been an issue since long before we entered office. It is almost nine years since the publication of “Good Work: The Taylor Review of Modern Working Practices”, which made some proposals on status, and more than seven years since the then Conservative Government accepted that changes needed to be made. It is a matter of record that nothing has been done since then to implement those proposals. It has therefore long been recognised that employment status is overly complicated, outdated and no longer reflective of the complexities of the modern labour market. We will see whether we can reach consensus on the solution, but we should at least begin to try to address it.

It might be helpful if I set out the current legal framework. I hope that that will demonstrate the need for reform and why this is a complicated area that requires careful consideration. First, there are those who are classed as employees, who receive almost all working protections, depending on service length. Then there are workers, or limb (b) workers—under section 230(3)(b) of the Employment Rights Act 1996—who have access to some working protections, such as the Working Time Regulations 1998 and the minimum wage, but not others. And then there are the self-employed, who have no rights to working protections.

In practice, differentiating each status can be tricky, and reliance has been placed on court cases to establish the boundaries between them. It can therefore be a significant challenge for an individual to understand under which status their employment falls. If they do not readily know the answer, it can be difficult to enforce their rights without legal support. Matthew Taylor noted pithily in his report that

“without an encyclopaedic knowledge of case law, understanding how this might apply to your situation is almost impossible.”

People’s status and their rights under it should not be subject to their willingness to fight, sometimes for years, through an employment tribunal.

It might be said that people’s status and rights ought to be obvious from day one of their employment. For many that is true, but it does not recognise the explosion in what might be described as gig economy-type work in the past 15 years or so. By the end of the previous Administration, the number of people classed as being in insecure work stood at about 4 million, according to a TUC analysis. That represented a growth of about 1 million during the Tories’ time in office. Job growth in that period was driven largely by a rise in insecure work, which increased three times faster than secure forms of employment. Of the 4 million in insecure work, the TUC found that about half were low-paid self-employed, and many of them were unlikely to be genuinely self-employed at all.

During that period, the emergence of platform work saw the size of the gig economy explode. His Majesty’s Revenue and Customs estimates that there were 1.6 million people working in the gig economy by 2022. Advances in technology, combined with ageing status laws, have allowed employers to avoid their responsibilities by advertising for positions that are described as for a “worker” or for the “self-employed” but, in reality, have all the hallmarks of direct employment.

[Antonia Bance (Tipton and Wednesbury) (Lab)]

I thank my hon. Friend and fellow member of the Business and Trade Committee for giving way. We have sat in a number of hearings where different industries have expressed to us the competitive disadvantage that they experience because people in the industry use the gig economy or platform work to avoid responsibilities. We heard evidence from Royal Mail about the disadvantage in the parcel delivery network, and from the British Hairdressing Association about the end of direct employment in hairdressing. Does my hon. Friend agree that it is important to think about the competitive disadvantage for employers who do the right thing in considering these issues?

[Justin Madders]

My hon. Friend is absolutely right to draw attention to the arguments put forward by not only those who represent workers, but those who represent businesses about the need for a level playing field. I will draw on some of the examples and evidence that the Select Committee has heard of the imbalances that are created.

Those who might be classed as being in bogus self-employment may perform work under the direction of a manager, and be told where to be and when; they may wear a uniform and follow policies; and they may not, in practice, have the opportunity to substitute their work to someone else. To all intents and purposes, they are acting as employees, yet they do not have the associated rights, such as sick pay, parental leave, protection from unfair dismissal or any sort of redundancy process. While that might be sold as flexibility to the worker, it is clear that the employer retains most of the flexibility.

I saw this at first hand a few years ago when I accompanied a self-employed delivery driver working for one of the large parcel companies. I saw the time pressure he faced each and every day just to make an hourly rate equivalent to the minimum wage, which, once overheads such as his van and fuel were taken into account, was not actually reached. If he was an employee, he would have the right to a minimum wage for each hour worked and the right to rest breaks, and he would not be forced to rush on a very tight delivery schedule just to scrape by.

It is important to note that the abuse of employment status has a knock-on effect on the competitiveness of businesses that choose to do the right thing by their workforce, which my hon. Friend the Member for Tipton and Wednesbury (Antonia Bance) referred to. The Select Committee has seen the impact of the race to the bottom on standards and on responsible employers, such as Royal Mail, that meet the full costs of employment and maintain good, unionised jobs, but are not able to compete with companies that choose to treat their couriers as self-employed or limb (b) workers. They may be doing so lawfully, but it means that they can undercut the likes of Royal Mail by not having to worry about the minimum wage, sick pay or holiday pay. It also means that they can, and do, treat their workforce as ultra-disposable commodities. I do not believe that is fair competition, nor do I believe that it is the direction that we should be going in as a country.

Recently, the Communication Workers Union and Royal Mail gave evidence to the Select Committee, and they argued for reform in this area. When unions and management speak with one voice, they send a powerful message that should be heard. The sad reality is that large multinationals have been able to exploit the UK’s ageing status laws to completely undercut and undermine one of our oldest institutions. That is bad for workers in the sector, bad for competition and bad for the Exchequer, which loses out on their national insurance contributions and may incur additional costs of supporting low-paid workers in the welfare system.

These practices are on the march. Over the past 15 to 20 years, they have expanded from their traditional home in the construction sector into food and parcel delivery, services and, most recently, hospitality and retail. When I was a Minister, I was concerned to learn that digital platforms, which laughingly called themselves “talent platforms”, were moving into these sectors to match companies with individuals to work shifts, not as agency workers but as self-employed contractors. It is reported that big high street names such as Uniqlo, Gymshark and Lush have used those platforms to advertise work, but, to their credit, they stopped when concerns were raised. However, the TUC found that as late as last year, Urban Outfitters, Claridge’s hotel and Colicci cafés all continued to advertise on the platforms.

These digital platforms mean that, increasingly, the shop assistant helping us bag our clothes or the barista serving us coffee no longer receives the working protections that we all believe they should have. What happens when the coffee shop across the road finds that it can no longer compete with the prices of its competitor because the competitor has everyone bogusly self-employed? It puts those who want to do the right thing in an invidious position.

This has already happened in other sectors, including delivery driving and the hair and beauty sector. The massive drop-off in apprenticeships in the hair and beauty sector is blamed, at least in part, on the rise in the chair model, which of course is another form of bogus self-employment, forcing other salons to make difficult and unpalatable decisions. It is clear that bogus self-employment is driving the race to the bottom.

Bogus self-employment is also facilitating illegal working by those who do not have the right to work in this country. There have been repeated reports that platforms in the gig economy were failing to check people’s right-to-work status. Measures have now been introduced to legally require gig-economy companies to carry out checks to confirm that anyone working in their name is eligible to work in the UK. This is the first time that such checks have been extended to these casualised sectors, making employers liable to fines of up to £60,000 per illegal worker. However, that is only one approach to tackle illegal working, which requires stronger labour market enforcement across the board. The introduction of a single worker status would mean that the stringent checks that employers are already required to carry out on those who want to work for them directly are also applied to those who work through an app.

There is no time to waste on tackling bogus self-employment. It is already unlawful, but the law must be enforced properly. It is happening at scale in this country, and the Government should take stronger action now. There is no need to wait until single worker status policies have been finalised.

Steps that could be taken now, ahead of a consultation, include introducing a presumption of worker status, which would require an operator to prove that individuals it engages are not workers or employees, rather than putting the onus on an individual to test their rights and try to enforce them via the legal lottery. That presumption is already standard practice in relation to the minimum wage. We could also empower the Fair Work Agency to conduct investigations when status is in question.

We must move away from the piecemeal approach whereby workers fight tooth and nail in a clogged-up employment tribunal system, possibly waiting years to establish their working status. Too often, even when a worker succeeds, the business tweaks its terms of business so that it can avoid the consequences of the tribunal judgment and move people back into bogus self-employment. How is that gaming of the system in the interests of working people in this country?

We can also quickly reform the law on substitution clauses, which are used widely to provide a façade of self-employment, no matter how someone typically works. They allow companies to disavow employee and worker status, on the basis that someone no longer owes any contractual obligations to perform a service personally. Downgrading the importance of that when determining worker status could help to reduce the number of times that it is used to avoid obligations. These things could all be introduced as interim measures to help improve the situation while the consultation and subsequent legislation are pursued.

Governing is all about making choices and intervening to solve problems, no matter their complexity. Doing so might not be popular with everyone, and it might not be easy, but effective Governments are guided by their principles on what is right and what is wrong. I think that most Members would agree that the current employment status system does not treat working people fairly. It is unnecessarily complex, it is no longer appropriate for our modern labour market, and it facilitates rampant bogus self-employment and exploitation. The Labour party decided that it was no longer fit for purpose, and we fought the last election pledging to “move towards” a single status of worker to simplify the system.

I will be the first to admit that that commitment was not as strong as I or others on the Labour Benches would have liked, but moving towards a single status of worker would at least be a step in the right direction. However, it is a step that we have yet to take, and that needs fixing. The Government must not forget about this important strand of the Make Work Pay agenda. I understand the challenges of doing this alongside implementing the provisions of the 2025 Act, but we entered government to deliver transformative change for workers, and that takes hard work and determination. We should not take our eye off the ball.

I have sympathy for the Minister; she is wholeheartedly committed to the Make Work Pay agenda and, indeed, was closely involved in its development while we were in opposition. I know that she will advocate for the package in internal discussions among Departments and push tirelessly for its implementation in full. Sadly, as I know from my own experience, she will also be facing scepticism and belligerence from other parts of the Government that are against bringing forward a consultation on worker status.

The Minister has my support, and no doubt the support of a large number of the Back Benchers here today, to continue pushing in internal discussions. She should remind those she has discussions with of not just what was in the plan to make work pay but the commitment at the Dispatch Box in the other place by Baroness Jones of Whitchurch, who I pay tribute to for all her work on the Act. On 23 July 2025, she said:

“I am pleased to be able to confirm to your Lordships’ House that we will publish our consultation on employment status by the end of this year.”—[Official Report, House of Lords, 23 July 2025; Vol. 848, c. 358.]

The Minister will not need it pointing out that we are already well into the next year.

I am concerned that some may have the view that the Make Work Pay agenda was completed as soon as the Employment Rights Bill received Royal Assent, but the job is not done. We cannot let this opportunity to transform the world of work slip through our fingers. We owe it to working people in this country to deliver on the change that we promised. The Government need to demonstrate their commitment to moving towards a single status of worker by opening the consultation this spring and setting out a timeline for delivering change. I look forward to hearing from the Minister.

[Several hon. Members rose—]

[Clive Efford (in the Chair)]

Order. We are likely to start voting between 3 pm and 3.30 pm, and there could be up to 16 votes. At that stage, I will suspend the sitting and we will have to return. I cannot see us finishing all the speeches and the Front-Bench speeches in the time we have available—although if that happens, it is all good news.

14:47

[Jim Shannon (Strangford) (DUP)]

As always, it is an absolute pleasure to serve under your chairship, Mr Efford. I thank the hon. Member for Ellesmere Port and Bromborough (Justin Madders) for highlighting this matter. It is a pleasure to see the Minister in her place; I wish her well in her new role. I think this is her second or third Westminster Hall debate, and she has done a fair bit in the Chamber.

Although I agree with the principle of what the hon. Member for Ellesmere Port and Bromborough said, I want to highlight the issue for businesses back home. They are not against the principle or object of a single status of worker, but we need a balance. With respect to other Members, I would like to tease that out.

The issue is incredibly complex and must be teased out from all angles. While I agree with the backdrop of ensuring fairness, I will highlight the risks of casting a long and perhaps damaging shadow over the small businesses and entrepreneurs who are the very lifeblood of the Northern Ireland economy. In my constituency, small and medium businesses create the most jobs, so it is for them that I am here today. I wish to be their voice in Westminster Hall.

No one in this House, and certainly no one in my party, supports the exploitation of workers. We have always stood for the right of every individual to be treated with dignity and to receive the pay that they have earned by the sweat of their brow. Where bogus self-employment exists to undercut the law, it must be met with firm and decisive action.

By the same token, we must not allow a desire for simplicity to lead us into a harsh overhaul that sometimes ignores the economic reality on the ground. For many, the current limb (b) worker status is not a trap but a choice that offers a vital compromise of flexibility that a rigid, one-size-fits-all employment contract simply cannot provide. I ask that the Minister takes my thoughts, and probably those of others, on board to ensure that we can provide protection for workers while at the same time not disadvantaging the small businesses in my constituency.

Our primary concern is for the small business owner—for example, the shopkeeper in Newtownards, the start-up in Ballynahinch and the family firm down in the Ards peninsula, all in my Strangford constituency. These employers are not faceless corporations. They are people who take risks to provide jobs for their neighbours. We have to be aware that in attempting to prevent abuse, we could be preventing job creation or retention by burdening them with the same administrative and financial burdens as multinational giants. Will the Minister ensure that small businesses—the lifeblood of my constituency—are protected? Rather than necessarily protecting workers, the Government may be jeopardising the very jobs that they rely on.

We must remember that jobs are not abstract concepts; they are costs. In the early stages of any business, every new hire is an investment that takes time to repay. We want to encourage businesses to continue hiring and rehiring, but they also have to have the prospect of a future, and a sense of where that leads. If we put our thumb on the scale against employers by removing the space they need to make vital judgments, we will potentially choke opportunity and harden the barriers for those who are currently on the margins of the workforce.

Let us focus on economic delivery and transparency. Let us empower businesses to grow, rather than stifling them with red tape. We need common sense, not ideological rigidity. We should be building a dynamic labour market that respects the need for flexibility, rather than one that forces every worker and business into a single, restrictive box. That is why the conversation—this debate—must be fulsome, taking into account the effect on small businesses, which account for 90% of all the workers in Northern Ireland. That is how massive this issue is, and shows the impact it could have on us. Those 90% of workers in Northern Ireland businesses do not have a human resources department to keep them right.

I am pleased to be part of this conversation, and I hope that all Members will take my views on board in a positive and respectful way. I am keen to achieve what the hon. Member for Ellesmere Port and Bromborough wants to achieve, but I am also conscious of ensuring that we can bring businesses along too. If we can do that, it is a win-win for everyone.

14:52

[Ian Lavery (Blyth and Ashington) (Lab)]

It is a pleasure to serve under your chairmanship, as ever, Mr Efford. I refer to my declaration of interests on my trade union membership and trade union support in the general election.

The Conservative ethos of unhindered market determination meant that historical antagonism to the trade unions, which are seen as an unholy impediment to the favoured goal of a flexible labour market, intensified as the Tories continued to try to curtail their power. It became the common theme of Governments here and elsewhere—up until, of course, the election of the Labour Government in 2024. The market had to be what determined the wages and conditions of ordinary working individuals, not collective bargaining or negotiations with unions. Management would be totally free to pay what the individual worker is worth. That is worth recognising at the outset.

They reckon that Thatcher’s greatest achievement was not Tony Blair, as she once declared; her most profound legacy was the gig economy. The widespread acceptance of insecure, casual employment is one of the cornerstones of the UK economy. What an absolute disaster. The gig economy was given legal underpinning by the Trade Union and Labour Relations (Consolidation) Act 1992 and the Employment Rights Act 1996, which defined the two levels of employment status: the employee, with full legal and contractual rights, and the worker, who enjoyed only minimal legal protections. The exploitative use of casual labour was basically given legal legitimacy. That was a crime against ordinary working people.

Under those Acts, a worker is said to have a more casual, less structured work pattern—for example, zero-hours contracts. They are usually required to do the work themselves, and cannot ask somebody else to cover for them. They technically do not have to make themselves available to work, but in reality the fear of no further hours being offered if they turn down a request that they work has made this a legal fiction in many cases.

Look at the economic effects of the widespread employment of those legally characterised as workers. It is blatantly obvious that good, long-term jobs have been replaced by low-paid, minimum wage jobs. Many of those who have been forced to work in the large casual work sector require benefits to survive. Employers’ profits are being subsidised by everybody in this room—by the taxpayer. Cheap labour has been a major cause of a lack of investment in capital and in research and development, resulting in poor productivity growth. It is hard for workers to achieve union recognition as they are without unfair dismissal protection, leading to even weaker union density in key industries—again, a key goal of the Conservatives throughout their history.

I would like to share some of the difficulties suffered by individuals employed as workers. Many have been on zero-hours contracts and do not know what money they will earn each month. We understand the problems that brings: they have no job security and can be dismissed without notice, they are not entitled to redundancy pay, and some employers employ a pool of workers who work besides those with employee status, so that there can be mass redundancies and avoid statutory consultations and legal obligations to discuss alternative employment with those affected—they can freely choose those with worker status.

Workers can be wrongly classified as being self-employed—the well-known bogus self-employed—a tactic used to avoid national insurance contributions, stakeholder pension contributions and so on. It is sometimes hard to spot because of legal complexities. If, on paper, somebody hired to work can choose somebody else to do that work for them, the so-called substitution clause means that that individual will legally be given self-employed status and have no employment rights whatsoever. It is often hard to prove the false nature of the written clause, but in reality, it is well known that no one in the firm would dare to rely on these clauses for, say, an extra day off.

[Tahir Ali (Birmingham Hall Green and Moseley) (Lab)]

My hon. Friend is making an important point about the exploitation of workers with very little legal protection. Does he agree that it must be incumbent on all employees to have union recognition, whereby the voices of employees, no matter how small the organisation, are heard and can be part of any action that can be taken against rogue employers? There are some very good employers that recognise unions and work with them to achieve the best, but many do not recognise unions and would rather have working conditions that take us back more than 100 years, before the work of trade unions had even started.

[Ian Lavery]

I fully agree with the sentiments outlined by my hon. Friend.

I will move on to a summary of the legal rights denied to people classified as workers under the Trade Union and Labour Relations (Consolidation) Act 1992 and the Employment Rights Act 1996: protection against unfair dismissal after six months; the right to guaranteed hours; the right to maternity pay; the right to paternity leave; protection against unfair redundancy selection; the right to redundancy pay; access to statutory union recognition procedures; and the ability to request family-friendly flexible hours. Those are the rights that are being denied to workers at this moment in time.

What are we really asking for? There must be a renewed push for the full implementation of Labour’s manifesto commitment to merge the employed and worker tiers into one single legal category of employee with full legal employment rights. We need an end to the bogus self-employment tactics that unscrupulous employers deploy. The law should not recognise the legitimacy of any substitution clause.

The best means of achieving a clear distinction between a new employee with single status and those who are actually self-employed is to use the formula proposed in Lord Hendy’s single status Bill of 2023-24, which was introduced in the Lords. That would not only merge employees and workers into a single status of employee; legal employment rights would also end the bogus self-employment tactics that employers use to deny people the higher employee status. Under Lord Hendy’s Bill, a person would be deemed to be self-employed only if there was clear evidence that he or she was genuinely operating a business on his or her own account. Evidence such as business accounts, advertising and the number of clients or customers would be needed to prove true engagement for services by a self-employed person.

I thank my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders) for bringing this timely debate to the House. I also thank the Minister for her sterling work on the employment Bill. It was an excellent Bill. It could be a lot better; it could be a lot stronger—to be honest, we need an employment Bill 2.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

Does my hon. Friend agree that one of the arguments against single worker status is that of flexibility, particularly for young people who want to work seasonally, as happens in my constituency in Cornwall? I therefore ask the Minister to confirm that that option still remains open if a person remains an employee under our new Employment Rights Act. There is misunderstanding about that, and it is really important that people realise that there is the option under the Act to retain flexibility without the need for self-employment status.

[Ian Lavery]

I am sure the Minister will respond to that question.

I want to say a huge thank you to my hon. Friend the Member for Middlesbrough and Thornaby East (Andy McDonald) for the sterling work that he has done. A lot more work needs to be done, but working people in this country are a lot better off now since the election of the Labour Government in 2024 than they ever were before. The Employment Rights Act transforms the lives of ordinary working people, but we must work at it and it must go a lot further. This debate is about the differences between an employee and a worker, and we must change that as rapidly as possible.

15:03

[Andy McDonald (Middlesbrough and Thornaby East) (Lab)]

It is good to see you in the Chair, Mr Efford. I thank my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders) for securing this debate and for his sterling work in ensuring the Employment Rights Bill became the Employment Rights Act. He was doughty in his prosecution of it. I refer hon. Members to my entry in the Register of Members’ Financial Interests; I too received support from trade unions in the run-up to the general election.

I have taken a long-standing interest in these issues, not least by leading, in opposition, on Labour’s new deal for working people. The Minister herself contributed to that in no small part, for which I am eternally grateful. It was a joy to work with her on it. We published it in September 2021, in consultation with affiliated and non-affiliated unions. I entirely support the Government’s direction of travel but, now that the Employment Rights Act has passed, the task is clear: we must implement it properly, deliver the remaining new deal commitments in full and ensure robust enforcement so that rights mean something in practice. I urge Ministers to go further and faster on one central commitment: a single status of worker. That was never peripheral. It was at the heart of the new deal. The principle is straightforward: if you work for someone else, you should enjoy the full range of employment rights. Without that clarity, bogus self-employment will continue to deny millions the basic protections of sick pay and holiday pay and protection from unfair dismissal.

One person’s flexibility is another person’s insecurity. There are ways and means of accommodating seasonal work, and nobody would deny that, but we must also look at it from the perspective of small businesses, which work hard to employ people. Let us think through how they are undermined by those who seek to rely upon alternative ways of engaging people. They are undercutting their competitors in Newtownards, down the street, and elsewhere. That is not how it should be. We should be playing by the same rules.

There is also a wider public interest. Artificial self-employment does not just erode rights; it undermines the Exchequer through lost national insurance, income tax and pensions contributions. The TUC’s research on this some years ago showed that it probably accounted for lost revenues in the order of £10 billion per annum. A single status would restore fairness in both the labour market and the tax system.

This reform is not new, and I pay tribute to Lord John Hendy KC, who introduced the Status of Workers Bill in the House of Lords in May 2021. It passed on Third Reading in January 2022 before I brought it to the House of Commons in early 2022. That work demonstrated both the strength of the argument and the breadth of support, yet, as a recent briefing makes clear, the current patchwork of employment statuses has created a legal battleground, with employers able to exploit complexity and avoid responsibility. That is why many of us believe that the Employment Rights Act 2025 should have centred on single status. Instead, we have a commitment to consult, but the case has already been repeatedly and convincingly made. That is why I reintroduced the Status of Workers Bill as an amendment on Report.

We should also heed Margaret Beels, the director of labour market enforcement, who told the Business and Trade Committee that this issue must be addressed and that it is time to act, not simply to consult further. Delay carries consequences. As new rights apply primarily to employees, the incentive for employers to downgrade status will only grow. That is the tragedy: we may be inadvertently promoting a regression and pushing people towards bogus self-employment. Without reform, those rights risk being avoided in practice.

Could the Minister say what work the Government are doing to assess the tax revenue benefits of introducing a single status of worker, as previously advocated by the TUC? Can the Minister say whether and how the Fair Work Agency will respond to the concerns raised by the director of labour market enforcement and ensure that consultation on single status is expedited? Ultimately, this is about the kind of labour market we build: one that is fair, clear and enforceable, rewarding good employers and guaranteeing every worker the dignity and security in the rights they deserve. When people go to work, they should be safe in the knowledge that they have a wage and terms and conditions that will protect them, enable them to put food on the table and let them build a future. At the moment, too many people are entering the job market without any thought about the solid future that we should be promising them.

We must bear in mind the problems that we build up for future generations if we do not provide our workers with security as they head into their middle and old age. If they have not been able to make provision, we are storing up an enormous problem for our successors. I will leave it there, but I trust that the Minister will address some of those points when she winds up.

15:10

[Chris Bloore (Redditch) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Efford. I congratulate my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders) on securing this debate. I refer to my entry in the Register of Members’ Financial Interests regarding my union support and membership of the trade union group of Labour MPs.

In my constituency, I hear from postal workers, delivery drivers, care workers and many others who feel that the current system simply does not reflect the reality of the work they do. At the heart of the debate is a simple question: does our system of employment status match the modern day labour market? At the moment the answer is clearly no. We have a three-tier system that is overly complex, often unclear and too easily exploited. This is not a marginal issue. The TUC estimates that approximately 4 million people in the UK are in insecure work, including those on zero-hours contracts or in forms of precarious self-employment.

In my community, insecure work shows up in very real ways: the delivery driver working regular hours who is told that they are self-employed, with no sick pay or job security; the worker who wants to speak up about unsafe practices, but fears that they have no protection if they do; and the families trying to make ends meet without the certainty of stable hours or fair conditions. In sectors such as distribution and logistics, which are so important to the economy, the problem is particularly acute.

The TUC has also highlighted that up to one in eight workers are now in some form of insecure work. Where a parcel is delivered in my constituency, the person carrying it is often classified as self-employed, without basic protections. That is not genuine flexibility; it is insecurity dressed up as choice, and it is costing working people in my constituency real security and dignity, and ultimately real income.

We can also see the wider consequences. Companies that rely on insecure models are able to undercut those that provide decent pay and conditions. That creates a race to the bottom, one that often harms workers, undermines responsible employers, and weakens our economy. We see that tension clearly in the postal sector. Royal Mail, which directly employs its workforce and provides a universal service, is competing with firms that can erode basic obligations by classifying workers as self-employed. As evidence to the Business and Trade Committee has shown, it is not a level playing field: decent employers are penalised for doing the right thing, while the Treasury loses out on revenue that should be contributing to our public services.

There is, therefore, a strong case for moving towards the single status of worker, with a robust test to distinguish genuine self-employment. This is not about removing flexibility where it works; it is about ensuring that flexibility does not become a loophole for rights to then be stripped away. It is also about ensuring that the gains we have made through measures such as the Employment Rights Act actually reach the people they are designed to protect. Rights such as protection from unfair dismissal, guaranteed hours and access to union representation mean little if they can be avoided through reclassification.

There is also a wider public interest in the single worker status. At present, too many people fall outside whistleblowing protections simply because of their employment status. That cannot be right. If we want safer workplaces and higher standards, we need a system that gives people the confidence to speak up without fear of losing their livelihood. On the day that we mark the 37th anniversary of the Hillsborough disaster, candour and truth in public and private life have never been more important.

Fundamentally, this is a cost-of-living issue. The TUC has found that insecure workers are significantly more likely to struggle to pay their household bills. When people lack basic protections, when their hours fluctuate unpredictably, when they have no sick pay and when they can be dismissed without notice, that instability feeds directly into financial insecurity. A fair labour market is essential to a fair standard of living. As a former chief executive who worked with a progressive Government overseas to improve employment rights, I believe in an economy built on fair rules, strong rights and shared prosperity, one that rewards good employers and protects working people.

I know the Minister has a long track record of supporting working people, so I have every faith that she will conduct this process well. I welcome the Government’s commitment to consult on a simpler framework to create a system that reflects the reality of modern work, closes loopholes and ensures that every worker has access to dignity, security and fairness at work. Ultimately, this issue comes down to a simple principle: people who work should have rights that they can rely on. For the people I represent, that principle cannot come quickly enough.

15:14

[Mr Joshua Reynolds (Maidenhead) (LD)]

It is a pleasure to serve under your chairmanship, Mr Efford. I thank the hon. Member for Ellesmere Port and Bromborough (Justin Madders), with whom I sit on the Business and Trade Committee, for securing this debate.

The world of work has changed beyond recognition in the past several decades, but our employment laws have been severely left behind. We still sort people in work into three rigid categories—employees, workers and the self-employed. The framework for that was built in a different era, when people had one job, one employer and the reasonable expectation that the law would protect them if things went wrong.

That is obviously not the reality for millions of people today. It is not the reality for the delivery drivers who log into apps and spend hours under the management of an algorithm; they cannot set their prices and they are disciplined if their ratings drop, yet when they fall ill or are injured on the job, they are told, “Sorry, you are self-employed—you are on your own.” It is also not the reality for the agency care worker who has been looking after the same vulnerable residents for years without ever accruing a single day of redundancy protection, and it is not the reality for the freelance designer who depends entirely on one client but has no holiday pay, parental leave or pension contributions.

These people are trapped in a gap in the law. They are doing essential work, but they are being denied the essential rights that go along with that. The legal case that created those gaps was rooted in case law going back to 1968 and relied on concepts designed for the factory floor, not for the platform economy. It means that the rights of many workers depend not on the work they do or the hours they put in but on how cleverly designed their contract is. Let us be completely honest about who benefits from those contracts and that complexity: it is most certainly not the worker.

The problem has not gone unexamined. The Taylor review reported in July 2017 and recommended significant reforms. The Government of the day responded with the “Good Work Plan” in December 2018 and committed to legislate. Although the previous Government identified the problem and promised to fix it, they never did, and that has left people waiting for far too long. The current Government have taken important steps in the Employment Rights Act 2025: guaranteed hours for workers if they want them, a day one right to make flexible working requests and the establishment of the Fair Work Agency. Those steps are all welcome, but the Act did not address the fundamental structural problem that the categories themselves are broken. The Government can strengthen the rights attached to the “worker” category, but if people cannot tell which category they fall into, those rights remain words on the page. The Government’s next steps document commits to consulting on a simpler two-part framework for employment status, but we have been here before, and consultation commitments alone are not enough.

The Liberal Democrats believe that reform in this area should be built on clear principles. First, we need a dependent contractor status that sits between those who are fully employed and those who are genuinely self-employed. If someone works personally for another party and is not guaranteed business on their own account, they should have access to minimum levels of earnings, sick pay and holiday entitlement. The idea that someone can work full time for a single company and have fewer rights than a Saturday shop assistant is an indictment of our current system.

Secondly, the tax and national insurance treatment for employers in different categories must be aligned, because the current framework creates fiscal incentives for businesses to push people out of the protections they deserve. When it is cheaper to classify someone as self-employed, that is exactly what happens, and the cost is borne by the worker, and ultimately the Government.

The third principle concerns the burden of proof in disputes, which should shift from the individual to the employer, because asking someone on low or irregular pay with no savings and no legal protection to take on that legal risk against the company that controls their livelihood is not a fair fight. If an employer has classified someone as self-employed, it should be for the employer to justify that decision.

Fourthly, the Liberal Democrats believe that pension provision for those in non-standard work must be addressed urgently. Far too many people in the gig economy sector are building no retirement security whatever. They are invisible to the auto-enrolment system, and when they reach retirement with nothing, that cost will fall on us. In the Commons, we are currently going through the Lords amendments to the Pensions Schemes Bill. The Government should be acting on the issue in the Bill.

Finally, where zero-hours contracts remain, there is a strong case for a higher minimum wage at times of normal demand to begin rebalancing the risk that currently falls entirely on the shoulders of those people who are least able to bear it. I urge the Minister to confirm when the promised consultation on employment status reform will come forward and to commit to a timetable for legislation that does not repeat the sorry patterns of promises and retreats that we have seen from Government time and again, because the people caught in the gap have been patient for a long time. They have been told time and again that reform is coming and they deserve more than warm words; they deserve the law to be on their side.

15:19

[Andrew Griffith (Arundel and South Downs) (Con)]

It is a pleasure to serve under your chairmanship, Mr Efford. I congratulate the hon. Member for Ellesmere Port and Bromborough (Justin Madders) on securing this important debate. I regret that he himself was a victim of unemployment, cut down in his prime by a capricious boss, although I have greatly enjoyed working with the current Minister, the hon. Member for Halifax (Kate Dearden), to try to do what we all seek to do: improve the employment lot of our fellow citizens.

Single worker status is not a minor legal tidy-up; it would be a fundamental restructuring of the labour market—the hon. Member for Ellesmere Port and Bromborough mentioned that in his opening remarks. For that reason, the Conservatives believe that we should proceed cautiously. We cannot have it both ways. This Government cannot deliver a once-in-a-generation change to workers’ rights—330 pages of new legislation that has caused a degree of indigestion in the employment market as it passes through it like an egg through a snake—and then immediately come back and say that we need to unleash even more uncertainty. The law that we pass most often in this House is the law of unintended consequences. Although we are well-meaning, it behoves us all to have regard to the ever-increasing proportion of our young people who are unemployed and unable to find work, in part no doubt due to the additional regulatory burden.

Although the Conservative party does not, of course, oppose a consultation on this subject—if that was a commitment given by the Government it is in the interests of good faith and democracy that they proceed to have such a consultation—we would nevertheless be extremely cautious about rushing too quickly to legislate. In the interests of time and productivity, I will leave my remarks there.

15:21

[The Parliamentary Under-Secretary of State for Business and Trade (Kate Dearden)]

It is a pleasure to serve under your chairship, Mr Efford. I congratulate my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders) on securing this debate and on his impassioned contributions throughout it. I know that, as my predecessor, he knows this agenda well. It has been a privilege to continue that work in my role. I was going to talk a lot about our Employment Rights Act and our wider plans to make work pay but in the interests of time I will not; my hon. Friends have covered those subjects exceptionally well and I thank them for that.

The world of work has fundamentally changed in recent years. As we have heard in this debate, it is no longer the norm to stay employed in the same company or even the same sector for a whole lifetime. New technology continues to transform the way that we work, and where and when we work. As the way we work changes, our employment rights legislation, which protects people, has had to be updated. That is what this Government are doing. I thank my hon. Friends for the many excellent points they have made in this debate about how we are working at pace to make sure that the environment for working people is much better than when we found it. My hon. Friend the Member for Ellesmere Port and Bromborough put exceptionally well how working people are already benefiting and seeing the impact that the Employment Rights Act and the other legislation that we have been working on are making.

I agree that to continue to progress in this area it is necessary to change the employment status framework for rights. The growth of the gig economy and growth in insecure work mean that some people are working without the certainty and stability that typical employment provides. The genuinely self-employed play an essential role in driving innovation, creativity and economic growth, and high-quality self-employment is a crucial part of our UK economy. However, vulnerable workers who work day in, day out, often in challenging conditions and for low pay, are not receiving the protections that they should. Their working conditions can be highly controlled by the people or organisations they work for, but they are nevertheless designated as self-employed, with no access to the national minimum wage, paid holidays, a workplace pension or protections from unlawful wage deductions.

The existing employment status framework can also be particularly difficult to understand and enforce. For someone to determine whether they are an employee, a limb (b) worker or genuinely self-employed can require the ability to understand both statute and a significant amount of complex case law. That presents challenges in a system where the onus is on the individual to bring a case to an employment tribunal to establish their employment status. It enables some employers to undercut their competitors—in this debate we heard many examples of that from different sectors—by misleadingly designating their workforce as self-employed when legally they are not, denying people the rights to which they are entitled, and exploiting the financial advantages associated with self-employment.

I thank hon. Members for mentioning the role of the Fair Work Agency on enforcement, and I am happy to continue the discussion outside the Chamber. I am sure that hon. Members will welcome the fact that the Government have set up a dedicated hidden economy team within the Fair Work Agency. From April, it will take action in sectors known to have egregious breaches of employment rights legislation, and act on illegal working and tax status.

We are committed to publishing a consultation on our plans to tackle employment status problems. It is important to look at whether the current test for employment status places the line between being a worker and being self-employed in the right place, and to consider how to improve compliance with the law so that everyone gets the rights to which they are entitled. Employment status is inherently complex, as we have heard in contributions to this debate.

I thank hon. Members for their time and consideration. We are doing lots of other work in this area, including for the self-employed, which I would like to talk about in further detail. However, in the interests of time I will not—I see you gesturing at the time with your pen, Mr Efford. I thank all hon. Members for contributing and thank my hon. Friend the Member for Ellesmere Port and Bromborough for securing the debate.

15:25

[Justin Madders]

I refer hon. Members to my entry in the Register of Members’ Financial Interests—it was my oversight to not mention that earlier.

Technically, the problem for a lot of the people who we are discussing is that they are not employees, so they have no recognition process. The debate has been interesting. I pay tribute to my hon. Friend the Member for Middlesbrough and Thornaby East (Andy McDonald), who made some very important points, particularly on the tax take. That is something that we absolutely need to address, but this issue is fundamentally about fairness. Our Make Work Pay agenda has to be bolstered by action to address this problem. I hope the Minister gets the message that we need to do that soon.

[Clive Efford (in the Chair)]

Congratulations to the hon. Member for Swansea West (Torsten Bell) for keeping the debate in the main Chamber going long enough for us to finish this debate.

Question put and agreed to.

Resolved,

That this House has considered the potential merits of creating a single status of worker.

15:25

Sitting suspended for Divisions in the House.