As introduced to Parliament, the Employment Rights Bill ("the ERB") sets out measures for guaranteed hours and the right to reasonable notice of shifts, as well as compensation if a shift is cancelled, moved, or ended early, for workers who work under zero or low-hours contracts. The UK government expressed an intention that these provisions would apply to agency workers and published a consultation seeking views on how that could be implemented. Application of these rights to agency workers is more complex than for those who are directly employed due to the temporary nature of agency work and the tripartite relationship between the agency worker, the employment agency ("the agency") and the end hirer ("the hirer").
Guaranteed hours contracts
The response to the consultation on the application of zero-hours contracts measures to agency workers confirms that the UK government will proceed and amend the ERB to extend the protections for zero and low-hours workers to agency workers.
The responsibility for offering guaranteed hours to agency workers is to lie with the hirer. This is a practical solution on the basis that the end hirer has control of workflow in the way that the agency would not. In line with the measures already in place in the ERB for zero and low-hours workers, it is intended that hirers will be able to offer agency workers temporary contracts where the work is genuinely of a temporary duration. Agencies and other entities, however, will not be prevented from offering guaranteed hours, where doing so would provide agency workers with the security these guaranteed hours provisions seek to provide. The government does not intend to interfere with the current provisions set out in The Conduct of Employment Agencies and Employment Business Regulations 2003, meaning agencies will continue to be allowed to include transfer fees in contractual agreements with end hirers, including where an agency worker accepts a guaranteed hours offer from an end hirer.
It is important to remember that while guaranteed hours must be offered, agency workers are not required to accept those offers - they can choose to continue with their existing arrangements if they wish to do so.
Reasonable notice of shifts
Responsibility for giving reasonable notice of shifts is to lie with both the agency and the hirer, with employment tribunals to be given the power to apportion liability between the two based on the responsibility of each party should a dispute arise. The form and manner of notification will be set out in regulations. The UK government does acknowledge that, in some cases, short notice may still be reasonable, and, in the response, they confirm their intention to consult and "work in partnership" with businesses, trade unions and other stakeholders to ensure that the requirement to give reasonable notice does not have unintended consequences for agencies or hirers.
Payment for short notice cancellation or alteration of shifts
Responsibility for paying compensation for short notice cancellation, curtailment or movement of shifts will lie with the agency. The UK government considers that by two months after the ERB receives Royal Assent, agencies should be aware that they can expect to be liable for these payments (although the duty to pay will not come into force at that point). From that point on they will be able to enter or modify their arrangements with hirers to enable them to recoup the cost of these payments if they consider it appropriate. Where there is an existing arrangement in place between an agency and a hirer that was entered into before a date two months after the Bill receives Royal Assent and it has not been modified then, by virtue of an amendment being made to the ERB, an agency will be able to recover from a hirer the proportion of any payment they have made to an agency worker that reflects the hirer's responsibility for the cancellation or alteration of the shift.
Other matters arising from the consultation response
The response also clarifies:
- The UK government does not intend to ban zero-hours contracts or agency work.
- The UK government recognises that it would not be appropriate for employers to be required to offer guaranteed hours where work is genuinely temporary in nature (such as seasonal work) and will consult before setting out the detail of what constitutes a temporary need.
- Much of the detail of the provisions in the ERB will be set out in regulations, and the government will consult further on the draft regulations that are needed.
- The UK government intends to continue to engage with the recruitment sector and trade unions on how agency workers' rights can be extended in this way without unintended consequences to hirers and employment agencies.
- The UK government will develop guidance on the new rights before they come into force.
Other amendments
A number of other amendments have been proposed by the UK government that relate to these provisions, and these are set out in the lengthy Amendment Paper that was published on 5 March. This includes a new right allowing employers and independent trade unions to enter into a collective agreement that can contract both workers and agency workers out of the right to guaranteed hours and reasonable notice of shifts and replace them with an alternative. The alternative terms must be incorporated into the worker's contract. As an agency worker's contract is with the agency then it follows that it is the agency that will need to enter into a collective agreement with a trade union. On the face of it, that leads to a situation where the end hirer will not have any control over the terms set out in the collective agreement but will be responsible for making the offers of guaranteed hours contracts.
What's next?
There is still a lot of work to be done. Significant issues including the reference period for calculating average hours (that a guaranteed hours offer must be based on) or how review periods should work, need to be clarified, as does the meaning of "short notice" and "low-hours workers" for the purpose of shift cancellation. Further consultation is to be undertaken on a number of issues, including the secondary legislation that will set out the details of how these new rights and obligations will work in practice. Stakeholders who will be impacted by these changes should make sure their voices are heard by responding to these consultations. It also remains unclear when exactly these provisions are intended to come into force.
