Agencies across the UK are getting ready for the Employment Rights Bill, which is set to pass in 2025. The bill brings some of the biggest changes in years for agency workers, contract terms, redundancy, and fire-and-rehire rules. For agencies, these updates may affect contracts, day-to-day operations, and how worker disputes are managed moving forward.

The new protections aim to tighten rules around job security and fair treatment for both employees and agency workers. Agencies need to understand what’s changing and how to keep up with new requirements, especially for zero-hours contracts, consultation on redundancies, and limits on changing terms of employment. This guide will lay out what agencies should expect, why these changes matter, and how to prepare for the shift.

Key Changes in the Employment Rights Bill that Affect Agencies

Agencies face some of their biggest adjustments yet as the Employment Rights Bill rolls out. The government has targeted some of the core areas that have shaped agency operations for years, including fair dismissal, probation, and zero-hours arrangements. Here’s a breakdown of what is changing, how it could affect your agency, and the practical steps you’ll need to take as reforms are phased in.

Day‑one unfair dismissal rights

One of the headline changes is the end of the two-year qualifying period for unfair dismissal claims. Under current law, workers must build up two years of continuous service with the same employer to qualify for unfair dismissal protection. The new rules will let staff, including those placed through agencies, bring unfair dismissal claims from their very first day on the job.

This shakes up risk management for every agency. Workers you place will have new confidence in job security, but agencies must be more careful from day one. Any slip in procedure or unclear documentation at the start is now a possible legal issue, not a matter to worry about years down the line. Onboarding, contracts, and performance records all become critical from the first shift.

Statutory probationary periods

The Bill introduces a formal probation period of up to nine months, with lighter safeguards around dismissal for those on probation. This period gives agencies and end clients a window to end employment with fewer hurdles, but there is still a structure to follow.

Here’s what to know about the statutory probation rules:

• Length: Up to nine months maximum. Shorter periods can be set in contracts.
• Dismissal: During probation, dismissal protections are relaxed, but agencies must still act within published guidelines and ensure reasons for dismissal relate to conduct, capability, or qualifications.
• Consultation: Government will release detailed consultation on what fair process looks like during probation, including the steps and notice periods agencies should follow.

Agencies need to update induction processes, communicate probation terms clearly, and make sure placement documentation matches the new requirements.

Extension of agency‑worker rights

The Bill gives agency workers the legal right to request predictable hours, not just regular employees. This builds on the earlier zero-hours contract reforms, widening the pool of workers who can ask for a more stable schedule.

Agency workers can now:

• Request a “predictable” working pattern if they have worked irregular hours for 12 weeks or more.
• Make two requests per year, with agencies required to consider them seriously.
• Expect a written explanation if a request is rejected.

This shift closes many of the old loopholes for agencies using flexible contracts. You’ll need to create clear policies for handling and recording requests, plus build better communication between your team and placed workers.

Changes to zero‑hours contracts

Zero-hours and “low-hours” contracts are under new scrutiny. The Bill clarifies what counts as “low” (less than 20 hours per week or 60% of the median full-time), and pushes agencies to provide greater security for those on these arrangements.

Key updates for agencies include:

• Predictable hours requests: Workers on low- or zero-hours contracts can request a more stable contract that matches their average hours.
• Treatment: Agencies need to offer contracts reflecting actual hours worked over recent months if asked, and cannot penalise staff who make such requests.
• Fees: A shift to fixed or higher-minimum hours can affect how agencies calculate placement fees and overheads.

You need to review your contract templates and consider how these changes might affect budgets, client agreements, and worker satisfaction.

Implementation timeline

Agencies have time to prepare, but updates will not all arrive at once. Here’s a clear view of the phased timeline so you can stay ahead:

Reform Area	Key Change	Implementation Date
Zero‑hours and predictable hours rights	Request process live	April 2026
Collective redundancy consultation rules	New thresholds for consultation	April 2026
Statutory probation period	Formal nine‑month period begins	October 2026
Day‑one unfair dismissal	Protection active for all workers	April 2027

Some consultation periods may overlap, so keep an eye on government updates and final regulations to fine-tune your policies. Early planning means less stress as these major reforms go live.

Impact on Agency Worker Contracts and Predictable Hours

The Employment Rights Bill means agencies across the UK will need to rethink how they handle contracts for temporary staff, especially when it comes to predictable working hours and fair treatment. Below we cover how the new rights affect agency worker contracts, what “predictable hours” requests involve, how you should calculate work patterns, and practical tips for updating your documentation.

Right to request predictable hours

Photo by Ron Lach

Agency workers with 12 weeks’ service will soon gain the right to ask for more predictable hours. Agencies should prepare for an uptick in requests, as workers on zero or low-hours contracts get a real shot at guaranteed schedules.

• Who qualifies? Anyone with 12 weeks’ continuous work via your agency, including those on irregular or on-call contracts.
• How do workers apply? They can make up to two written requests for predictable hours in any 12-month period. This only applies to those whose schedules are not regular or who are classified as “low-hours.”
• How long to respond? You must reply within one month. Give a written explanation for any refusal and clearly outline the reasoning. Acceptable grounds to refuse are limited and will be listed by government guidance.

Agencies should set up simple request forms and train consultants to handle these requests fairly and transparently.

Calculating the reference period

Determining if a worker falls into the “low-hours” bracket depends on a defined reference period. Agencies must track actual hours worked to get this right.

• Length of the reference period: Expected to be 26 weeks, based on government proposals (final guidance due with rollout).
• Calculation method: Add up the actual hours a worker has completed in the period, ignoring weeks when no work was offered.
• Threshold: If a worker averages less than 20 hours per week, or below 60% of the median full-time hours for your sector, they count as “low-hours” and can request a predictable contract.

Keep records clean and up to date. Investing in clear timesheet software now means far less stress later when requests start rolling in.

Obligations for guaranteed hour offers

When an agency offers a new contract with guaranteed hours in response to a worker’s request, the terms must not be less favourable than what the worker already has.

• Key rule: Pay rate, leave, and other benefits cannot be cut just because hours go up.
• Contract terms: The guarantee must reflect what the worker actually worked on average—not just the minimum advertised or agreed previously.
• No penalising: Agencies cannot downgrade other parts of the deal when responding to a request.

If you’re drafting new contract offers, compare every relevant term side by side before proposing changes.

Effect on recruitment fees

These reforms could ripple into how agencies set recruitment fees, especially for short placements or clients using flexible, on-demand staff.

• More predictable hours may mean longer assignments, potentially shifting fee calculations from hourly to fixed terms.
• Minimum engagement rules might discourage “one-shift” placements, leading to renegotiation with clients who prefer ad hoc bookings.
• Resist the urge to front-load fees to cover extra admin or contract complexity. Instead, explain changes to clients up front and adjust terms clearly.

Review your service-level agreements and fee schedules so both the agency and client know what to expect under the new law.

Best practice for contract updates

With these changes approaching, agencies should not wait until the last minute. It’s time to audit current contracts and processes.

Here are steps to help agencies get ready:

1. Audit your workforce: Find out who is on low or zero-hours patterns to spot at-risk contracts.
2. Review and update templates: Make sure standard contracts allow for predictable hour variations and cover new legal requirements.
3. Set up request tracking: Add a process (manual or software) to record and respond to working pattern requests promptly.
4. Train your team: Run workshops for consultants on handling requests, updating terms, and documenting outcomes.
5. Communicate with clients: Let clients know about new worker rights and possible changes to how placements are arranged and charged.

Taking these steps now will mean fewer surprises and a much smoother transition when these rules go live.

Collective Redundancy Rules and Agency Liability

The new Employment Rights Bill tightens collective redundancy rules with major implications for agencies across the UK. The law will soon require firms to look across all their UK locations when assessing redundancy numbers. Agencies must revisit consultation plans, documentation, and risk management to prepare for stiffer penalties and greater scrutiny.

New collective redundancy threshold

The definition of “collective redundancy” has changed. Instead of only counting redundancies at each individual branch or office, agencies must now look at all redundancies across every UK site.

This means:

• If an agency proposes 20 or more redundancies within 90 days, it must start a collective consultation—even if the 20 redundancies happen across separate client sites.
• The new law is designed to catch situations where agencies might have previously avoided consultation by spreading redundancies out across different locations.

What does this mean for agencies? Even smaller headcount changes at several client businesses or branch offices could add up to trigger a statutory duty to consult, opening up new legal and financial risks.

Consultation duties for agencies

Agencies must follow a set consultation process whenever the redundancy threshold is met. This process is strict and the standard for paperwork is higher than before.

Key steps include:

• Start early: Consultation must begin “in good time.” For 20-99 redundancies, begin at least 30 days before the first dismissal. For 100 or more, start at least 45 days before.
• Consult with elected representatives: If there is no recognised trade union, agencies must allow staff to elect employee reps for the consultation.
• Supply clear written information, including:
  • Reasons for the redundancies
  • Number and job types affected
  • Proposed selection criteria
  • Proposed method of carrying out the dismissals
  • Calculation method for redundancy pay
• Ongoing communication: Agencies must respond to feedback and consider alternatives during the consultation, demonstrating genuine effort to avoid or reduce redundancies.
• Notify the Secretary of State: Agencies must formally notify government authorities with an HR1 form, making sure details are accurate and timelines are clear.

Missing any step in this process can create a real risk of legal claims and penalties.

Photo by RDNE Stock project

Increased penalties for non‑compliance

The stakes have doubled. If agencies fail to meet their consultation duties, tribunals can now award up to 180 days’ pay per affected worker—up from a previous maximum of 90 days.

Why is this so serious for agencies?

• Cash flow risk: Even a small error could mean paying out half a year’s wages to every affected worker.
• More claims, higher costs: The broader threshold increases the odds that agencies will unintentionally cross the line, especially if redundancies are scattered.
• Negligence won’t help: Even unintentional failures can trigger penalties, so robust internal records and compliance are essential.

Agencies should weigh these risks, especially if handling several client contracts at once.

Cross‑site redundancy calculations

Getting the math right is crucial. Agencies must now count redundancies across different clients or sites for the 90-day period, not just at each place separately.

For example:

• If you cut 5 roles each from 4 different hospital placements and 6 from another care-home contract, all within a 90-day window, that’s 26 redundancies across your agency. This crosses the 20-person threshold—even though no single site saw 20 departures.
• Agencies providing staff to multiple sectors or regions need well-kept records and a system to track potential redundancies across the whole UK workforce, not just at individual placements.

A simple table shows how this might work:

Client Site	Number of Redundancies	90-Day Period
London Clinic	5	01.05 - 15.06
Manchester Factory	7	01.05 - 20.06
Birmingham Office	4	10.05 - 15.06
Glasgow Care Home	6	12.05 - 20.06
Total	22

If these happen together, consultation rules now apply. Careful tracking and centralised planning have never been more important.

Practical steps for agencies

Agencies don’t need to take risks with these changes. Here’s a clear checklist to get ready for the new redundancy rules:

1. Centralise redundancy tracking: Set up a single system or spreadsheet to log all proposed redundancies across every client, branch, and region.
2. Review contracts and communications: Make sure your standard terms allow prompt communication with placed staff and host sites.
3. Train your management team: Ensure everyone knows when collective consultation starts and what steps to follow.
4. Prepare template documents: Draft sample letters, consultation scripts, and HR1 notifications ahead of time.
5. Set calendar reminders: Timelines matter. Schedule alerts so you never miss a deadline for starting consultation or notifying authorities.
6. Engage representatives early: If workers need to elect reps, help them do so. Early action reduces disruption and shows good faith.
7. Monitor regulatory updates: Watch for the final details and thresholds as new regulations roll out from 2026 onwards.

Being proactive and planned not only reduces risk, it helps reinforce trust with both staff and clients. Agencies who focus on preparation and clarity will stand out from the crowd and avoid major compliance headaches.

Fire and Rehire Restrictions for Agency Placements

The fire and rehire clampdown in the Employment Rights Bill directly affects how agencies can change worker terms. Agencies, clients, and umbrella companies must now rethink contract changes, especially around pay, hours, and key benefits. A stricter ban limits when you can end contracts then re-engage staff on worse terms. Some exceptions exist, but the bar is high. Let’s break down the key rules, when dismissals become automatically unfair, and what this means for agency agreements.

Fire and rehire ban explained: Define the automatic unfair dismissal rule when workers refuse contract changes

Starting October 2026, agencies will face strict limits on fire and rehire for “restricted variations” in contract terms. Restricted variations cover important conditions like:

• Pay
• Pensions
• Working hours and shift patterns
• Paid time off (including holidays and sick leave)

If an agency or its client tries to force these kinds of changes on a worker by ending one contract and offering rehire on less generous terms, that dismissal is automatically unfair. This rule applies even if the worker has less than two years’ service, giving agency staff day-one protection against these tactics.

The ban means you can’t get around resistance to contract cuts just by ending the assignment and inviting them back on worse terms. If a worker refuses to sign up to the new terms, they have the law on their side.

Exceptions for severe financial strain: Outline the narrow circumstances where fire‑and‑rehire may still be lawful and the evidential burden

There’s a narrow escape for agencies facing real financial trouble. If the business’s survival is at risk and there is no sensible alternative, fire and rehire could still be possible. But the burden of proof is heavy:

• Agencies must show credible, up-to-date financial evidence that they cannot continue trading on current terms.
• You’ll need audit trails from accountants, board minutes, and written attempts to negotiate in good faith with affected workers first.
• It isn’t enough to claim lower profit margins—actual viability must be threatened.

Supervisors and managers should expect close inspection from employment tribunals. If you rely on the financial strain exception, be ready to share documentation and justify every step.

Impact on agency placement agreements: Discuss how agencies must draft placement contracts to avoid triggering the ban

Contract drafting is under the spotlight. Standard flexibility clauses, once common in agency agreements, could now breach the new rules if they allow the agency or client to change restricted terms without worker consent. Agencies should:

• Remove or revise any blanket clauses that let you change pay, hours, or holidays by giving notice.
• Clearly set out which conditions may change and how consent will be asked—don’t generalise, be explicit.
• Only include variation rights for things outside the restricted category (like minor duties or reporting lines), unless agreed upfront at the start of employment.

Agencies must work with legal partners to future-proof templates. Communicate these updates to clients and explain why certain contract tweaks may no longer be allowed mid-assignment.

Risk of automatic unfair dismissal claims: Highlight the potential for agencies to be named as parties in unfair dismissal claims

The shift to automatic unfair dismissal changes the legal landscape. Agencies can now be named directly in tribunal claims—not just end clients—if placed workers suffer unlawful fire and rehire. This means:

• Higher risk of expensive legal cases, even if your agency simply passes on the client’s decision.
• No loophole for umbrella companies or outsourcing partners if they direct or approve the dismissal.
• Claims can arise for both ongoing and new placements, so every contract matters.

It’s now critical to keep careful records, involve HR early when variation talks start, and consider legal advice before making any contract change connected to restricted terms. Quick, poor documentation or casual emails can land your agency in front of a judge.

Adapting agency policies: Suggest policy updates, staff training and client communication strategies

Agencies have a window to prepare, but action is needed now. To stay compliant and guard against tricky disputes, agencies should:

• Review all placement contract templates. Update for new fire and rehire restrictions, especially flexibility clauses.
• Run staff training sessions for consultants and HR teams who negotiate contracts. Focus on spotting restricted terms and explaining new worker rights.
• Draft clear internal policies on how to document consent, handle difficult negotiations, and escalate any pushback before assignment endings.
• Strengthen client communication. Send a briefing or host a Q&A for end clients, covering why the law is changing and why “old school” contract swaps will risk a claim.
• Monitor ongoing legal updates as the government refines these rules, and update internal guidance as needed.

By setting out clear steps and raising awareness across the agency, you’ll protect your business and reputation, while building trust with your staff and clients.

Compliance, Penalties and the New Fair Work Agency

The Employment Rights Bill isn’t just about new rights for workers. It also brings in the Fair Work Agency, designed to police agency practices and drive up workplace standards. Agencies now face regular checks, stronger fines, and a real shift toward data-driven oversight. Keeping pace with what the Fair Work Agency expects is vital, especially if you manage large numbers of temporary or agency staff. Below, we break down what the new regime looks like and what changes you’ll need to make to stay compliant.

Role of the Fair Work Agency

The new Fair Work Agency (FWA) will be the watchdog for core agency-worker rights. Set to launch in 2026, its job is to:

• Check that agencies pay statutory sick pay (SSP) and holiday pay in full and on time
• Guarantee agency workers get all new entitlements under the Bill
• Investigate modern slavery, underpayment, or unlawful practices by agencies and umbrella companies
• Review compliance with gangmaster licensing and working conditions in regulated sectors

If you run an agency, expect the FWA to ask for proof of how you calculate and pay SSP, how you manage holiday accrual, and whether you’ve honoured worker requests for better terms. The focus is on practical, provable standards, not just ticking boxes.

Reporting and record-keeping requirements

The Bill ramps up the level of data agencies must hold and submit. Agencies will need to:

• Keep detailed records of all SSP and holiday pay calculations for each worker
• Retain these records for at least six years (failure to do so may be a criminal offence)
• Store documents related to agency-worker contracts, hours worked, requests made, and how each entitlement was handled
• Submit regular compliance reports at scheduled intervals (the first due within twelve months of the FWA opening), covering:
  • Number of workers placed
  • Pay rates and actual hours worked
  • All statutory payments made, including SSP and holiday pay

Agencies who record everything on spreadsheets, or worse, on paper, will struggle. The Fair Work Agency can ask for records at any time, so efficient digital systems are now non-negotiable.

Enforcement powers and penalties

The FWA wields far more power than previous bodies. Its enforcement toolkit includes:

• The right to enter business premises, request documents, and gather evidence without warning
• Issuing “notices of underpayment” detailing unpaid sums and ordering payment to affected workers
• Imposing penalties of up to 200% of the sums owed (capped at £20,000 per worker) for missing holiday pay or SSP
• Reducing penalties to 100% if agencies pay up within 14 days, but late payers will face the full charge
• Charging agencies additional enforcement costs if the FWA needs to intervene

Penalties are set to be public, with a record kept of sanctions against non-compliant agencies. In short, there is now a real cost to getting things wrong, both to your finances and your firm’s reputation.

Integrating compliance into HR systems

Trying to run agency payroll and entitlements manually is now risky and inefficient. Agencies should:

• Move to cloud-based workforce management tools that log hours, auto-calculate holiday accrual, and trigger alerts about SSP eligibility
• Use platforms (like BrightHR, Sage, or RSM’s agency management software) offering automated document storage and audit-ready logs
• Set up dashboard reporting to flag missing data, overdue requests, or contracts that need updating as the new rights come in
• Train back-office teams to spot gaps early, so fixes happen before the Fair Work Agency comes calling

Smart systems not only make audits less painful—they help agencies spot issues long before they turn into fines.

Future monitoring and updates

The FWA has big ambitions. The coming years will see more secondary legislation and fresh guidance as the agency’s remit grows. Agencies should:

• Subscribe to bulletins from the FWA, the Department for Business and Trade, and your industry body
• Set calendar reminders each quarter to check for updates, new codes of practice, or consultation launches (expect plenty in 2026 and 2027)
• Nominate a compliance lead or team to review policy changes, update systems, and deliver quick internal briefings to your wider staff

By treating compliance updates as a live process, not a one-off task, agencies will not only avoid penalties but build long-term trust with workers and clients. Keeping one step ahead is the best way to protect your business as these reforms come in.

Conclusion

The new Employment Rights Bill marks a big shift for agencies, giving workers more security from day one and changing how contracts should be managed moving forward. Agencies will need to rethink their paperwork, record keeping, and consultation processes to keep up with stricter rules and steeper penalties.

Getting ahead now is key. Review your current contracts, flag any flexible terms that might not fit new rules, and talk with your clients and staff about upcoming responsibilities. Sorting your systems and training early will save you a lot of stress once the Fair Work Agency starts checks and the new fines kick in.

Staying sharp and informed helps protect your business and builds trust with both staff and clients. If you haven’t started planning for the changes, today is a good day to begin. Thanks for reading—what steps will you take next to get your agency ready?