How will the Employment Rights Bill affect the recruitment and umbrella sector?
We’ve known that one of the biggest shake-ups of employment legislation has been coming for some time. The Bill was introduced by the Labour Government as one of their election pledges and whilst it will not come into effect until 2026 at the earliest, it’s important that the recruitment sector is prepared.
The legislation is still being drafted but we have a good idea of what’s coming.
The Fair Work Agency (FWA) – the Bill will create a new Government Agency that will do exactly what it says on the tin. It will be a centralised agency that employers and employees can go to for advice and guidance on matters such as Statutory Rights, National Minimum Wage. The agency will also be given inspection powers to ensure businesses are complying with employment legislation.
Day one Rights – apart from in certain circumstances, most employees are not currently permitted to make a claim for unfair dismissal within their first two years of employment. The Bill will enable workers to make a claim from the first day of their employment which will provide new protections for over 9 million workers.
Zero Hours Contracts – generally perceived to be exploitative, these kinds of contracts will be banned by the Bill. There’s still some uncertainty whether agency workers will be given a contractual entitlement to a minimum number of hours but other workers will be. Zero Hours contracts can be useful in certain sectors where they provide flexibility for workers and employers so it will be interesting to see the detail of the legislation – will it be a sledgehammer to crack a nut?
Flexible working – the Bill will provide additional protections to employers who may have felt pressured in the past to accept unreasonable flexible working requests, and at the same time it will strengthen workers’ existing right to make such requests.
The umbrella sector is currently unregulated and the Government has already consulted on how best to stamp out non compliance. In their recently published response to the consultation, it has been confirmed that umbrella companies will be brought into the scope of the Employment Agencies Act 1973 and we expect that this will also be under the jurisdiction of the FWA. This will all hang off the “Definition of an Umbrella Company” that will form part of the upcoming legislation
Clearly these changes will have far reaching consequences for the recruitment sector, and combined with the changes coming along the line in April 2026 around umbrella regulation, agencies will face a bigger administrative burden, as will umbrella companies.
Kanopi Contract Services has many years of experience as an employer of people under our umbrella service and we are experts in our field. We already advise many large recruitment agencies on employment in the temporary work space. We partner with Chartergates and are FCSA Veripaye certified so you can rest assured that we are fully compliant with all of the existing and upcoming legislation.
For more information or to find out how we can help, give us a call on 01524 952777 or Click here
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