Employment Rights Bill: How should the zero hours contracts measures apply to agency workers?

The Government has issued a consultation seeking views on how the new measures in the Employment Rights Bill relating to zero hours and low hours workers should apply to agency workers.

Employment Rights Bill

Under the Employment Rights Bill, employers will have to offer workers on zero hours and low hours contracts a contract with guaranteed hours, reflecting the number of hours the workers regularly worked during a reference period (expected to be 12 weeks). Much of the detail will be set out in further Regulations, including the length of the reference period and how to define a ‘low hours contract’ and ‘regular hours’.

Workers will also have a right to reasonable notice of shifts (including details of how many hours are to be worked and from what time on what day), shift changes and cancellations, and to payment for cancelled, moved or curtailed shifts. Again, ‘reasonable’ is yet to be defined.

A worker will be able to bring an employment tribunal claim and be awarded compensation where their employer has not complied with these obligations.

You can read more about the Bill’s provisions here.

Consultation

Although agency workers do not qualify for these rights under the Bill’s provisions, the Government believes that they would benefit agency workers. It also recognises that if agency workers do not have these rights, employers would turn to agency workers in order to get round the new rights.

The Government acknowledges that the measures need to apply to agency workers in a different way because of the tripartite relationship between end hirers, employment agencies and agency workers. Agency workers have a contract with the agency but work under the direction and control of the hirer. Agency worker relationships can be further complicated if an they are paid through an umbrella company which often employs them and pays their wages through PAYE.

Guaranteed hours

The Government is considering whether the responsibility for offering guaranteed hours should fall on the employment agency or the end hirer.

If responsibility were to fall on the employment agency, it notes that:

• Some agency workers work for multiple end hirers and are likely to be entitled to more guaranteed hours if the agency is required to offer them guaranteed hours reflecting the hours they have worked for multiple end hirers
• However, agencies would have to guarantee hours over which they have little or no ultimate control, since the demand for hours is largely dictated by the end hirer. This would therefore be an additional business risk for employment agencies.

If responsibility were to fall on the end hirer, it notes that:

• This follows the logic that the hirer is in a better position to forecast and manage the flow of future work
• An agency worker who works for multiple end hirers could become entitled to guaranteed hours from any hirer for whom they have worked regularly over a 12 week period (or more than one)
• However, requiring the end hirer to offer guaranteed hours could change the nature of the relationship with the agency worker, effectively requiring the end hirer to become the agency worker’s employer.

The Government goes on to seek views on whether hirers should be required to pay a transfer (‘temp-to-perm’) fee to the agency (or have the option to pay for an extended period of hire), if the agency worker accepts a guaranteed hours contract with the end hirer. Legislation currently allows for this if the hirer directly employs an agency worker within 8 weeks of an assignment ending (or 14 weeks of it starting, if later), if certain conditions are met.

Reasonable notice of shifts and payments for cancelled or curtailed shifts

In terms of the right to reasonable notice of shifts, the Government proposes that both the hirer and the agency should be responsible for providing reasonable notice and that an employment tribunal should be able to find either the agency or the hirer or both liable to compensate an agency worker for losses suffered as a result of unreasonable notice (but only to the extent that they are responsible for the unreasonable notice).

Where shifts are cancelled or curtailed at short notice, the Government considers that it should be the agency that is responsible for paying the cancellation payments to the agency worker alongside their other payments. It recognises that it is likely to be appropriate for employment agencies to recoup these costs from the hirer where the hirer is responsible for the cancellation or curtailment. It seeks views on whether it should legislate to ensure agencies can recoup their costs or whether this should be left to the contractual arrangements between the hirer and the agency.

Responses to the consultation are required by 2 December 2024.

Contact us

For further information on how these changes could affect your business, please contact a member of our Employment team or submit an enquiry form, below.