The government is set to revise the legal definition of what a worker is with a view to increasing their employment protections.

The proposals, outlined before the general election, are part of a large package of amendments dubbed Make Work Pay that seek to strengthen the rights of millions of workers in the UK.

The Employment Rights Bill, set to be announced on Thursday, will address a number of these areas, including the right to disconnect and protection from unfair dismissal from the first day of their job.

Instead of workers being placed in three different categories, with varying protections, the government instead hopes to introduce a “single worker status”.

While the plans to term workers under a single category have been praised in abstract, implementing them may prove to be a bit more complicated.

Here’s why the legislation is being proposed, what it means for workers, and what the government intends to do next.

Work and the ‘gig economy’

The 2007-9 financial crisis was considered to be the most devastating financial crashes since the Great Depression. It also changed the way we work at a rapid-fire rate.

Globally, more and more people began working more than one job to get by. With fewer permanent contracts available, many people used to full-time employment were left to pursue short-term contracts or freelance jobs.

The New Yorker coined the term “gig economy” to describe these roles, inspired by gigging jazz musicians in the 1910s who were paid per performance.

Now, the term is commonplace. It defines workers who may have multiple jobs, do not earn an annual salary, and in turn, do not receive workplace benefits like holiday pay or retirement contributions.

“Over the last 15 years, if not longer, we’ve had a big rise in the amount of insecure work,” Tim Sharp, the senior policy advisor at the Trades Union Congress told Yahoo News. “We reckon there are with 4 million people in various forms of insecure jobs and the growth of the gig economy.

“We’ve had huge changes in the labour market. And thus far, until now, we’ve had a government that hasn’t been very interested in dealing with some of the outcomes of that.”

Zero-hours contracts also became popular around this time. This contract, which means that an employee has no guaranteed hours each week, now account for around 6% of all UK employment agreements.

It is people in these categories who often have an unclear employment status — meaning that their rights at work are also in flux.

Three categories of worker

Currently, workers in the UK are legally defined by three different categories: as an employee, a worker, or self-employed.

Employees have more employment rights than workers or self-employed people, and additionally, more obligations towards their employer.

A self-employed person is their own boss. They are responsible for how and when they work, and are usually a company owner or a freelancer. Self-employed people have very few employment rights.

It is the third category, the worker category, that is harder to define. While workers belonging to this category have some employment rights, they do not have as many as employees.

If they do work for an organisation, it might be more casual, and less structured. They also may not have a regular working pattern.

“Workers in this category may have some statutory protections, but not all of the statutory protections that employees have. But critically, they may, in certain circumstances, be taxed as though they’re self-employed, and so they’re in that middle ground,” Rustom Tata, the head of employment law at firm DMH Stallard told Yahoo News.

Sharp, from the TUC, brands this an “unusual legal agreement”.

“There’s a strong incentive for employers to try to prove that somebody is either a worker or completely self-employed so they don’t have to honour those rights,” he told Yahoo News. “We get this bizarre situation where if people have the theoretical ability to have someone else go and do their job for them, the employer can claim that the they’re technically self-employed.”

What does the government want to do?

Because of the complex nature of this system – one Labour’s pre-election manifesto says “requires an encyclopaedic knowledge of employment law” – it wants to introduce a single worker status, condensing these three categories.

Under this revision, workers will be considered to be either employed, or self-employed.

To do this, it is expected to consult in detail on a simpler framework that “differentiates between workers and the genuinely self-employed”.

The details of the plans could be outlined as early as Thursday.

However, reports highlighted the policy was weakened following the party’s policy forum, with the aim to ‘consult’ on its plans, peoplemanagement.co.uk reported.

This means that it could take several months to implement the plans that were first touted in Labour’s literature back in 2022.

How will it benefit workers?

For gig economy workers, those on zero-hours contracts and other people in the “worker” category, the benefits are expected to be manifold.

“Those currently classed as workers, such as the Uber drivers who recently successfully established worker status, would have full employment rights,” David Sillitoe, a partner at Ralph Robinson, told Yahoo News. “Arguably, the most important of these would be protection from unfair dismissal (the qualifying period for which is expected to decrease to six months). They would also be entitled to family-friendly rights, such as maternity leave.”

And as many trade unions have argued, attaining worker status before this point has proven to be very challenging.

Being recognised as having worker status can take companies years, with Deliveroo and Uber drivers fighting to attain recognition after taking their cases to the Supreme Court.

According to one legal firm, if the changes go ahead, the move will benefit tens of millions of people.

“A House of Commons UK Labour Market Statistics Report from 10 September 2024, there are currently 33.23 million full and part-time workers, and 28.83 million employees within the UK,” Anna Schiavetta, a solicitor in the employment team at Blacks Solicitors told Yahoo News.

“In total, there would be 62.06 million people protected following the creation of a single worker status.”

What are the drawbacks?

Like any far-reaching policy proposal, the move does have its critics.

While some worry the proposals risk being watered down, others fear that the costs of increasing employment protections may be passed to consumers.

For Henry Chango Lopez, the general secretary at the Independent Workers Union of Great Britain – which represents workers in precarious employment – the law needs to be properly enforced to be truly effective.

“Legislation that expands accessibility to working rights is always welcome, but this needs to be properly enforced, and if the boundaries of what legally constitutes worker status are disputed then the burden of proof must fall on the employer rather than the workforce,” Chango Lopez told Yahoo News UK.

Some have also flagged that the redefinition may in fact disadvantage some workers.

“Some workers and employers who currently benefit from the flexibility of the current ‘worker’ status may not want the more fixed status the employer and employee relationship offers,” Debbie Coyne, Partner and Head of the Employment Law team at Slater Heelis told Yahoo News.

“It is likely there will be increased costs for employers as they will be paying more in benefits to individuals, which in turn may be passed on to customers and consumers. Some businesses may not be able to absorb these additional costs which may result in potential redundancies.”