The Labour Party has announced a policy to create a single status of ‘worker’ to include all but the genuinely self-employed. Senior Associate, Jennifer Platt, discusses the implications.
Earlier this week Labour announced plans to create a single status of ‘worker’ to include employees, those who are currently classed as workers and those who do not seem to fit neatly into any specific category. The genuinely self-employed would retain their self-employed status.
Recent cases dealing with the employment status of those working in the gig economy have prompted Labour to consider how to respond to the development of hybrid employment models by businesses operating in a number of sectors.
Andy McDonald MP, Labour’s Shadow Employment Rights and Protections Secretary, said:
“Millions of workers are in insecure employment with low pay and few rights and protections, particularly key workers whose efforts got the country through the pandemic.
“A lack of basic rights and protections forces working people into poverty and insecurity. This is terrible for working people, damaging for the economy, and as we have seen throughout the pandemic, devastating for public health.”
The proposal would remove qualifying periods for some basic employment rights to give people more ‘day one rights’ in their job. All those (other than the genuinely self-employed) would receive rights and protections including Statutory Sick Pay, National Minimum Wage entitlement, holiday pay, paid parental leave and protection against unfair dismissal (which, in all but a limited number of circumstances, requires a qualifying period of two years’ service).
The implications of the policy being adopted would be significant both for individuals and employers. In many ways it would simplify the contentious area of employment status and make it more straightforward for individuals and employers to understand the position. As such it may reduce the number of disputes that arise which could in turn relieve the burden on the stretched Employment Tribunal system. There could be many wider benefits for society, including job security, higher tax revenues and lower costs of staff turnover for employers.
Possible downsides for employers would include increased costs and increased complexity in dealing with short-service dismissals where such dismissals are currently often straightforward. Some businesses operate models which require flexibility and it could prove difficult and costly to achieve such flexibility with a ‘one size fits all’ approach. There would be a significant administrative burden at the outset of any change as radical as this, including the need to change contractual documentation for staff, so it would take some time to see the benefits of simplification.
Will it happen?
The fact that Labour has announced this policy obviously doesn’t mean (given it is in opposition rather than in government) that it will actually happen. What it perhaps indicates is that the situation which has developed and the case law that has emerged from the gig economy shows that the current position is unsatisfactory and is leaving large numbers of people without the protections they need. Simplifying the position does have some immediate appeal and with the right support for employers, perhaps a significant reappraisal of employment status could have benefits for individuals, employers and society more widely.