The Government has launched a consultation on employment status reform to tackle bogus self-employment and stop broad substitution clauses from denying people core employment rights. The changes target limb (b) worker status for rights only, and does not affect the existing laws on tax status (e.g. IR35 / off-payroll).
What is the employment status consultation?
The Department for Business, Innovation, Science and Trade published the consultation on 14 October 2026. Its main target is bogus self-employment among couriers and delivery drivers in the gig economy.
Dave Chaplin, CEO of IR35 Shield, is unimpressed. “This is a consultation about the gig economy dressed up as employment status reform,” he says. “The foreword promises to grasp the nettle, but it quietly parked the single status of worker and left the test for employee status untouched.”
Has Labour kept its single worker status promise?
In its Plan to Make Work Pay, published in May 2024 during the general election campaign, Labour pledged to “move towards a single status of worker”. It promised a simpler two-part framework separating workers from the genuinely self-employed.
The consultation sidelines that commitment. The Government now says it will “consider creating a single status of worker as a longer-term goal”. It even asks whether to rename “limb (b) worker”, which keeps the three-tier system firmly in place.
Labour also promised to consult in detail on that simpler framework. This consultation asks no questions about it, so you get tweaks to the worker test while the reform Labour put before voters stays on the shelf.
Does it change employee status or IR35?
No. The proposals apply to limb (b) worker status for employment rights only. The test for whether you are an employee stays as it is.
Your tax status is unaffected too. “For contractors, the key point is that none of this affects tax status,” says Chaplin. “IR35 is unchanged.”
How would the worker status test change?
Right now, for the Worker test, courts ask whether you must do the work personally. A genuine right to send a substitute usually ends the inquiry, and you count as self-employed.
The Government wants control to carry more weight. Under its main proposal, courts would ask whether you provide personal service or work under significant direction or control.
Other options on the table include:
- Treating a right to send an equally qualified substitute as personal service
- Stopping substitution from being the overriding factor
- Making your ability to set or negotiate pay a key factor
- Renaming “limb (b) worker” to something clearer
What else does the consultation propose?
- Presumption of worker status: engagers must prove you are self-employed
- Repeat misclassification: extra tribunal penalties of up to £20,000 per claim
- Fair Work Agency: state-funded test cases on status
- Written statements: key terms in writing for the self-employed
- Wider protections: blacklisting and health and safety cover for some self-employed
Will these changes make a real difference?
For gig-economy couriers, possibly. Fair Work Agency test cases could end the gamble some businesses take that their workers will never sue.
Several proposals look weaker on closer reading. Personal service drops out of step 2 and reappears at step 3, so expect substitution arguments to run again in a new place. Chaplin warns that some of the intent is sensible “but may take years of litigation to resolve, for example, what ‘significant control’ means.”
The pay-setting factor needs care. Plenty of independent contractors accept market rates through agency supply chains, and accepting a going rate says little about dependency.
Why does the CEST comparison worry contractors?
The consultation proposes a non-binding online tool to help you check your worker status. It says the tool would be similar to HMRC’s Check Employment Status for Tax (CEST).
“Modelling a new tool on CEST should worry everyone,” says Chaplin. “CEST has been widely criticised for years and has caused nearly half a billion pounds worth of tax errors in the public sector; it is hardly a shining example of success.”
What should you do now?
Agencies and end clients who engage self-employed individuals directly have the most at stake.
You can respond online or by email before 11:55 pm on 8 January 2027.