As the Employment Rights Bill progresses through the House of Lords, industry groups are voicing growing concern over its potential implications for UK businesses, particularly those reliant on flexible labour models.
The Association of Professional Staffing Companies (APSCo) and audit and consulting firm RSM UK have warned that the current form of the Bill could increase costs and complexity for employers, with unintended consequences for workers and recruitment practices.
The House of Lords held its first committee debate on the Bill this week, with discussions focusing on the proposed introduction of guaranteed hours contracts and penalties for short-notice shift cancellations. Under the current proposal, employers would be required to offer workers on zero or low hours contracts a guaranteed number of hours, based on a 12-week reference period. The measure is intended to address one-sided flexibility and provide workers with greater security and predictability.
However, APSCo and RSM UK argue that the proposed framework places excessive administrative and financial burdens on employers, particularly in sectors such as retail, leisure and hospitality, where part time, casual and seasonal labour is essential. Both organisations are calling for changes before the Bill receives Royal Assent, warning that rushed implementation without clarity could damage hiring confidence and strain already stretched tribunal systems.
Calls for clarity and flexibility
APSCo has submitted a briefing to Lords ministers, seeking amendments to ensure the final legislation is both proportionate and workable. Among its recommendations is a delay in implementing the guaranteed hours offer until a public consultation defines the scope more narrowly. It is also asking for high-skilled, higher-paid contractors to be excluded from the requirement, based on earnings above an agreed multiple of the National Minimum Wage.
In addition, APSCo has proposed extending the Initial Period of Employment before day one rights apply to between 9 and 12 months, and maintaining the current three-day waiting period for Statutory Sick Pay. The organisation is also calling for reform of employment tribunals, which it says lack the capacity to handle an increased caseload under the new rules.
Tania Bowers, Global Public Policy Director at APSCo, said, “The Employment Rights Bill is being fast-tracked through Parliament, but the scrutiny it has faced has to be acknowledged and addressed before it reaches Royal Assent. Appropriate worker protections and economic growth need to go hand-in-hand.”
She warned that too much of the Bill’s implementation is being left to secondary legislation, creating uncertainty for businesses and making it difficult to assess the true impact of the measures.
“The current one-size-fits-all approach leans too far in the direction of protecting the relatively small segment of the labour market identified by the Government as on exploitative contracts and risks unintended negative consequences on the broader labour market,” she added.
Retail and hospitality sectors at risk of reduced hiring
RSM UK echoed similar concerns, particularly in relation to the hospitality and retail sectors, which it said were already struggling with rising wage costs and national insurance contributions. Charlie Barnes, head of employment legal services at RSM UK, said the Bill in its current form could reduce hiring and limit opportunities for individuals who depend on the flexibility of casual work.
“While the government has taken a sensible step in not banning flexible contracts completely, there are still grave concerns from the hospitality and retail sectors already struggling with national insurance and wage cost increases,” Barnes said.
He added, “If the bill is implemented in its current form, the general consensus is that this will lead to a reduction in hiring as employers look to offset increased administration costs and take a more cautious approach on recruitment. This could even lead to fewer opportunities for those who value or rely on the flexible nature of casual work.”
Barnes noted that a recent British Retail Consortium survey found 70 percent of HR directors at major retailers believed the Employment Rights Bill would negatively impact their business, with guaranteed hours being the leading concern. Amendments proposed in the Lords include redefining what constitutes a ‘low hours contract’ and extending the reference period used to calculate guaranteed hours, in an effort to address industry concerns.
Barnes concluded, “Businesses fully support the need to protect vulnerable workers from exploitation, but are looking for a more flexible approach to the rules and more certainty on how they will apply in practice. The legislation as drafted leaves much open to interpretation, which is no good for anyone, and will instead add to an already unsustainable workload for employment tribunals.”
