UK firms will have to prove their workers are self-employed
Key Points
- Employers would have to prove a worker is genuinely self-employed
- Presumption would cover holiday pay, pensions and trade union protections
- Repeat misclassification could bring penalties of up to £20,000 per claim
- Only 50 such penalties were issued from over 55,000 tribunal wins
Businesses could have to prove their workers are genuinely self-employed under plans to reverse the burden of proof.
The Department for Business, Innovation, Science and Trade set out the proposal in a consultation on employment status reform published on 14 October.
At the moment, individuals who believe their employer wrongly labelled them self-employed must make the case and supply the evidence at an employment tribunal.
The government wants tribunals to presume an individual is a worker unless the engager shows otherwise.
The presumption would cover all rights that come with limb (b) worker status, including holiday pay, workplace pensions and protection from detriment over trade union membership.
Section 28(1) of the National Minimum Wage Act 1998 already contains a similar presumption for minimum wage claims.
The presumption would only settle whether someone qualifies for the rights, not whether the employer actually paid them correctly.
The government does not plan to change the existing position for employee status.
Tribunals would keep their power to strike out claims with no reasonable prospect of success, which the department said would discourage speculative cases.
The department said it does not expect the change to substantially affect the genuinely self-employed, as most of those relationships are clear and never reach a tribunal.
Penalties for repeat offenders
The government also plans to make repeated failures to recognise employment status an aggravating factor in tribunal cases.
Tribunals could order penalties of £100 to £20,000 per claim when an employer contests status despite earlier rulings covering colleagues in broadly similar roles.
Tribunals have held the power to issue such penalties since 2014 but rarely use it.
The Resolution Foundation found only 50 penalties across more than 55,000 successful tribunal claims between 2014 and 2019.
The Fair Work Agency could also use its civil proceedings power to bring status cases to tribunal in place of individual workers.
The department said this would help when inspectors suspect bogus self-employment but lack the evidence to issue a Notice of Underpayment.
