Employment status, rights and regulation
Explore the CIPD’s point of view on employment status, rights and regulation, including recommendations for employers and actions for the UK Government
Explore the CIPD’s point of view on employment status, rights and regulation, including recommendations for employers and actions for the UK Government
Current regulation in the UK creates a labour market that, generally speaking, strikes the balance between flexibility for employers, and job opportunities and security for individuals. However, employers need to ensure that any working arrangement works for both employer and individual.
Evidence suggests that employment regulation in the UK creates a labour market that, overall, strikes the balance between providing flexibility for employers, and job opportunities and security for individuals.
For example, analysis by the OECD finds that employment regulation in the UK is towards the bottom of the league in terms of the protections it provides to individual workers. This relatively light touch labour market framework is associated with a high level of permanent employment by OECD standards. There is also little evidence that employment in the UK is becoming structurally more insecure, given that the proportion of non-permanent employment has remained at about 20% for the last two decades.
However, the UK’s labour market enforcement system is inadequate both through the individual route via the tribunal system and through the various enforcement bodies. This means many workers continue to be treated unfairly and face discrimination as well as difficulties in accessing justice and receiving compensation if their employment rights are breached.
There is also a lack of clarity over the issue of employment status and rights, which particularly affects workers in the gig economy. This is evidenced by evolving case law involving companies like Uber and Deliveroo over whether people are categorised as workers or self-employed.
The priority for policy-makers interested in improving the effectiveness of employment regulation and strengthening workers’ rights should be reforming and improving the labour market enforcement system. There is little point in introducing new employment protections for workers if existing employment rights are not being enforced effectively.
Improving enforcement would require a significant increase in the number of inspectors and more proactive inspections of workplaces particularly in high-risk sectors. There would also need to be a much stronger focus on supporting employers – particularly small firms – to comply with employment law, with Acas given more resources and an enhanced role.
Alongside better enforcement, employment status should be simplified. The best way to do this would be to abolish ‘worker’ status, which CIPD research shows most employers don’t use and often don’t even understand or recognise. This would help clarify and strengthen employment status and rights for some vulnerable groups in the gig economy and across the wider UK labour force. It would also align status for both tax and employment purposes at the same time.
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