The Employment Rights Bill on Temporary Staffing

The Employment Rights Bill marks the beginning of a lengthy legislative process. Although the bill has been set in motion, immediate changes are not expected, with most provisions likely to take effect by Autumn 2026.

For the bill to become law, it must go through multiple stages of debate in Parliament, including the House of Commons and the House of Lords, where amendments and consultations may refine its terms. Only once the bill receives Royal Assent will its provisions become enforceable.

Recognising the need for adjustment, the government has committed to providing organisations with time to update contracts, train staff, and adapt policies—particularly concerning new provisions like unfair dismissal. Additionally, a supplementary document, Next Steps to Make Work Pay, outlines broader changes not included in the bill itself, such as potential National Minimum Wage reforms. This includes instructions to the Low Pay Commission to gradually narrow wage gaps for younger employees.

While the bill includes “day-one rights” for all employees, future regulations are expected to set distinct guidelines for initial probation periods, allowing employers to assess new hires’ suitability with clarity and fairness.

The Labour Government’s Employment Rights Bill: What It Means for the Temporary Staffing Sector

On 10 October 2024, the Labour government introduced the Employment Rights Bill, hailed as the biggest overhaul of employment law since 1997 when the then Labour government introduced the National Minimum Wage. As anticipated, these reforms will significantly impact both employers and employees, especially in sectors reliant on temporary staffing. Below is our analysis of the key changes based on the published Bill.

Day-One Employment Rights

The Employment Rights Bill will introduce the right to claim unfair dismissal from day one, removing the current two-year threshold. This move represents a major shift in worker protections. Staffing agencies will need to ensure thorough and compliant dismissal processes to avoid potential legal battles. While this introduces operational challenges, it also promotes a more secure and motivated workforce from the outset. For the worker, this reform is a major win, providing immediate job security.

Ban on Exploitative Zero-Hours Contracts

Labour’s pledge to ban “exploitative” zero-hours contracts remains central to the reforms. Workers will now be entitled to a “reasonable” number of shifts and financial compensation if a shift is cancelled last minute. Although this does not mark the total ban some expected, it places new obligations on employers and staffing agencies. Agencies will face higher administrative burdens tracking shift patterns and handling compensations, while employees gain greater stability in work hours.

Flexible Working as the Default

The Bill positions flexible working as the default option for all employees, unless an employer can provide evidence that it is impractical. This will be a game-changer for temporary staffing agencies, especially those supplying commercial, traditionally office-based roles. It will require agencies to rethink shift patterns and availability. Industrial staffing agencies are less likely to be affected. For workers, especially those balancing multiple jobs or personal commitments, this provision will increase job satisfaction and accessibility.

Strengthened Parental Leave and Sick Pay

Day-one rights for paternity, parental, and bereavement leave are a welcome addition for millions of workers. Statutory sick pay will now be available from the first day of sickness, eliminating the current three-day waiting period. For staffing agencies, this means providing these benefits from the very start of a contract, which will increase costs and administration, though it might also enhance workforce retention as workers feel more secure in their roles.

The New Fair Work Agency

The establishment of the Fair Work Agency introduces a single enforcement body tasked with ensuring compliance with the new rights, from sick pay to holiday entitlements. Employers failing to meet these standards could face fines, so agencies will need to step up their compliance efforts to avoid penalties.

In summary, while these changes present significant challenges for businesses in the temporary staffing sector—particularly in terms of compliance and costs—they also offer opportunities. Agencies that adapt to the new framework could benefit from a more engaged, loyal workforce and position themselves as ethical leaders in the industry.

Pros and Cons: How the Employment Rights Bill Impacts Employers and Employees

For Employees: The Gains and Trade-offs

Pros:

Day-One Protections: Workers gain immediate rights to unfair dismissal claims, sick pay, and parental leave, providing much-needed security and a healthier work-life balance.
Stability in Shifts: The reform on zero-hours contracts introduces fairness by guaranteeing reasonable shifts and compensation for last-minute cancellations.
Enhanced Flexibility: Making flexible working the default will benefit workers with family or personal commitments, improving work accessibility.

Cons:

Reduced Flexibility for Some: Workers who prefer the absolute flexibility of zero-hours contracts may feel constrained by the new regulations.
Slower Hiring Processes: With greater protections from day one, employers may become more cautious in their hiring processes, potentially slowing down job opportunities.

For Employers: Navigating the New Landscape