The government has launched a consultation on how reforms to zero-hours contracts should apply to agency workers, as the Employment Rights Bill had its second reading in the House of Commons yesterday (21 October).
A major reform in the Bill includes measures to tackle “one-sided flexibility” in zero-hours contracts.
Agency workers and zero hours
Impact of Employment Rights Bill published as consultations launched
Two new rights are included. One is a right to guaranteed hours that reflect the number of hours regularly worked.
The other gives workers the right to reasonable notice of shifts whereby employers must pay for any shifts cancelled or curtailed at short notice.
The consultation, which closes on 2 December 2024, seeks views specifically on the application of these measures to agency workers, with further consultation at a later date on the implementation of these two measures more generally.
The government is planning to repeal the Workers (Predictable Terms and Conditions) Act 2023, which would have brought in a “right to request” a predictable work pattern, which could be turned down by the employer.
It says it believes all workers – including agency workers – should have the right, after 12 weeks, to guaranteed hours which reflect the hours they regularly work, but acknowledges that in many sectors it is difficult to anticipate when agency workers will be needed.
Guaranteed hours
One key aspect of the consultation is seeking views on whether it is the employer or the agency which should offer the guaranteed hours.
If agencies offer the guaranteed hours, they could be liable for guaranteed hours over which they have “little or no ultimate control”. Larger agencies with many end-hirers may be able to cope, but this could be a significant risk to smaller agencies.
If employers offer the guaranteed hours, they would be in a better position to forecast future work.
However, by requiring the end-hirer to offer the guaranteed hours, the hirer might effectively be required to become the agency worker’s employer, with financial consequences of “temp-to-perm” transfer fees.
The consultation document states: “It is not clear whether it would be practical for the hirer to offer guaranteed hours which did not involve directly employing the agency worker. Views are welcome on whether this would be viable and worth pursuing.”
A subsequent question in the consultation asks whether end-hirers should be required to pay a transfer fee or use an extended hire period if they are required to offer guaranteed hours to an agency worker.
Reasonable notice of shifts
The Employment Rights Bill also intends to give workers greater certainty about when and for how long they will be working. It will also prevent employers from only scheduling shifts at the last minute to avoid paying for cancelled or curtailed shifts.
If employers do not provide reasonable notice of shifts (the definition of reasonable will be the subject of the later consultation), workers will be able to take a case to the employment tribunal to receive compensation for losses they have suffered.
The government wants to ensure agency workers are also entitled to reasonable notice, but acknowledges that this is complicated by the “tripartite relationship” between the agency worker, agency, and end-hirer.
It proposes that both the end-hirer and agency should be responsible for providing reasonable notice and that, if necessary, a tribunal should judge whether the agency, end-hirer or both should be liable for any compensation for losses suffered by the agency worker.
But the government is proposing that, before a dispute reaches a tribunal, agencies should be responsible for cancellation payments to agency workers. The consultation asks respondents whether they agree, and whether the agency should be able to recoup this cost from the end-hirer if it is responsible.
Agency workers and zero hours: reaction
Recruitment and Employment Confederation (REC) chief executive Neil Carberry said it was particularly pleased about the consultation describing agency work as a “vital route to work for lots of workers”.
He said: “We will use the consultation process on the provisions around zero-hours contracts to ensure the government understands the difference between exploitative ZHCs and well-regulated agency work.
“Agency workers are among the best-protected people in our labour market, with protection from two different sets of regulations and a specific Employment Agencies Act, with enforcement by a statutory regulator. And by working with an agency, workers always have someone looking out for them on a client site.”
However, Crawford Temple, CEO of Professional Passport, an independent assessor of payment intermediary compliance, said the consultation “appears to fall short” in addressing the true intricacies of modern workforce solutions.
“The oversimplified approach to zero-hour contracts risks tarring all flexible working arrangements with the same brush, potentially damaging legitimate business models that serve both workers and the economy well.
“Of particular concern is the consultation’s inadequate treatment of umbrella companies and joint employment scenarios. Despite recognising these structures early on, the questions posed demonstrate a worrying regression to binary agency-versus-end-client considerations. This suggests a gap between policy development and market reality that needs to be bridged.”
He added: “Any meaningful reform must be grounded in a thorough understanding of these established practices and relationships. The current consultation’s approach and the questions posed in the consultation document risk creating legislation that could be both impractical to implement and potentially harmful to the very workers it aims to protect.”
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