How Will the Updates to the Employment Rights Bill Affect Recruitment Businesses?

On 27th November 2024 an amendment paper to the Employment Rights Bill which is currently going through Parliament was published.  

The amendments do not reflect any significant changes to the shape of the Bill. However, there were notable proposals relevant to recruitment businesses including the extension of the deadline for workers to bring most Employment Tribunal (ET) claims from 3 to 6 months. The following changes were made to the provisions already contained in the Bill: 

Guaranteed Hours Contracts 

• Clarification that where a worker is engaged on multiple assignments, the last assignment/contract a worker worked on (during the 12-week relevant period, offer period and response period) is what will be considered in the assessment of whether a termination of an assignment has validly occurred so that the worker is no longer entitled to the offer of a guaranteed hours contract. 

• A requirement for a worker to be given notice where the right to guaranteed hours does not apply or the offer of a guaranteed hours contract is validly withdrawn during the response period. Workers will be entitled to bring claims for failure to provide this notice. 

• A duty to inform workers who 'it is reasonable to consider' might qualify for a guaranteed hours contract offer, of their rights during the initial information period (the two-week period after the Bill comes into force if they are already on assignment, or the two-week period after the start of their first assignment if they are not on an assignment after the Bill comes into force) and ensure that they continue to have access to information about this right. 

• The introduction of worker protections against detriment because a worker reasonably believes that they are entitled to a guaranteed hours contract. 

• An amendment giving the Employment Tribunal discretion as to the amount of compensation to be paid where the detriment a worker has been subjected to is the termination of an assignment. Assignments are referred to as 'an arrangement that is not a worker’s contract' in the amendment document. 

Reasonable notice of a shift 

• An amendment requiring notice of a shift to specify the end time of the shift. The Bill previously only required notice to contain details of when a shift would start and the hours to be worked during the shift. 

Reasonable notice of the cancellation or change in a shift

• Notice should include information about changes to when the shift is to start or end and a reduction in the number of hours to be worked during the shift because of a break in the shift or any other change to the shift. This amendment has been made to account for the possibility of the hours in the shift being cut whilst the worker is in the middle of the shift. 

• A change in the compensation for failure to give notice from 'a specified amount' to an 'amount that the Employment Tribunal considers is just and equitable' providing the Employment Tribunal with discretion on this. 

Notice of a shift being cut short, cancelled or moved 

• Specifies that short notice means 'a period of time to be specified in regulations' before the earlier of when a shift would have started if it had not been moved/or moved and cut short and when the shift is now due to actually start. 

Unfair Dismissal 

• Clarification of the initial probationary period during which a light touch dismissal can be carried out. Initial probationary period is defined as 'not less than 3 months but no more than 9 months'. 

• A dismissal will be automatically unfair if done for the purposes of avoiding giving a guaranteed hours contract when an employer believes the worker is entitled to one.  

• An amendment removing provisions specifying the time a dismissal related to a worker's right to a guaranteed hours contract should occur. The Bill originally stated that a dismissal should be during the 12-week reference period or during the guaranteed hour contract offer period. 

• The Secretary of State can specify (likely in regulations) the maximum compensatory award a worker dismissed during the initial period of employment would be entitled to. Usually, this amount is based on lost earnings from date of dismissal to the date judgment is provided by an Employment Tribunal. Presumably, this is to make provisions for situations involving workers on zero-hour contracts where this loss is unclear.

The amendment paper also introduced entirely new provisions into the Bill relating to the following: 

Substitution clauses 

• A ban on substitution clauses in employee, worker or 'dependent contractor' contracts which is likely to apply to contracts for the supply and engagement of PSCs or sole trader contractors. This provision bans the inclusion of clauses allowing workers/contractors to send a replacement to carry out their work which is a key distinction between those whose employment status is that of either a worker or an employee and self-employed contractor. Workers and employees are required to provide personal service whilst self-employed contractors are currently not, and are permitted to send a substitute. A substitution clause in and of itself is not enough to prove that a contractor is genuinely self-employed, but it is a significant part of that assessment. Much will depend on the definition of 'dependent contractor' because some members believe this brings an assignment outside of IR35.  

Non- Disclosure Agreements (NDAs) 

• A provision making NDAs in settlement agreements void to the extent that they require workers not to disclose incidents of harassment (including sexual harassment). 

Statutory Sick Pay (SSP) in Northern Ireland  

• An extension of the provisions in the Bill seeking to remove the 3 waiting day and Lower Earnings Limit conditions of entitlement to SSP to Northern Ireland. 

The Bill will now continue to make its way through both Houses of Parliament, which means there could be further changes to the Bill as it progresses. There is also the need for further consultation on many of the provisions before they can take effect, therefore it will be some time before any of the proposals, if approved, come into force. The REC's draft response to the consultation on the zero-hour contract aspects of the bill can be found here.