As the government publishes amendments to the Employment Rights Bill it is clear that we are entering a new era for workforce regulation. These changes, including the extension of the zero-hours contract ban to agency workers tighter ‘fire and rehire’ restrictions, and protections for umbrella company employees, will reshape how businesses operate across multiple sectors. While these amendments seek to provide workers with greater stability, they also introduce new complexities that employers must navigate.
One of the most significant amendments is the inclusion of agency workers in the ban on zero-hours contracts. The government aims to prevent agency work from becoming a loophole that undermines worker security. This means that agency workers, like their directly employed counterparts, must be offered contracts that reflect their regular working hours. They will also be entitled to reasonable notice of shifts and compensation if those shifts are cancelled at the last minute.
This shift is a game-changer for businesses, especially in retail, healthcare, education, and hospitality, where managing staffing has always been a challenge often relying on agency workers to step in at short notice, giving them much-needed flexibility. But now, they must find a way to balance that flexibility with the need for more contractual certainty. The first step is taking a closer look at our workforce patterns – how often are agency workers used and what their shifts typically look like. From there, there is a need to rethink contracts and agreements that give workers more stability, like guaranteed minimum hours, while still keeping some level of flexibility. At the same time, improving workforce planning is crucial. Investing in predictive scheduling and demand forecasting will help to minimise last-minute changes, which could now come with additional costs.
While these changes bring greater security for workers, they could also make it harder for employers to secure temporary staff at short notice. Sectors such as education and healthcare, where demand fluctuates unpredictably, will feel the greatest strain. Employers must now rethink their approach to workforce agility and implement greater structure and oversight over indirect hiring practices. Over the years Matrix has been helping employers across public and private sectors to create greater cost and process control and visibility ensuring that our customers benefit from the agility that a temporary workforce provides whilst managing the legislative and compliance risks that are inherent in managing an indirect workforce. Considering these challenges, organisations should now explore working with a partner to understand alternative workforce models, such as multi-skilled teams or part-time contracts, to maintain flexibility while ensuring compliance and efficiency.
The government is also cracking down on ‘fire and rehire’ tactics, making it much riskier for businesses to rely on this as a cost-cutting strategy. By doubling the maximum protective award for collective redundancies from 90 to 180 days, employment tribunals now have more power to impose significant penalties when employers don’t meet their consultation obligations. The message is loud and clear – mass contract terminations followed by rehiring on worse terms are no longer an easy option.
For business leaders and HR depts, this means rethinking how they manage workforce changes. Forward planning is crucial to avoid rushed redundancy decisions, ensuring employers are not left in a position where drastic measures feel like the only choice. Strengthening the consultation processes is crucial, not just to stay compliant but to avoid costly legal consequences. More importantly, focus should be on retention strategies that prioritise employee engagement and job security rather than reacting to challenges by restructuring roles.
The new amendments also bring a major shift for workers employed by umbrella companies, giving them the same rights and protections as those directly employed by recruitment agencies. The government has made it clear that enforcement action will be taken against any umbrella companies that fail to comply. This is a big deal because umbrella companies play a crucial role in handling payroll and employment for temporary workers. For businesses using these structures, it’s now essential to take a closer look at their supply chains to ensure everything aligns with the new regulations. Working closely with recruitment partners is key to making sure employment terms and worker rights are clear from the start. And just as importantly, businesses must ensure complete transparency around pay and benefits for all temporary staff.
The amendments to the Employment Rights Bill reinforce the government’s commitment to greater worker protections. Employers must now shift their approach from relying on ultra-flexible labour models to fostering a more stable and predictable workforce. This doesn’t mean flexibility disappears – it means employers need to be more strategic in how they achieve it.
By acting now, employers can stay ahead of more regulatory changes, maintain operational agility and build stronger, more sustainable employment models.
