In a landmark move set to reshape the UK's employment landscape, the government is introducing new rules that extend protections to agency workers. These changes, encompassing the ban on zero-hours contracts, aim to close existing loopholes and offer greater security to agency staff. This development comes as two-thirds of small businesses express reluctance to hire new employees, citing potential challenges posed by the amendments.
The amendments to the Employment Rights Bill propose significant changes, including a requirement for employers to compensate agency workers with 180 days' worth of pay if they fail to properly consult employees before dismissing and rehiring them on less favourable terms. This doubles the current penalty payment of 90 days' worth of pay. The changes will also extend sick pay to workers earning under £123 a week from the first day of their illness. Previously, workers needed to be ill for three consecutive days to qualify for statutory sick pay.
Paul Novak, general secretary of the Trades Union Congress, highlighted the importance of these reforms.
"Make up a significant proportion of the zero-hours workforce and need protections from bad working practices too" – Paul Novak, general secretary of the Trades Union Congress.
The reforms will impact around one million agency workers in the UK. Under the new rules, these workers must be offered contracts guaranteeing a minimum number of hours each week, calculated based on their average work hours. Agency workers who prefer zero-hour contracts will be eligible for compensation if their shifts are cancelled or changed without adequate notice.
Kate Shoesmith, deputy chief executive of the Recruitment and Employment Confederation (REC), emphasized that agency workers often choose this line of work for its flexibility.
"For the flexibility it provides at a time and stage in their life" – Kate Shoesmith, deputy chief executive of the Recruitment and Employment Confederation (REC).
However, concerns have been raised about the potential adverse effects on businesses. Martin McTague, national chair of the Federation of Small Businesses, warned that these changes could have serious consequences.
"We're not sort of crying wolf; we're saying these will have really damaging effects and if the government wants the economy to grow, they need small businesses on their side" – Martin McTague, national chair of the Federation of Small Businesses.
The amendments also propose reducing the notice period for strike action from 14 days to 10 days. With around 250 additions to the Employment Rights Bill, the government aims to create a balanced approach that safeguards worker rights while supporting business needs.
Paul Novak further commented on the long-term benefits of these changes.
"Creating a modern economy that works for workers and business alike" – Paul Novak, general secretary of the Trades Union Congress.
"Will stop good employers from being undercut by the bad, and will mean more workers benefit from a union voice" – Paul Novak, general secretary of the Trades Union Congress.
Despite these optimistic outlooks, about a third of businesses report they might reduce their workforce due to these legislative changes. The REC continues to advocate for ensuring that new laws do not undermine existing protections for agency workers.
"Ensure any legislative changes do not conflict with existing and hard-won protections for agency workers" – Kate Shoesmith, deputy chief executive of the Recruitment and Employment Confederation (REC).