Potential future reforms: Employment status, whistleblowing and post-termination restrictions
Employment status
The Government has launched a consultation on proposed changes to employment status. We currently have three categories in place:
Employee
Worker
Self-employed
Some rights, such as protection against unfair dismissal, apply to employees but not to those who are workers only. There has long been debate about whether this three-category model suits the modern workplace. The Government’s proposals stop short of introducing only two categories, employed and self-employed. Instead, the consultation proposes:
Changing the definition of worker in respect of personal service
worker status currently requires a contract for personal service. The consultation raises concerns that substitution clauses may exclude some individuals who should be protected. Options for reform include:
the test being whether the individual personally provides services or is under a significant level of direction or control by the employer
Relaxing the assessment of what constitutes “personal service”
Legislate to state that a right to provide a substitute does not outweigh all other factors
use a term other than “worker”
create a presumption of worker status to help individuals bring claims, placing the burden on the employer to show that an individual is not a worker rather than on the individual to establish that they are
expand tribunal powers so that repeated misclassification of employment status is treated as an aggravating factor that may increase compensation. Employers could therefore face greater financial exposure where misclassification affects multiple individuals, rather than simply paying the underlying entitlement when challenged
add enforcement of employment status to the remit of the Fair Work Agency
strengthen protection for the self-employed through proposals to:
extend the meaning of “worker” such as to protect the self-employed in certain ways (eg whistleblowing)
implement a right to a statement of the self-employed terms and conditions in place
The consultation closes in January 2027. Employment status reform is a longer-term objective than many of the Employment Rights Act reforms, so the final changes and implementation timetable remain uncertain.
Whistleblowing reform
On 12 October consultation opened on the current protections for whistleblowers, seeking feedback on the following:
Should protection be expanded beyond employees and workers? For example, to self-employed, job applicants (only NHS applicants are currently protected), volunteers, trustees, non-executive directors
Is statutory guidance needed on when a disclosure is “made in the public interest”? This is currently determined by case law, and the Government is concerned that this creates uncertainty for workers and employers
Is the current list of wrongdoing about which an individual can whistleblow fit for purpose in the modern workplace? For example, does AI create a need for additional categories?
Should the conditions for making disclosures externally be relaxed? The current requirement is that the worker believes the disclosure is substantially true. Should this be relaxed to encourage disclosure of genuinely held suspicions?
A statutory duty to have a whistleblowing policy and procedure in place
Extending the period for making an application for interim relief from 7 to 14 days
This issue is at consultation stage and any reform is therefore not likely to occur soon. It is the case, however, that employers are dealing with more incidents of whistleblowing, more Tribunal claims from individuals asserting that they are whistleblowers and more applications for interim relief.
Post-termination restriction reform
We reported in December 2025 on the Government’s working paper on reform of non-compete clauses.
The paper, on the one hand, expresses concern that post-termination restrictions:
Can act as a brake on entrepreneurial activity
Can restrict job mobility and decrease wages
Can restrict competition by making it harder for smaller businesses to scale up
On the other hand, it notes that restrictions can also provide employers with the confidence to invest in training and skills.
The paper compared approaches internationally, including mandatory payment for non-compete restrictions in some jurisdictions and bans in others.
The paper mentioned potential reforms as:
A statutory limit on the length of non-compete clauses
A statutory limit on the length of non-compete clauses according to company size
A ban on non-compete clauses
A ban on non-compete clauses below a salary threshold
Combining a ban below a salary threshold and a statutory limit of 3 months
On 9 October 2026 the Prime Minister was reported as saying that he would ban non-compete clauses. His actual words at the Innovation Nation Summit do not necessarily go that far:
“I believe some businesses have gone too far in their use of restrictive practices such as non-compete clauses.
A few I know shared by many in this room and across the sector. Non-compete clauses stop workers from joining a rival organisation or indeed setting up one of their own after they have left their role and I think that’s a drag on innovation and prevents the best really being energised and bringing that dynamism to the economy.
So, we are looking at changing this. They are often held back and unpaid during the time they have to sit out on the sidelines, and it does, as I say, stunt innovation and traps workers.
So, I can confirm today we will legislate to make sure that non-compete clauses will no longer be a barrier to hiring for our most promising startups and scaling firms.
Call it, if you like, the Bosman ruling for the innovation sector, but I think it’s much needed and long overdue.”
Further details of the proposed reforms are awaited. A key issue will be how any changes affect existing contractual obligations.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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