Government ministers recently confirmed a wide-ranging consultation on simplifying employment status will be published by the end of 2025. The consultation will form part of the Labour Party's manifesto and plan to “Make Work Pay”
The goal? To address long-standing confusion and gaps in worker protections by clarifying the status framework.
What Will the Employment Status Review Cover?
Four key areas are expected to be included in the consultation:
- Simplifying the three current status categories: Employee, worker, and self-employed, and determining whether to retain or reform the “worker” category.
- A review of contractual substitution clauses, which do not represent the reality of the workers' situation and employment status.
- Strengthening protections for the self-employed, potentially introducing new rights in areas like health & safety.
- Improving the classification of freelancers, self-employed, and sole traders to enhance clarity and official data accuracy.
What Could the Outcomes of the Employment Status Review Mean?
For Contractors & Freelancers:
A clearer legal definition of “self-employed” and more robust status protections could reduce ambiguity, especially around IR35, for those operating via PSCs or umbrellas. Reworking the “dependent contractor” model may redefine how control, client dependence, and business-based factors affect status decisions.
For Recruitment Agencies & Umbrella Providers:
These organisations should proactively prepare for possible changes by reviewing current contracts, especially substitution clauses, and engaging in the consultation process to help shape fair outcomes.
For End-Clients:
Organisations that rely on long-term contractors or temps may need to reassess their workforce models and hiring strategies. Any realignment of status definitions could shift responsibilities related to IR35 and employment rights.
What's Next?
The consultation will be published by the end of 2025, followed by stakeholder responses and legislative proposals. Any resulting reforms are unlikely to take effect until 2027 at the earliest. The period between now and then is a critical window of participation for all parties in the temporary labour supply chain.
By staying informed and engaged, contractors, agencies, umbrella companies, and end-clients can influence reform and prepare for what may be the most significant overhaul of employment status in decades.
Partnering with Champion Contractors can help you plan and prepare for any employment status reforms, eliminating the risk of any non-compliance.
For more information, contact the Champion team on 0161 703 2549 or email info@championcontractors.co.uk.