UK to Close 'Bogus Self-Employment' Loopholes, Extending Rights to 100,000

Up to 100,000 UK workers could gain entitlement to the national minimum wage and holiday pay under a government crackdown on what it calls "bogus" self-employment, business secretary Jonathan Reynolds announced at the Labour Party Conference in Liverpool.

Reynolds said the government will first consult on what he described as loopholes in UK employment law that allow firms to classify workers as self-employed when they are clearly not.

"Loopholes in our employment laws are being used to define workers as self-employed when they are clearly not, denying them basic employment rights, undercutting businesses who are doing the right thing, and leaving people with the sense that playing by the rules doesn't pay," he told delegates.

"We will close the loopholes, we will stop the most egregious examples of bogus self-employment, and we will level the playing field for business. And in doing so, up to 100,000 more workers will get access to the national minimum wage and holiday pay."

What the consultation is expected to cover

For individuals currently engaged on self-employed contracts, the stakes go beyond headline entitlements. Employment lawyer Rebecca Seeley Harriss said the consultation is expected to consider a legal presumption of worker status when an individual brings a tribunal claim, a reduced weight given to "personal service" in status tests — particularly where contractual substitution clauses do not reflect working reality — and additional protections for the genuinely self-employed.

Each element could mark a substantial shift. "A presumption of worker status would alter the practical burden in tribunal proceedings. Changing the role of personal service could be more fundamental still," Seeley Harriss said. She cautioned, though, that the government will need to provide more clarity on exactly what it means by "bogus self-employment".

The practical effect for workers would be significant. A presumption of worker status would mean individuals no longer carry the initial burden of proving their employment status in tribunal; instead, the engager would need to rebut it. Reducing reliance on substitution clauses would close a widely used drafting technique that has often decided status cases on paper rather than practice.

Sector concern: protecting genuine contractors

Contracting industry representatives warned the reforms must not sweep legitimate independent professionals into employment status by default. Dave Chaplin, CEO of ContractorCalculator, urged the government to distinguish between disguised employment and genuine commercial choice.

"Any attempt to crack down on bogus self-employment must not come at the expense of the genuinely self-employed. There is a fundamental difference between disguising an employment relationship and two parties freely choosing to engage on a self-employed basis," he said.

"The government should be targeting genuine abuse, not creating more legislative sludge that makes it harder for freelancers and small businesses to operate. Where an individual genuinely wants to be their own boss and the business genuinely wants to engage them as an independent contractor, the law should respect that choice rather than override it."

What it means for the market

For employers, the reform could raise labour costs in sectors where self-employment classification has suppressed them, while levelling competition against firms that already pay full entitlements. For the roughly 100,000 workers the government has identified, the change would translate directly into minimum wage floors and paid leave. For genuinely self-employed contractors, the risk is a compliance burden that Chaplin argues could make contracting harder to operate.

Much will depend on the detail of the consultation — in particular how the government defines "bogus" self-employment and how tribunals apply any presumption of worker status once the reforms reach the statute book.