Guaranteed hours consultation closes with agency workers firmly in scope

The government's consultation on the zero-hours provisions of the Employment Rights Act closed at midnight on 25 August, and the recruitment industry's submissions share a starting point that was not in doubt: agency workers are inside the new rights, and agencies will carry most of the administration.

The consultation, Make Work Pay: ending one-sided flexibility, was published on 2 June and covers the three rights the Act creates for workers on zero-hours and similar contracts. The first is a right to be offered guaranteed hours reflecting the hours actually worked over a reference period. The second is a right to reasonable notice of shifts and of changes to them. The third is a right to compensation where a shift is cancelled, shortened or moved at short notice. The Act extends all three to agency workers, and the consultation asks how.

What is still open

The questions that will shape the regulations are practical. How long is the reference period over which regular hours are measured, and when does a worker qualify. How are seasonal and genuinely short-term workers treated. What counts as reasonable notice. How is compensation for a cancelled shift calculated, and who pays it when the cancellation comes from the end client rather than the agency. The government has said the rights will take effect in 2027, with the timing to be confirmed once the responses have been considered.

The Recruitment and Employment Confederation, APSCo and the CIPD have each welcomed the consultation while warning that regulations drafted for direct employment will not transplant cleanly into a supply chain. The REC's position throughout the passage of the Act was that the end client, which decides whether a shift exists, should carry the obligations that flow from cancelling it, and that an agency cannot guarantee hours it does not control. The Act as passed allows the regulations to allocate responsibility between agency and hirer. The consultation is where that allocation will be decided.

The umbrella question

Umbrella companies are the other party watching closely. A worker employed by an umbrella under an overarching contract and placed through an agency on a series of assignments is, on one reading, a worker on a contract similar to zero hours, with the umbrella as employer. The industry's advisers have asked the government to say clearly whether the guaranteed-hours right attaches to the umbrella, the agency or the client in that chain, because all three could plausibly be the party required to make the offer. The consultation does not yet say.

For the professional contractor

The professional contractor working through a personal service company is not a worker for these purposes and is outside the rights. The professional contractor working through an umbrella may not be. The distinction is the same one that runs through the off-payroll rules, and the same one the Taylor review asked the government to settle in 2017. Nine years later the Employment Rights Act has given the worker category more rights without resolving who is in it.

The government has said it will publish draft regulations after considering the responses. The recruitment industry has asked for a transition period of at least twelve months from publication to commencement. With commencement pencilled for 2027, that request implies regulations by the end of this year.