Worker’s rights battle heats up again – but could the self-employed get burnt?

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The Labour party are pitching themselves as the “pro-worker, pro-business” choice at the next election. Should they enter Downing Street, this mantra will face its biggest test almost immediately, with a worker’s rights shake up planned for Labour’s first 100 days in power.

Despite neither receiving or upholding employment rights of any kind, the self-employed have a lot of skin in the game, with the changes potentially making self-employment a better (or worse) defined way of working. But only time will tell whether this is ultimately a good or bad thing.

Keeping the show on the road

Labour has proudly exhibited its efforts to engage with businesses and trade bodies in the build-up to an election. This has a real purpose, one that goes beyond winning the staged ‘hi-vis and hard hat’ stakes.

Labour wants and needs the backing of business to make a success of its plans to clamp down on practices like fire and rehire, zero hour contracts and bogus self-employment. They insist that businesses are generally supportive of its ideas to improve the lot of Britain’s workers, acknowledging that “we’re obviously not going to agree on everything.”

But the President of the CBI recently told the Financial Times that the group are pushing Labour to soften its approach to avoid “unintended consequences”. This prompted the head of the TUC to tell businesses to “get on board” with the proposals rather than “parking” workers on contracts that give employers “almost total control over workers’ hours and earning power.”

With a showdown seemingly brewing over the ‘new deal for working people’, a Labour government may struggle to hold its “pro-worker, pro-business” appearance together. But if it’s unintended consequences we’re worried about, we should think carefully about how well a tug-of-war between workers and employers serves the needs of millions in the economy who fall into neither category.

Are you “genuinely” self-employed?

What is self-employment? It seems like an obvious question at first. We all have our own, slightly different ideas of what working for yourself looks like. But who ultimately gets to decide who is, or isn’t, “genuinely” self-employed? It could be a future Labour government.

Their proposal to establish a single legal status of ‘Worker’ for “all but the genuinely self-employed” is one of the biggest components of their new deal. They not only hope that this will put workers on a stronger footing, but also clamp down on ‘bogus self-employment’ – a term typically associated with the gig economy, where disputes over self-employed status have been taken all the way to the Supreme Court.

But disputes over employment rights are just one side of the coin. The other is all about tax, where we are more likely to hear the term ‘disguised employment’. This is the crux of the IR35 rules, which have had an overwhelmingly negative impact on self-employed freelancers and contractors, many of whom have been effectively forced to shelve their businesses, become employees or stop working altogether as a result.

A redrawing of the boundaries between those who are and aren’t self-employed will inevitably have a knock on effect on rules like IR35. Of course it’s important to help people out of bogus self-employment, but this shouldn’t come at the expense of forcing yet more people out of willing self-employment.

Where next for zero-hours workers?

Employment status could be placed under further strain by the new deal’s proposal to abolish zero-hours contracts.

We have all unfortunately heard stories of unscrupulous employers using zero-hours contracts to exploit workers. Banning these contracts would almost certainly see many of these workers moved onto contracts that guarantee their working hours and subsequently their income.

But IPSE’s concern is that many others could be funnelled into bogus self-employment as employers seek to get around the rules, only adding to the problems that Labour are seeking to fix with a single Worker status.

Let’s be ‘pro-freelance’ too

With its New Deal for Working People, it’s clear that the Labour party has a view on what ‘good work’ looks like, and it’s on a mission to get as many people into it as possible. But for IPSE, one of the most important questions for a future Labour government is the extent it believes that good work and ‘good self-employment’ are intertwined. This question, among many others are ones which IPSE has asked in its engagement with the Labour party, including in our submission to its manifesto-shaping National Policy Forum.

Some people choose to work for themselves because they know they’ll be happier and better off. Others choose it out of necessity, accepting the uncertainty that comes with running a business alone in exchange for an income in a turbulent jobs market. What both of these groups share is that they made a deliberate, informed choice to work for themselves. Once doing so, we believe they are best served by respecting and protecting that choice.

Ultimately, a government can’t be pro-worker and pro-business if it isn’t also pro self-employment, abandoning approaches to policymaking that repeatedly challenge and undermine those are who genuinely operating as freelancer or contractors.


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Meet the author

Fred Hicks

Senior Policy and Communications Adviser