Recruitment, contracting and legal leaders have voiced concerns about the proposed inclusion of agency and flexible workers in zero-hours contract reforms proposed in the Employment Rights Bill under amendments unveiled earlier this week.

Further amendments announced earlier this week [4 March 2025] that involve regulating the umbrella industry market and allowing the government to make an employment tribunal claim on behalf of a worker also have drawn comment as the bill makes its way through Parliament.

The inclusion of agency workers in zero-hours contract reforms has been criticised almost universally within the recruitment sector and its suppliers. 

“There are two sides to this coin,” said Seb Maley, CEO of Qdos, which provides insurance for flexible workers. “A one-size-fits-all approach could well backfire, [affecting] the flexibility of the labour market at a time when businesses are relying on the agility of temporary workers to navigate increasing costs of employment – measures, incidentally, introduced by the government.”

Tania Bowers, global public policy director at APSCo, said: “The extension of the zero-hours legislation across the whole temporary workforce is over-regulation, primarily to close off loopholes that could be exploited rather than the actual risk of exploitation in the professional sector.

“Other solutions must be found to the loophole risk to ensure that critical segments of the highly skilled flexible workforce can be excluded to avoid dampening [effects] on flexible labour and growth.”

Bowers went on to say: “This move will put greater pressure on staffing firms to be the guarantor of workers’ hours, which simply isn’t feasible and puts them in a difficult financial position should they be unable to secure the hours agreed.”

Neil Carberry, CEO of the Recruitment & Employment Confederation, warned: “If government is serious about the longer-term interest of workers, growth and competitiveness, it needs to change tack. We are worried that the current approach will drive serious non-compliance and false self-employment at workers’ cost.”

He also said: “Many of our members and their clients will find it difficult to reconcile that these announcements are unequivocally pro-business and pro-workers if the detailed regulations to come don’t consider the costs to business from overly complex bureaucracy and a lack of choice on how to employ agency workers who already have protections.

“The task at hand is to protect a temporary workforce roughly equivalent to the population of Birmingham and not undermine confidence among hirers of permanent staff.”

Charlie Barnes, head of legal services at RSM UK, spoke to the proposed amendment that would give government the power to make an employment tribunal claim on behalf of a workers and to provide legal assistance to parties involved in a claim. Describing the amendment as “a highly irregular development”, Barnes said. “If this will be the remit of the Fair Work Agency (FWA), the government may have to implement the Business and Trade Committee’s recommendation of at least one FWA inspector per 10,000 workers by 2029, equating approximately 3,000 inspectors. With only 600 NMW, EAS and GLAA inspectors currently, this will require some significant investment from government.”

He also said: “There appears to be no limits on what claims this will apply to.”

Moving to the proposed regulation of umbrella companies, Dave Chaplin, CEO of contracting authority ContractorCalculator, said he welcomed the “long overdue” regulation and the measures to “close down the widespread non-compliant schemes”. Chaplin went on to say: “Shifting PAYE responsibility to agencies and end clients is a game changer, ensuring taxes are properly collected before rogue umbrella companies can rip off worker and the exchequer with non-compliant practices.” 

The proposed steps, Chaplin added, will “finally bring accountability” to an industry that has remained “unchecked for too long… these reforms lay the foundation for a fairer labour market”.

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