Review of modern working practices

Last updated: 02/07/2025

Umbrella companies: On 30 October 2024, the government published a policy paper titled Tackling tax non-compliance: umbrella company market, outlining its intention to introduce legislation which will change who has responsibility to account for PAYE where an umbrella company is used in a labour supply chain to engage a worker. A technical consultation with draft legislation is expected in Summer 2025. The proposed changes could have wide-ranging consequences for the flexible labour market following the reform of off-payroll working (IR35).
The case law surrounding employment status and worker rights continues to evolve at pace, with several lead case decisions expected to have a significant impact on how employment status is to be determined. Important decisions are currently awaited from the First-tier Tribunal (including Basic Broadcasting, RALC Consulting and PGMOL) and the Court of Appeal (Mantides).
Wide-ranging reforms to employment rights planned by the government include a plan to move to a two-tier system of employment status, comprising of the self-employed and a single worker status.
The Employment Rights Bill, containing the basis for many of the employment law reforms, is currently progressing through its parliamentary stages. The move to a two-tier system of employment status is, however, not included in this legislation and is more likely to be a longer-term aim.
On 1 July 2025, the government published the Employment Rights Bill Implementation Roadmap, setting out a draft timeline for implementation of the different reforms contained in the Employment Rights Bill ranging from immediate reforms once the Bill receives Royal Assent to others which will take until 2027 to take full effect.
Timing: Changes to umbrella company rules are expected to take effect from April 2026. Employment law reforms will be phased in gradually between 2025 and 2027.