The Recruitment and Employment Confederation (REC) has raised concerns about the proposed Employment Rights Bill, warning that the legislation may harm the UK’s jobs market if key changes are not made.
The Bill, currently under scrutiny in Parliament, aims to introduce new measures including protections for workers on zero-hours contracts, reforms to statutory sick pay, and stronger safeguards against fire-and-rehire practices.
The REC’s warning follows criticism from several organisations, including the Regulatory Policy Committee, which deemed the government’s impact assessment of the Bill “not fit for purpose.” The Employment Lawyers Association and the London Chamber of Commerce and Industry have also expressed concerns about the potential operational and financial burden the Bill may place on businesses.
Shazia Ejaz, REC’s Director of Campaigns and Research, highlighted the risks posed by the legislation: “Some of these proposed changes could put the benefits of a flexible labour market at risk for both businesses and workers. Recruiters are keen to work with the government, but this Bill requires significant revisions to ensure it supports workers and grows the economy.”
Zero-Hours Contracts: A Focus of Debate
The Bill includes measures to address one-sided flexibility in zero-hours contracts. These include guaranteed hours reflecting actual work patterns, reasonable notice of shifts, and compensation for last-minute cancellations.
While the REC acknowledges the need for greater protections for directly employed workers, it opposes applying these rules to agency workers. Shazia Ejaz argued that agency workers are already well-protected under existing laws, such as the Agency Workers Regulations 2010, and typically choose flexible work arrangements.
“Guaranteeing hours after 12 weeks or providing reasonable notice isn’t practical for agencies, which don’t control shift schedules,” Ejaz stated. “Exempting agency workers from these rules is a straightforward way to prevent unnecessary disruption to the temporary labour market.”
The REC has offered to collaborate with the government on alternatives to address concerns about exploitation while preserving the flexibility and opportunities the agency worker market provides.
Statutory Sick Pay Reforms: Challenges for Small Businesses
The Bill also proposes changes to Statutory Sick Pay (SSP), including revising the percentage replacement rate for low-income earners. The REC has voiced concerns about the financial strain these changes could impose, particularly on small and medium-sized enterprises (SMEs).
Ejaz noted that agencies are likely to bear the brunt of increased SSP costs rather than end hirers. She added: “Expanding SSP risks creating a disproportionate burden on SMEs, which make up a significant portion of the market. Sixty percent of new SSP costs would fall on small businesses already grappling with rising employment costs, including National Insurance hikes and minimum wage increases.”
The REC has called for a balanced approach that supports workers while ensuring business sustainability. It suggested reintroducing the government rebate for SMEs to offset SSP costs as a potential solution.
Fire-and-Rehire Practices: Calls for Refinement
The Bill seeks to strengthen protections against fire-and-rehire practices, where employees are dismissed and rehired under new terms. The REC supports reforms in principle but raised concerns about the potential rigidity of the proposed legislation.
“Fire-and-rehire practices should be a last resort, but dismissal and re-engagement must remain an option in extreme scenarios,” Ejaz explained. “The government should focus on enhancing the existing Code of Practice, which was developed with input from businesses to provide practical guidance. New legislation risks creating unintended barriers to necessary restructuring.”
The REC has called on the government to work more closely with businesses to ensure the Employment Rights Bill strikes the right balance between worker protections and operational flexibility. As discussions continue in Parliament, industry leaders emphasise the importance of crafting legislation that supports the evolving needs of both employers and employees in a competitive and dynamic labour market.
