The government’s publication of amendments to Employment Rights Bill is a clear indication that a new era in workforce regulation has begun. These changes will change the way businesses in multiple sectors operate. They include the extension of the ban on zero-hour contracts to agency workers, tighter “fire and rehire” restrictions and protections for employees at umbrella companies. These amendments are intended to give workers more stability but they also create new challenges for employers.
The inclusion of agency workers into the zero-hours contract ban is one of the most important amendments. The government wants to stop agency work from being a loophole which undermines worker safety. The government wants to ensure that workers who are employed by agencies, just like those directly employed, receive contracts that reflect the hours they work. The workers will be entitled to reasonable advance notice and compensation in the event that shifts are cancelled last-minute.
This is a major shift for business, particularly in the retail, healthcare, educational, and hospitality sectors, where managing personnel has always been challenging. They rely on temporary workers to fill in when needed, which gives them much-needed flexibilty. Now, businesses must balance this flexibility with the requirement for greater contractual certainty. First, we need to examine our workforce patterns. How often do agency workers work and what are their typical shifts? The next step is to rethink the contracts and agreements so that workers have more stability (like guaranteed minimum hours) while maintaining some flexibility. Moreover, it is important to improve workforce planning. Investing into predictive scheduling and forecasting demand will reduce the number of last-minute changes that could result in additional costs.
These changes may increase the security of workers but could make it more difficult for employers to find temporary staff on short notice. The greatest pressure will be felt in sectors such as healthcare and education, where demand is unpredictable. Employers need to rethink how they approach workforce agility, and put in place greater structure and oversight of indirect hiring practices. Matrix has helped employers in the public and private sector to improve cost control, process visibility and transparency. This allows our customers to benefit from the flexibility that temporary workers provide while managing the risks of legislative and compliance issues that come with managing an indirect workforce. In light of these challenges, organisations need to work with a partner in order to better understand alternative workforce models such as multi-skilled team or part-time contract, which will allow them to remain flexible while maintaining compliance and efficiency.
As part of its crackdown on “fire and hire” tactics, the government has made it more risky for businesses to use this tactic as a way to cut costs. Employment tribunals have increased their power by doubling the maximum protection award for collective dismissals from 90 days to 180. It is clear that mass terminations of contracts followed by rehiring at worse terms will no longer be an option.
This means that HR departments and business leaders need to rethink how they handle changes in the workforce. To avoid redundancy decisions that are rushed, it is important to plan ahead. This will ensure employers do not feel forced into drastic measures. Not only is it important to remain compliant, but also to avoid expensive legal consequences. Focus should be placed on retention strategies which prioritise employee satisfaction and job security, rather than reacting by restructuring roles.
The new amendments bring about a significant shift for the workers who are employed by umbrella firms, as they now have the same rights and benefits as those employed directly by recruitment agencies. The government has stated that umbrella companies who fail to comply will face enforcement action. It’s a big deal, because umbrella companies are crucial in managing payroll and the employment of temporary workers. Businesses that use these structures must now take a closer view at their supply chain to ensure compliance with the new regulations. It is important to work closely with your recruitment partners so that employment terms and rights of workers are clearly defined from the beginning. Businesses must also ensure that all temporary workers are paid and rewarded in a transparent manner.
The Employment Rights Bill amendments reinforce the commitment of the government to better worker protection. Employers will need to shift from ultra-flexible models of labour to more stable and predictable ones. Flexibility is not going away, but employers must be more strategic about how they do it.
Employers can take action now to stay ahead of future regulatory changes, keep their operational agility, and create stronger, more sustainable employment model.
