What Labour plans for the UK’s self-employed: 7 policy moves to watch

When I spoke with chancellor John Healey on the fringes of Labour’s 2026 conference two weeks ago, our conversation about the UK’s self-employed workers reinforced my policy expectation of this Andy Burnham-led Labour government: that both Number 10 — and Number 11 potentially as soon as October 28th’s Autumn Budget 2026 — will lean into the workers’ rights agenda rather than a tax agenda.

Workers’ rights being the agenda upon which changes to UK contracting will be introduced under Labour isn’t all that surprising, perhaps, writes Labour Business vice-chair Philip Ross, a co-founder of PCG (now IPSE), and the chair of union Community’s self-employed committee.

Andy Burnham’s record on the self-employed

When Mayor of Greater Manchester, Mr Burnham stood with self-employed workers during covid when they were being denied support. Mr Burnham, now prime minister, spoke to ContractorUK at the time about the unfair treatment of limited company directors who were left with scant covid income support. HMRC could easily identify self-employed workers for tax, but struggled to do so when those workers needed covid income support. The self-employed were being let down then, and many are still being let down in tax year 2026/27.

The Labour Party appears to agree with me that it’s vital that workers are protected and empowered regardless of whether they’re employed, self-employed, or operate somewhere between those two categories.

Seven Labour policy moves set to affect contractors

By my calculations, Mr Burnham’s government will make four policy moves set to affect the rights of workers, including contractors:

1. The right to be paid on time
2. The right to a written contract
3. Protection from discrimination as part of a right to trade union representation
4. A rebuttable presumption of worker status (‘presumptive determination’).

Mr Burnham’s government may also make three tax moves that could change UK contracting, in relation to IR35 and umbrella companies:

5. Employment taxes = employment rights, ending ‘employee for tax purposes only’
6. Umbrella companies = payroll administrators, ending the ‘sham’ employer risk
7. A compliance and regulation clean-up at clients.

What did Jonathan Reynolds tell Labour’s conference about bogus self-employment?

Jonathan Reynolds told Labour’s 2026 conference the government will end bogus self-employment, giving up to 100,000 more workers minimum wage and holiday pay.

Reynolds, the business secretary, joined Mr Healey and me for our brief fringes chat on all things self-employed in Liverpool in late September 2026. Reynolds’ conference speech shows why contractors will see most change through workers’ rights, not tax:

“There is one area which both workers and businesses raise with me repeatedly, and that is bogus self-employment,” Reynolds began.

“Loopholes in our employment laws 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.

“Everyone can see this isn’t right. It is a fundamental question of fairness. And conference, I am proud to announce to you today this Labour Government will put an end to it. 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.”

Presumptive determination, not Single Worker Status, is now the favourite

My reading of Reynolds’ speech is that, despite Labour talking in recent years about Single Worker Status, it now appears more likely that Andy Burnham’s government will pursue a system of “presumptive determination” for self-employed contractors.

What is presumptive determination?

Presumptive determination (a rebuttable presumption of worker status) means employment rights are presumed to apply, and the client must prove a worker is genuinely self-employed.

Under presumptive determination, workers would no longer bear the burden of proving they are employees or workers.

For self-employed contractors, presumptive determination would shift the identity of the party required to produce the evidence from contractor to client. At a tribunal, it would be for the client to demonstrate that contract workers it engaged are genuinely self-employed, rather than for the individual workers to demonstrate that they deserve rights. Presumptive determination has been called a “fairer starting point,” and barring any nasty surprises in the Department for Business and Trade’s forthcoming ‘bogus self-employment’ consultation, I’m inclined to agree.

At Community, where I chair the self-employed committee, presumptive determination is seen as a powerful tool for challenging ‘sham’ employment arrangements. The presumptive determination model would enable decision-makers to look beyond contractual structures and identify the true nature of the working relationship. Principles similar to presumptive determination already exist within IR35 and could be extended into employment rights law.

What effects has IR35 reform had?

Since IR35 was reformed, the off-payroll working reforms have distorted and threatened the flexible and contractor labour market. Organisations are understandably anxious about potential IR35 tax liabilities. In response, many employers have chosen to ban the engagement of self-employed workers operating through their own limited companies (also known as Personal Service Companies — ‘PSCs’).

Risk-averse organisations instead engage workers through umbrella companies. In my view, IR35 reform-induced engagement of workers via umbrella companies has created a system that is often artificial (even if it is, technically, lawful). Workers are treated as the “employees” of umbrella companies while the end-client avoids responsibility for employment rights and protections.

In some cases, genuinely self-employed workers have been dismissed and then required to return under umbrella arrangements, giving the ‘Friday-to-Monday’ scenario (which IR35 was introduced to combat) an entirely new meaning. Rerouting genuinely self-employed workers through PAYE umbrella companies is effectively “fire and rehire” by another name. Fortunately, Labour has pledged to end “fire and rehire” practices.

But Labour must extend its fire-and-rehire pledge to self-employed workers, so umbrella companies become pure payroll administrators, not facilitators of sham employment arrangements.

What might change under Labour for inside IR35 contractors?

Tying employment taxes to employment rights could mean inside IR35 contractors gain agency worker rights or worker rights with the end-client.

Currently, inside IR35 contractors contract directly with organisations but are effectively told they are employees only for tax purposes. No employment rights accompany this ‘inside IR35’ classification under the Off-Payroll Working rules. The contractor is expected to pay the taxes of an employee without receiving the protections of one. We’ve told the Labour Party that isn’t on.

What is the Employment Status Bill expected to cover?

Whether contract workers are channelled through umbrella companies with manufactured employment relationships, or subjected to ‘employee for tax purposes only’ arrangements, this unfairness in UK contracting must be addressed through the forthcoming Employment Status Bill. How Labour tackles both umbrella employment and ‘tax-only’ employee status will test its commitment to fair work.

I’m hopeful that the employment status review (promised before 2026 but yet to emerge) will grasp the nettle. Contractors expecting a single solution will likely be disappointed, however, as the draft contents of the employment status review have been described to ContractorUK (by a civil servant familiar with its contents) as a “melting pot of ideas.”

Can self-employed contractors join a trade union?

Some argue that self-employed workers cannot form part of a trade union because there are no employment rights to defend.

When Labour asked Community whether the self-employed belong in unions, our response was simple: we moved to support the TUC, the federation representing most UK trade unions, in its adoption of Motion C03.

The TUC is backing action on IR35, too

The Trades Union Congress (TUC) is calling in Motion C03 for action on IR35 (which it states “leads to those in self-employment facing unfair taxation without any of the associated employment rights”), and an end to discrimination against self-employed workers within the trade union movement.

Protection for contractors from discrimination matters most in the context of ‘fire and rehire 2.0’ (my shorthand for the practice of re-routing genuinely self-employed PSCs via umbrella companies) and other contractor workplace insecurity, including the need to challenge flawed Status Determination Statements.

TUC Motion C03 commits the TUC to lobby Labour to extend protection from detriments to the genuinely self-employed. Motion C03 further commits the TUC, with Community’s support, to press ministers to act on Labour’s promise to consult on the right to a written contract.

Will contractors get the right to be paid on time?

The right to be paid on time — one of the four workers’ rights policies coming to contracting from Labour — is already incoming thanks to the Commercial Payments Bill.

[Editor’s Note: At the time of writing, the Commercial Payments Bill has completed its ‘Report’ stage in the House of Lords.]

What will the Fair Work Agency check at organisations using contractors?

Labour’s seventh likely policy move is an employer compliance refresh, potentially targeting clear failures that get found as part of the action on IR35 and umbrella companies. So umbrellas are set to become pure payroll administrators; inside IR35 should lead to worker or agency rights applying; and the wider compliance environment will be subjected to a clean-up, potentially with oversight by the Fair Work Agency, the new labour rights watchdog.

What workplace choices do clients have under Labour?

Under Labour, then, clients are facing a future of three choices. Organisations can:

1. Accept the baggage of employment (worker) rights
2. Configure their working practices to be those of genuine self-employment (outside IR35)
3. Offer workers transparent and fair practices that put beyond doubt that their organisation is not one of the bad actors who’d interest the Fair Work Agency.

Why fairness, not just tax, matters to contractors

Workers’ rights, not tax, will drive the Labour policies that affect UK contractors. But we have also presented our views to more than 50 major businesses through the CBI’s Employment and Tax Working Group. The discussions with the CBI, Britain’s largest employers’ organisation, revealed a surprising amount of common ground. Many employers recognise that the current system governing flexible and contingent work creates uncertainty and complexity for businesses as well as workers.

However, it is wrong to suggest that the only policy concern for the self-employed is taxation. Both Labour Business and Community have historically made the case that self-employment policy must be centred on fairness and certainty. That said, tax reforms introduced by previous governments have undermined both fairness and certainty. The cumulative effect of those tax reforms has been to increase insecurity for the UK’s 4.2million self-employed workers. Hopefully, meaningful change to that unenviable operating environment for contractors is no longer than a fortnight away.