PolicyLens

Green - Labour market

Create a single worker status

Replace employee, worker and dependent-contractor boundaries with one core employment status.

Last updated: May 2026.

Read the policy-specific methodology note

Status boundary

The central case treats 1.5 million dependent self-employed, gig, agency and casual workers as newly covered by core rights.

  • Employment-law and tax status may diverge.
  • Tribunal capacity is already strained.
  • Tax recategorisation is highly uncertain.

Core trade-offs

Workers gain clearer rights and protections. Employers lose cheaper flexible contracting. Fiscal effects depend on whether tax status changes alongside employment-law status.

  • Insecure workers gain rights.
  • Employers lose flexibility.
  • Tax effect could go either way.

Illustrative fiscal impact

-GBP 2.0bn to +GBP 5.0bn. Central estimate: +GBP 0.6bn.

  • Positive numbers mean public-finance pressure; negative numbers mean Exchequer savings.
  • Gross costs are separated from tax, NI and benefit offsets.
  • Private business costs are not automatically fiscal costs.
  • Behavioural responses widen the range materially.
  • This is not an official costing.

Economic impact by 2027-28

  • Jobs: Likely negative for marginal contracting and casual hours in exposed sectors.
  • Wages: Some workers gain holiday, sick-pay and dismissal protections rather than hourly pay.
  • Prices: Platforms and contractors may pass higher costs to customers.
  • GDP / productivity: Likely negative short run where flexibility is reduced; security gains are distributional.

Assessment

A single status could reduce exploitation and legal gaming, but it would also raise expected labour costs for some flexible work. The central estimate excludes full tax-status alignment because that is a separate, very large design choice.

Confidence: Low. The affected group and tax-status response require HMRC and platform microdata.

Main risks

  • Contracting loss: Some marginal gigs, agency shifts and casual contracts may disappear.
  • Legal uncertainty: A new status creates transition disputes before clarity improves.
  • Tax ambiguity: Fiscal savings depend on whether tax status is aligned too.

Safeguards

  • Specify tax-status treatment.
  • Phase with sector guidance.
  • Fund tribunals and enforcement first.

Academic evidence

Autor, Kerr and Kugler, Economic Journal, 2007

Does Employment Protection Reduce Productivity?

Employment-protection changes can reduce productivity where firms face higher firing and adjustment costs.

Supports caution on policies that raise dismissal, scheduling or adjustment costs.

Does Employment Protection Reduce Productivity? (2007)

UK government evidence

Department for Business, Energy and Industrial Strategy, 2017

Good work: the Taylor review of modern working practices

The Taylor Review highlighted problems from unclear employment status and insecure work.

Sets the policy problem behind single worker status.

Good work: the Taylor review of modern working practices (2017)

HMRC, 2026

Employment status

HMRC guidance distinguishes employment status for tax and employment-law purposes.

Shows why status reform may affect receipts.

Employment status (2026)

Department for Business and Trade, 2026

Employment Rights Act 2025 - Economic Analysis

The ERA economic analysis estimates around GBP 1bn annual direct business cost before social-care bargaining.

Provides official baseline costs and affected groups.

Employment Rights Act 2025 - Economic Analysis (2026)

Department for Business and Trade, 2026

Employment Rights Act 2025 impact assessments

The IA collection separates guaranteed hours, unfair dismissal, fire and rehire, union and equality measures.

Prevents treating broad rights packages as one undifferentiated pledge.

Employment Rights Act 2025 impact assessments (2026)

Sources

Other Green policies

PolicyLens estimates are illustrative and not official costings.