The UK government opened a consultation on 14 October that would change who counts as a worker under employment law. It proposes a presumption of worker status in tribunal and a test that gives control more weight than personal service. Responses close at 11:55 pm on 8 January 2027, and the document states that it is not government policy and is subject to consultation.
What the consultation proposes
The consultation, titled Make Work Pay: employment status reform and protections for the self-employed, covers England, Wales and Scotland. It deals with employment status for employment rights only. Tax status is outside it. The current three tiers of employee, limb (b) worker and self-employed stay in place.
Three sets of proposals sit inside it. The first places less emphasis on personal service when a court decides whether someone is a limb (b) worker, the middle tier that gets rights such as the National Minimum Wage and holiday pay without full employee status. The second creates a presumption of worker status, so an engager has to show that a person is not a worker. The third looks at new protections for the genuinely self-employed, including a written statement of terms, protection from blacklisting for union membership, and health and safety coverage.
Why personal service is the target
Under the current test, a person who has a real right to send a substitute in their place can fail the personal service requirement and be treated as self-employed. The consultation says broad substitution clauses “can be used to push people into self-employment” even where “substantial control is being exercised over how the work is being carried out”. It cites 4.4 million self-employed people in the UK, set against around 30 million employees.
The proposed change adds control to step 2 of the three-step test. A person would fail that step only if they neither provided personal service nor worked under a significant level of direction or control. The document does not propose dropping personal service entirely. It says someone who does no work personally for the engager should not be a worker, so personal service would be examined again at step 3.
One passage on pay deserves attention from anyone who runs contractor programmes. The government says “the ability to set the rate of pay or negotiate pay is a key factor in differentiating between limb (b) workers and the self-employed” and asks whether that should shape the test. Its illustrative example is a courier company that sets pricing, tracks performance and fixes collection times. Under the proposed test, the drivers’ right to substitute would no longer end the case at step 2.
The presumption of worker status
Today the person bringing a claim has to prove they are a limb (b) worker. The consultation proposes reversing that burden for the rights that flow from limb (b) status, with holiday pay, protection from detriment for trade union membership and a workplace pension as named examples. It points to section 28(1) of the National Minimum Wage Act 1998, which already presumes that an individual qualifies for the minimum wage unless the contrary is established.
The scope is narrow in two ways. The presumption would apply only to whether a person is entitled to the rights, and the burden of proving that a right was actually fulfilled would stay where it is. The government also does not propose to change the position on employee status. It adds that repeat misclassification found by a tribunal could carry increased penalties.
The Fair Work Agency appears in the document as an enforcement route. The consultation describes a civil proceedings power that would let the Secretary of State bring a case in place of a worker to clarify status where enforcement officers lack the evidence to issue a Notice of Underpayment. It also floats an online assessment, modelled on the existing Check Employment Status for Tax tool, that would give a non-binding indication of status.
Kate Dearden MP, Minister for the Future of Work, wrote the foreword. She said: “We intend to grasp the nettle and create a system that is both fairer and more resilient.”
What it means for the HR leader
Most of the pressure lands on organisations that engage individuals through platforms, agencies or direct contractor agreements. The consultation notes that right to work check requirements have already been extended to those who engage limb (b) workers or individual sub-contractors, and that the requirement will cover substitutes too. A status decision therefore touches the records HR already keeps, from onboarding checks to pay and pension enrolment. Our earlier coverage of the three employment rights changes due before 2027 and of the whistleblowing consultation shows how many of these reforms now reach the same teams at once.
In our reading, the reversed burden matters most for record keeping. If an engager has to show that a person is genuinely self-employed, the evidence sits in the engagement file: who set the rate, who controlled the schedule, whether substitution was ever used, and what the person was told at the start. HR systems that hold only a contract and an invoice trail will have little to show. The same reading applies to flexible arrangements, where the line manager’s decisions are already shifting, as covered in our piece on flexible working decisions moving down to the line manager.
What to do before 8 January
- List every engagement type in the UK that relies on a substitution clause, and note whether any substitute has been used in practice. The consultation says courts look at the reality of the relationship, so usage data counts.
- Check who sets the pay rate in each of those arrangements. The government names this as a key factor, so a rate fixed by the engager is the first thing to review.
- Record the control factors for each contractor group: scheduling, branding, performance tracking and equipment. These are the facts a tribunal would ask for if the burden moved.
- Decide whether to respond. The consultation lists businesses and business groups among its audiences, and it asks 46 numbered questions, from whether personal service should carry less weight to how the Fair Work Agency should use its civil proceedings powers.
- Watch the timeline. Nothing here is law yet, and the government says it will publish a response after the consultation closes.
Source: GOV.UK, “Make Work Pay: employment status reform and protections for the self-employed”
