Background
The Employment Rights Bill is progressing rapidly, with Royal Assent expected by September 2025. Although reforms affecting agency workers may not take effect until 2027, the scale of the change means employers should start preparing now.
What’s Changing?
In brief, the Bill proposes three key rights for agency, zero-hour, and low-hour workers:
- Guaranteed Hours: At the end of every reference period (likely 12 weeks) the hirer must offer qualifying workers guaranteed hours reflecting the hours worked in the period.
- Notice of Shift Changes: Hirers and agencies must give workers reasonable notice of any changes or cancellations.
- Compensation for Cancellations: Agencies must pay workers compensation if shifts are cancelled or curtailed at short notice.
We are still waiting for further clarity on definitions of “low hour workers”, “reasonable notice” and how compensation will be calculated. These details are expected in secondary legislation following the Autumn 2025 consultations. This article focuses on what we currently know about the obligations to offer guaranteed hours.
Ping-Pong
At present, the Bill is in “ping-pong” between the Lords and Commons, with the Lords recently proposing the following amendments:
- Shifting the duty from employers to offer guaranteed hours, to workers having the right to request them.
- Defining “short notice” for changes to shifts as 48 hours.
- Defining low-hour workers as those contracted for 8 or fewer hours per week.
- Tightening the pay conditions within guaranteed hours so that the pay offered must (as a minimum) match the highest rate of pay received by the worker during the reference period (unless a lower rate of pay is objectively justified).
These amendments are not government-backed and are unlikely to be accepted by the Commons. Regardless of the final form, the duty to offer guaranteed hours will pose fundamental hurdles to employers who rely on agency workers.
Business Impact
Agency workers are vital in sectors with fluctuating demand, such as hospitality, construction, media and healthcare. The guaranteed hours duty is expected to operate as follows:
- It applies to workers on low or zero hours contracts.
- It applies at the end of every reference period (likely to be 12 weeks), repeating until the point that the worker no longer qualifies as “low hours”.
- To be triggered, the relevant hours must meet certain criteria (to be defined in regulations) likely to relate to the number and regularity of those hours.
- If triggered, the guaranteed hours offer must reflect the average hours worked in the previous period.
- The offer could be in the form of a new contract or a variation, but the choice impacts whether employers would be able to change other terms.
The guaranteed hours duty could result in end hirers becoming direct employers, affecting staffing costs, potentially triggering compensation clauses in agency contracts, and opening them up to financial and legal liability if they do not adapt.
Employers cannot be complacent on this issue if they want to manage the impact of the changes. By auditing their reliance on agency workers, identifying seasonal peaks and monitoring their use of repeat workers, employers can start to paint a picture of their staffing structure. Based on their review, employers may want to proactively widen their talent pool to try to spread work between different workers and avoid triggering their guaranteed hours obligations.
However, for many employers simply spreading the workload will not be a viable solution. In such cases, employers will need to start considering alternatives which may fundamentally change the way they engage their staff. For example, considering the use of independent contractors, redesigning shift patterns, better predicting demand or considering more fixed term contracts.
Any solution needs to be tailored to your business model – there is no one size fits all.
What Should You Be Doing?
Audit: Assess your reliance on agency and casual workers early to identify your risk points.
Monitor: Implement IT infrastructure to effectively monitor casual workers’ hours.
Training: Brief hiring managers on the obligations and risks of non-compliance.
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Disclaimer
This information is intended for general informational purposes only and does not constitute legal advice. We recommend seeking professional advice before taking any action on the information provided. If you would like to discuss your specific circumstances, please feel free to contact us on 0800 2800 421.
