Skip page header and navigation

Recruitment trade bodies raise concerns over UK Employment Rights Bill

Recruitment trade bodies raise concerns over UK Employment Rights Bill

October 11, 2024

main article

UK recruitment trade bodies, including the Recruitment and Employment Confederation (REC) and the Association of Professional Staffing Companies (APSCo), have welcomed parts of the bill but expressed concerns for other areas of bill.

Ministers announced the Employment Rights Bill on 10 October, introduced within 100 days of the Labour government coming to office.

The Employment Rights Bill is part of the Labour government’s wider Make Work Pay plan.

The bill puts forth 28 individual employment reforms, from ending exploitative zero-hours contracts and fire and rehire practices to establishing day-one rights for paternity, parental, and bereavement leave for millions of workers. The bill states that statutory sick pay will also be strengthened, removing the lower earnings limit for all workers and cutting out the waiting period before sick pay kicks in. 

The planned changes will not take effect for two years following a period of consultation.

Neil Carberry, REC Chief Executive, said in a press release, “There is good news in the timescale for delivery and in the commitment to consultation, as much of the most important detail is yet to be worked out. This should calm business fears for now – but it does not take away from the need to ensure that we strike the pro-business, pro-worker balance that the government wants.”

On the zero-hours contract, Carberry said, “Far too much is made of zero-hour contracts as being imposed on workers when there is more than enough evidence that people want to work in different ways. The measures in the Bill are targeted, and we welcome the rejection of a ban on these contracts. But, even the suggested approach could cause significant challenges if applied without understanding of workers’ varied needs. Carving out space to consult on the specific needs of agency workers is good news – reducing opportunities for people who want flexible work would be a grave mistake.”

Carberry also commented on unfair dismissals, “The nine months’ probation period that follows a job start should allow for an employer to see if things will work out. We would have preferred a longer period – to protect smaller firms. But the real test is the process firms have to follow to dismiss. It is good that it is to be simplified – but will it be simple enough for even the smallest firms to follow?  If it is not, firms may be less likely to take a chance on someone.”

On statutory sick pay and the single worker status, Carberry said, “Day one sick pay is a concern for flexible work, as workers will not need to have been on site for any period of time before calling in sick. For agencies who have to meet that cost, building client understanding that this is part of their fee is necessary. Agencies say they will need government support to educate clients on the need to accept rises in NMW (National Minimum Wage) and areas like sick pay.”

“The decision not to rush the plans to define a single status of worker shows a government that gets how complex and difficult it is to make this work,” Carberry said. “The REC will continue to make the strong case for why this will not work, and that the UK’s dual status system is well-suited to the labour market we have today. Other countries look to us for a model in how to protect gig workers – why would we ditch it?”  

Tania Bowers, Global Public Policy director at the Association of Professional Staffing Companies (APSCo), also commented on the announcement.

“As we expected, the Bill leaves areas yet to be fully fleshed out. Following our conversations with policy decision makers over the past months there are no surprises and we recognise that government has sought to address the concerns of business particularly over the need for a probation period and we welcome the opportunity to consult.  However, the complexities of the modern workforce make it impossible to create rules and regulations with a one-size-fits-all approach.”

Bowers continued, “APSCo will be involved in the consultations in the coming months, but from our initial review of the proposals there are a number of areas we are keen to ensure are addressed. Primarily, the introduction of day one rights has the potential to hinder hiring. Risk-averse employers may look at methods of pushing the risks onto others in the supply chain, such as staffing companies, which places these businesses in a difficult position.”

“We were expecting the right to guaranteed hours and a cancellation fee on zero hours in the Bill, and we are pleased to note that there is going to be consultation as to how agency workers are incorporated into this legislation,” Bowers said. “It is clear that the government has recognised the complexity of this, but the intention remains to fit agency workers into these zero-hours changes. This does create some concern, particularly around who should be responsible for this, employers or recruiters.”

Bowers said, “We support the Bill’s intention to support people into work and drive growth with a “pro-business, pro-worker” approach, but the unique diversity of the UK labour market with the value delivered by professional contracting must be retained and encouraged.  The intention to move to a single status of worker, for example, is a highly complex challenge to address.”

“We are encouraged by the Next Steps document outlining reforms to be implemented in the future following consultations with relevant industry representatives. This suggests that the government is taking an informed and robust approach to what will be a significant overhaul of employment legislation,” Bowers added.

UK law firm Osborne Clarke said that overall, the enhanced rights provided for by the Bill are “likely to be felt most by employers in sectors with larger numbers of low-paid workers – for example, retail, construction, healthcare, logistics, manufacturing, etc. – where rights to predictable hours, the removal of age-related National Minimum Wage (NMW) rates and changes such as ‘day one’ rights, will provide a benefit that is not currently costed and provided for by the employer.”

“In the short term, these changes will result in workforce reorganisations as employers attempt to control these anticipated employment costs and reconcile the wage bill for their businesses before these measures come into force,” Osborne Clarke added.

The law firm added that the introduction of day one unfair dismissal rights, subject to a limited probationary period, will inevitably drive more cautious recruitment practices. 

It added that many would welcome the creation of a new enforcement body, the Fair Work Agency. “This body seems likely to ensure holiday pay, NMW and modern slavery rules are complied with, with holiday pay enforcement being a new area of regulation with new criminal and other sanctions for non-compliance,” the law firm stated.

Seb Maley, CEO of IR35 specialist Qdos, said, “A dark cloud of complexity hangs over employment status. Far too often, the lines are blurred between employees, gig workers and the self-employed, which can create problems for everyone involved.

“Along with ensuring those who need rights receive them, in theory, a simpler framework could help ensure businesses compliantly engage self-employed workers,” Maley continued.

Maley added, “There’s a lot of talk about banning exploitative working practices, but as it stands, nothing on regulating the umbrella industry, addressing IR35 or banning zero-rights employment. These are glaring omissions that will leave many flexible workers feeling largely ignored.”

“Tax avoidance schemes dressed up as umbrella companies continue to lure in unsuspecting flexible workers, leaving them at risk of staggering tax bills. Meanwhile, the rollout of IR35 reform has meant that many contractors are placed inside IR35, where they pay tax as employees but don’t receive any rights in return. It’s totally illogical,” Maley said.

Janine Chidlow, Managing Director at WilsonHCG, said, “While the full details of the Bill and the many planned reforms will emerge in the coming months, what we are certainly keen to see is a continued focus on flexibility, not only in terms of individuals having this as an option for work, but also in the regulation itself. How people are engaged by a business is constantly adapting and evolving. The regulatory environment needs to reflect this in order to set UK workers and employers up for the best long-term success.”

Louise Shaw, managing director at recruitment firm Omni RMS, said, “The impact of these planned reforms will be driven by how they are implemented and the consultation period will be a prime opportunity for the voice of the business and employment communities to be heard to limit potential negative results.”

“For example, the removal of the two-year qualifying period for unfair dismissal is designed to strengthen worker protections, but this could drive employers to rely more on temporary roles or adopt stricter hiring practices.”

Peter Cheese, Chief Executive of CIPD, the professional body for HR and Learning & Development professionals, commented in the UK government’s press release, “The changes being proposed represent the greatest update in employment legislation in decades. We’re pleased to see the ongoing commitment from government to engage with the business community to work through the important details to ensure they have a positive impact for both employers and workers.” 

Paul Nowak, TUC (Trades Union Congress) General Secretary, said in the government’s press release, “Driving up employment standards is good for workers, good for business and good for growth. While there is still detail to be worked through, it is time to write a positive new chapter for working people in this country.”

The government’s ‘Next Steps to Make Work Pay’ plan can be found here.