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Single Status of Worker

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.