Legislation seeking to create a single worker status, entitling every individual who carries out work for another party to employment rights, is to receive its third reading in the House of Lords this week.
If taken forward, Lord Hendy QC’s Status of Workers Bill will see a simplification of laws governing how workers are categorised, effectively creating two statuses: workers who have employment rights from their first day in their job; and the genuinely self-employed, who have their own accounts and customers.
“At the moment we have a variety of categories, each with a different set of employment rights,” Lord Hendy told Personnel Today.
“The rights that Parliament has decided employees should have, in my view, ought to be available to anybody working for somebody else and not conducting their own business.”
The Labour peer said that simplifying how workers were categorised would help tackle the issue of “bogus” self-employment, as well as preventing organisations from forcing individuals into setting up personal service companies in order to cut costs.
“A genuine personal service company is used as a vehicle by someone who would otherwise be genuinely self-employed – an author perhaps, or a consultant advising on HR matters,” said Lord Hendy. “But some employers have been using this as a device to avoid certain employment rights.”
He said the Taylor Review of Modern Working Practices, which made several recommendations around worker status including updating legislation so it is clearer about what the legal tests are for each status, was a “damp squib” and did not go far enough to address worker exploitation.
“[Matthew Taylor’s] proposals were very modest,” said Lord Hendy. “Essentially, it was a preservation of the status quo but with different titles given to the various categories.”
He added that changes to the IR35 off-payroll working rules in the private sector indicated that the government recognised there was an issue, but this did not address bogus self-employment in terms of employment rights.
If his bill were to become law, all workers would be given access to rights including holiday pay, sick pay and maternity pay. Lord Hendy said this would create a level playing field for organisations who felt they were being undercut by competitors that denied workers their rights in order to save money.
“We would have to have some distinctions about how these rights applied to workers who perhaps work numerous jobs,” said Hendy.
“Rights would have to be graded in some way – for example, someone working for one day a week for six months should not be entitled to full maternity pay – but they ought to be entitled to something on a pro-rated basis.”
Commenting on the recent employment status cases involving companies including Uber and Deliveroo, he said the bill would not prevent disputes between organisations and workers who felt they should receive employment rights, but would diminish the area for such litigation and give workers more clarity around what they’re entitled to.
If the bill passes its third reading this week, it will enter the House of Commons to be debated by MPs.
Although the bill had support from across the House of Lords at its second reading in September, business minister Lord Callanan stated that he was “not convinced that the bill is the right solution to further protect those in insecure work.”
Callanan said that the government “will continue to take steps to protect vulnerable workers where needed”, including through the forthcoming Employment Bill – which was first proposed in 2019.
- Listen to Lord Hendy talk about why the current employment status legislation is broken on this week’s Oven-Ready HR podcast.