The UK’s new Employment Rights Bill Roadmap has landed. However, a Labour Party promise – Single Worker Status – is conspicuously absent from immediate plans. What does this mean for the future of independent work and the contentious IR35 rules?
The UK government’s recently unveiled Employment Rights Bill (ERB) Roadmap, published on 1 July 2025, has set out a phased approach to modernising workplace protections.
However, a notable omission from the immediate legislative agenda is the much-discussed “Single Worker Status” (SWS), a key proposal from the Labour Party aimed at simplifying the UK’s complex employment status framework.
While the Bill prioritises a raft of new rights for millions, its cautious stance on SWS raises questions for the nation’s burgeoning independent workforce and the future of IR35.
Single Worker Status delayed: when will it start?
The ERB Roadmap, which outlines reforms rolling out until 2027, confirms that the comprehensive restructuring of employment status, which would see a shift from the current three-tier system (employee, worker, self-employed) to a simpler two-tier model (genuinely self-employed and all other workers), is not part of the current Bill. Instead, further consultation on SWS is anticipated “during 2025 at the earliest”.
Despite its absence from the immediate legislative text, Single Worker Status remains a stated priority for the Labour government. Outlined in their ‘Plan to make work pay’ (May 2024), the SWS proposal aims to enhance pay and working conditions across the labour market by granting universal rights – including minimum wage, holiday pay, statutory sick pay, and protection against unfair dismissal – to all those classified as ‘workers’.
With no mention of Single Worker Status in the Employment Rights Bill Roadmap, it appears that status has been kicked into the long grass and with so much to implement in the ERB, it seems unlikely that it will ever reach the top of this Labour government’s agenda.
–Dave Chaplin, CEO of IR35 tax compliance firm IR35 Shield
The ERB itself, described as a “core part of the Plan for Change,” is designed to “boost rights for half of all UK workers”, showing the Labour Party’s intent to strengthen worker protections, even if the most fundamental redefinition of status is being approached with caution.
The phased implementation of the ERB, balancing “meaningful worker protections with the practical realities of running a successful business”, suggests that SWS is considered a complex reform requiring extensive stakeholder engagement before it can be legislated.
IR35 rules to continue under current employment framework
However, for freelancers, contractors and the solo self-employed who value their independence, the delay of SWS means the enduring presence of the Off-Payroll Working Rules, commonly known as IR35.
This legislation, designed to counter “disguised employment” where individuals operate as self-employed for tax advantages but in some cases function like employees (yet without benefits), remains fully in force. HMRC continues to assess IR35 status based on the “actual working relationship” and a series of “Tests of Employment,” such as control, personal service, and mutual obligation.
How will Single Worker Status impact freelancers?
For example, if an engagement is deemed “inside IR35,” the contractor is taxed at a rate comparable to an employee, often necessitating engagement through an umbrella company. The Association of Independent Professionals and the Self-Employed (IPSE) has historically campaigned against IR35, advocating for its replacement, hoping a clear “genuinely self-employed” definition under SWS could render it obsolete.
The question then arises: will the forthcoming regulation of the umbrella sector justify IR35 rather than abolishing it?
“With no mention of Single Worker Status in the Employment Rights Bill Roadmap, it appears that status has been kicked into the long grass and with so much to implement in the ERB, it seems unlikely that it will ever reach the top of this Labour government’s agenda,” said Dave Chaplin, CEO of IR35 tax compliance firm IR35 Shield.
Umbrella company regulation: New rules coming in 2027
The ERB Roadmap confirms that formal “regulation of umbrella companies” will start in 2027, bringing them under the oversight of the Employment Agency Standards Inspectorate. Crucially, from April 2026, a significant shift in tax liability will occur: if umbrella companies fail to remit tax, the responsibility could transfer to recruitment agencies or even the end client. This measure is intended to compel greater due diligence and elevate compliance standards across the labour supply chain.
Why the umbrella sector welcomes regulation
Qdos, which provides insurance for umbrella companies under its sub-brand, UmbrellaSure, hailed the news as a “historic moment” for the industry, which has been “plagued” by tax avoidance schemes posing as compliant umbrella companies in recent years.
Sam Cox, Commercial Director at UmbrellaSure, said the umbrella industry “engages hundreds of thousands of workers and sees billions of pounds passing through it – a sector that has been plagued by rogue operators of tax avoidance schemes in recent years, exacerbated by the introduction of the off-payroll rules.”
Cox continued, “The industry has been crying out for regulation. Done in the right way, it could be pivotal in flushing out non-compliant operators in the sector – tax avoidance schemes that not only pose a huge risk to any worker or business engaging them, but also leave a huge hole in the UK’s tax receipts every year.”
While the Freelancer & Contractor Services Association (FCSA) has welcomed the prospect of regulation, it has voiced “urgent concerns” regarding what they perceive as the government’s “fundamental lack of understanding of the temporary labour market”.
FCSA argues that merely shifting tax responsibilities to recruiters will not effectively curb fraud and emphasises the critical need for clear legal definitions of both “umbrella company” and “inherently temporary” work.
IR35: What independent professionals must consider
The current trajectory suggests that the regulation of umbrella companies, by making the sector more transparent and accountable, is likely to reinforce the existing IR35 framework.
Instead of abolishing IR35, these reforms aim to ensure that where contractors are deemed “inside IR35” and requested by recruitment agencies to get paid via umbrella companies, the associated tax and employment obligations are met compliantly. This effectively streamlines and legitimises the mechanism for IR35-caught engagements, thereby justifying its continued existence rather than paving the way for its removal.
For independent professionals who prefer to remain outside the umbrella company model, the current worker status model means that the onus is on them to ensure their recruitment agency and umbrella company are tax-compliant. Contractors working through an agency and umbrella company will have to check their pay slip every week or month depending how oftn they get paid to ensure the right amount of tax is being paid to HMRC. The most effective way to do this is to call HMRC directly to fact-check what is on your pay slip, the amount deposited into your bank account and the amoun HMRC says it has been paid by the umbrella company. There have been umbrella companies in the past which have reportedly skimmed a contractor’s pay, added hidden fees and also say they are paying HMRC the correct tax but have not.
Umbrella workers do have employee benefitssuch as sick and holiday pay, because they are effectively an employee of the umbrella. However, the genuinely self-employed who do not work through an umbrella will still lack statutory benefits such as sick pay and holiday pay, as these are typically derived from an employer-employee relationship.
The onus remains on these individuals to manage their financial security and ensure their working arrangements unequivocally align with genuine self-employment to avoid misclassification risks and navigate the complexities of IR35.
Future of UK employment law: Phased reforms through 2027
Arguably, the ERB Roadmap signals a period of significant, albeit staggered, reform in UK employment law. While the ambition for a simplified employment status system remains, it is a long-term goal.
In the meantime, the focus of the Labour Party is on enhancing worker rights within the existing framework and tightening compliance in the contingent labour market, a move that appears to solidify, rather than dismantle, the operational realities shaped by IR35.
