At a recent House of Commons Business and Trade Committee hearing, Neil Carberry, Chief Executive of the Recruitment and Employment Confederation (REC), warned of ‘undercooked and unworkable’ elements of the Employment Rights Bill.
Carberry warned MPs that certain aspects of the proposed legislation could lead to unintended consequences, such as a rise in false self-employment. Carberry also criticised the Bill for failing to address compliance issues in the umbrella company sector, suggesting that improved enforcement of existing laws should take priority.
The Employment Rights Bill aims to tackle “one-sided flexibility” in zero-hours contracts. Key proposals include guaranteed hours reflecting a worker’s reference period, reasonable notice for shifts, and compensation for cancelled shifts. However, the REC has called for agency workers to be excluded from much of this legislation, arguing that their engagement model is fundamentally different.
Agency Workers and Flexible Employment
Carberry told MPs that agency workers benefit from a two-sided flexibility model, which allows them to choose where and when they work. He added that agency workers already enjoy robust protections under existing laws, including the Agency Workers Regulations and independent oversight. Carberry argued that extending zero-hours contract regulations to agency workers would unfairly impact approximately one million temporary workers in the UK, undermining the flexibility they value.
“When we think about extending powers on Zero Hours Contracts to agency workers, we are talking about one million people who went to work as a temps this morning,” he said. “The articulation from government as to why agency might be covered by these powers is that ‘we want to avoid direct employers using agency as a loophole’. I don’t think one million agency temps should be taken for granted like that.
“I think we need to accept that agency workers are protected by their own Act, two sets of regulations, an independent regulator – which needs some more resource – and defined statements in Key Information Documents (KIDs).”
Carberry added that placing agency workers under the proposed framework could unintentionally encourage false self-employment. He noted recent instances of direct employers using platforms to misclassify workers as self-employed, which he described as the “real enemy” of fair employment practices.
Concerns Over Umbrella Companies
The REC also criticised the Bill for failing to address unethical practices in the umbrella company sector. Carberry called for greater regulation of umbrella companies, similar to the framework governing employment agencies. He said that while some umbrella companies operate ethically, others engage in poor payroll practices that undermine fair employment.
“We would like to see the kind of regulation that the Employment Agencies Act [and] the Conduct Regulations bring to employment businesses (agencies) brought to umbrella companies as well,” Carberry said.
Shift Cancellations and Reasonable Notice
Another point of contention was the proposal to hold agencies solely responsible for providing reasonable notice of shift changes or cancellations. Carberry argued that this approach is unworkable, as many cancellations are driven by client demands or worker absences at short notice.
He proposed that liability for compensation in such cases should lie with the party responsible for the decision, typically the client.
“No one wants a situation where someone’s arranged childcare, paid for the bus, standing in the queue when they get a text [to cancel a shift]. If someone’s there they should be getting paid. Our only point would be is that payment should be made by the people who made that decision,” he said.
Carberry also called for flexibility in defining “reasonable notice” to account for variations across industries.
The REC also defended the use of transfer fees, or “temp-to-perm” fees, which employment businesses charge when a client hires a temporary worker permanently. Carberry argued that abolishing these fees could encourage unscrupulous employers to exploit agency workers by using them as a temporary labour force before transitioning them to permanent roles without cost.
“We are strongly of the view that we keep transfer fees no matter what to avoid unscrupulous employers just wanting to hire a load of workers as temps and move them across to permanent without costs. Or else you end up in a situation where people who would have been hired directly spending six months as temps with a different status which is probably not the labour market we want to build,” he added.
