UK Trends and Developments Contributed by: James Ross and Helen Farr, Taylor Wessing LLP
to navigate greater ambiguity and take advice if they are worried about getting the assessment of employment status wrong. The government has pledged to clamp down on “bogus self-employ - ment”, to regulate umbrella companies that have to date operated under the radar and thirdly to redefine employment status. Taken together, these three strands will erode the previous dis - tinction even more, so that there may be fewer advantages to relying on more ”flexible” models, or fewer models finding it a lucrative market. The position is further complicated by the planned Employment Rights Bill, which will take effect in 2026. One example of how the Employment Rights Bill will erode the distinc - tion between employees and workers is that gig workers will become entitled to “guaranteed hours”, which reflect the hours they usually work, after a qualifying period (likely to be 12 weeks). The details are yet to be finalised but it is clear that there will be obligations on employ - ment agencies and end-hirers in this regard. So, the formerly ”nimble” option will itself become more onerous, both for the end-hirer and any employment agency. An additional development with the Employment Rights Bill is that the right to claim ordinary unfair dismissal will become a day-one right (subject to a probationary period) as opposed to a right that applies from two years (the current situa - tion). This will result in many employers prefer - ring not to employ people. As explained below, this will also be the case due to the higher level of national insurance that now prevails. These factors will combine to put more pressure on the organisations who wish to genuinely use work - ers, or the self-employed, to get the assessment of employment status right.
An Employment Appeal Tribunal (EAT) case in 2025, Ter Berg v Malde and another, highlighted how the test for whether someone is a work- er cannot simply be derived from the test of whether someone is an employee. While there is an overlap, the EAT gave guidance that the expectations are different for a worker and so the element of personal service, rather than, for example, control, is likely to feature most heavily in the assessment. The government has committed to reviewing employment status but this is a longer-term project. Notably, the Employment Rights Bill itself does not contain provisions that will bring about a revised definition of employment sta - tus (effectively the three-way distinction we see created between employees, workers and the self-employed by virtue of Section 230 of the Employment Rights Act 1996). Responding to a government committee report in June 2025, in the context of the Employment Rights Bill and manifesto promises, the government indicated that a review of employment status is complex and will happen over a longer timeframe than the Employment Rights Bill implementation (which is likely to be enacted in October 2026). Increase in Employer National Insurance In addition, the government announced an increase in the rate of employer national insur - ance (ie, social security) contributions from 13.8% to 15%, and a lowering of the threshold at which it becomes payable from GBP9,100 to GBP5,000 per year. This is charged on remu - neration payable to employees (but not to independent contractors), and so will result in a material increase in the cost of employing individuals, which will disproportionately apply to lower-paid individuals. HM Revenue & Cus - toms (HMRC), the UK tax authority, has litigated employment status cases aggressively in recent
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