UK government's '100 day' employment law bill to be published in October – what do staffing companies, gig platforms and users of contingent workers need to be ready for?

In mid-October 2024, the UK government will be issuing its employment bill. Among other things, this will, the government states, offer a "new deal" for the types of zero-hours workers whom it considers to be exploited, and (by offering "day one rights") make workers, otherwise worried about losing accrued statutory employment protection, less nervous about moving jobs.

The chancellor, Rachel Reeves, has said that she considers that day one rights will boost the economy by making sure talented people feel able to move to the best employers rather than lingering at less vibrant businesses which have less capacity for growth.

We will issue an update when the details of any proposals are published. This Insight is designed to help staffing companies, gig platforms and users of contingent workers prepare for the announcement and start thinking about some of the decisions they will have to make.

What is likely to be announced?

It has been hard to work out what is planned with zero-hours workers. Announcements have focused on ending "exploitative" zero-hour arrangements which suggests that certain types will broadly continue as before, with new rules relating to rights to better protection perhaps being fairly limited or only applying to certain types of casual work or lower pay grades.

Any new rights for zero-hours workers is likely to be linked to a right to more predictable hours – there was already legislation (drafted by the last government) ready to implement this but the new government has shelved it and said it will deal with that issue with new legislation.

In relation to day-one rights, there seem to be more clues: it was reported by the Financial Times  in September that ministers may have settled on full employment rights not cutting in until six months after the start of employment (that is, not day one), but the BBC has reported that this has not yet been settled.

Even if most rights do not cut in until after six months there is a possibility that there will be some lesser rights from day one. It will be interesting to see if, for example, there can be a right to statutory protection (and a statutory termination payment) where a termination before six months relates to restructuring plans, or the like, which were already in train before the employee accepted the relevant job offer, or if there will be some statutory process relating to how to deal fairly with people in this reported six month statutory probationary period (so that they cannot just be dismissed on a whim). 

Importantly for users and suppliers of contingent workers, we think it is unlikely that the employment bill will extend day one (or even month six) unfair dismissal rights to all workers as well as employees:  workers (otherwise known as limb b workers) and agency workers do not currently have a right not to be unfairly dismissed – but we await the draft to confirm whether any workers who are not employees will have these rights. 

In both cases (zero hours and day one rights) it will also be interesting to see whether, and how, the government proposes to apply any new regimes to non-standard working relationships, for instance where individuals are engaged via intermediaries (such as platforms, staffing companies, umbrella companies and employers of record), and how it proposes to address avoidance behaviour (for example, employers shifting staff into new models that are thought otherwise to fall outside the new regimes).

In particular, it is not clear how these rights might apply to workers engaged via intermediaries such as staffing companies – against whom would the worker  have the relevant rights? And what if the user of an occasional gig worker (such as someone providing some help in the garden) is an individual consumer (as opposed to a corporate end user): will they be subject to obligations relating to statutory minimum notice and the like? And if agency workers and zero-hours workers are no longer available on a turn-on turn-off basis, how will the current business models of many cyclical industry sectors survive?

One thing that offers a clue to this is the apparent acceptance by the government that its original plan to abolish worker status, such that the only two categories are full employees and the genuinely self-employed, can only take place after a lot of consultation about what any new test of employment/self-employment should consist of, and so that is unlikely to happen quickly. And if worker status continues, that suggests that some of the new rights (such as unfair dismissal rights) will not apply to workers or agency workers.

The main things for all stakeholders to remember are that:

• any measures seem unlikely to become law until some detailed consultation processes have played out; and
• something prompting a class action will eventually happen and there will be class action law firms gearing up to help agency workers, gig workers and zero-hours workers bring claims.

For our previous comment on what the employment bill and related measures could cover see our earlier Insight. 

There are of course other likely announcements about more general employment rights for "conventional" employees and the Insight from our employment team covers those. Employers of record and umbrella company employers operating in the UK will also be impacted by these changes.

What do affected organisations need to do pending the announcements?  

Not much is known for sure, and announcement day may therefore lead to quite a lot of concern as people try to work out their options to minimise adverse impact.

However, there are three things that staffing companies, gig platforms and users of contingent workers can do now to get ahead of the game.

Non-standard engagements

Following the publication of the employment bill, some may conclude that the new rights will not apply to workers engaged in certain non-standard ways. There may be truth in this – the zero hours and/or day one rights may, for reasons given above, not apply to workers, agency workers or to workers who seem to be self-employed. Or they may only impact the intermediary in a labour supply chain such that end hirers can distance themselves from liability by routing all new hires via an intermediary. Or they may have exclusions, for example in relation to any ban on zero hours working arrangements,  for some narrow categories of worker.

For those who are tempted to look at or offer new methods of engagement as a workaround, we would make these recommendations:

• Be very careful about the anti-avoidance provisions in any new legislation. It may be that (as is already the case with regimes like the Agency Workers Regulations and the agency worker tax regime) any steps taken "the most likely explanation for which" is the avoidance of the new regime will be deemed void. If so, any steps businesses take to structure engagements in a way which happens to fall outside the new regimes will likely need to be motivated primarily by some other legitimate business purpose. Any internal communications about using method A to get round the new rights, for example, engaging a worker via an agency before employing them direct with the sole purpose of reducing day one unfair dismissal risk, may become disclosable in subsequent litigation. Businesses should be very careful about how plans are framed and what is said internally about the purpose of the plans.
• If the workaround involves reliance on an intermediary to indemnify an entity higher up the supply chain in relation to liabilities that might arise under the new regimes, that entity will need to check that the balance sheet strength of the intermediary would be enough to allow a pay out if a class action is brought by relevant workers.
• Certain intermediaries to whom casual workforce arrangements may be transferred as a way of mitigating the impact on end users of new rights will be credible in terms of helping manage risk under the regime, but many less well-established intermediaries may over-promise or (worse) be fronts for unlawful tax schemes, which continue to proliferate, including in parts of the umbrella industry. Businesses should not form a tie-up with any intermediary unless they have done serious due diligence on them, especially in relation to tax compliance. Failure to do this could expose them to unlimited fines under the Criminal Finances Act.

Non-criminal tax consequences

Be ready, in any planning, also to consider the non-criminal tax consequences on any solution that may be looked at. Things that may work from an employment law perspective may cause tax problems. In particular, if self-employed models using personal service company contractors are seen as the way forward, note that HMRC is expected to step up enforcement of IR35.

Usage of contingent workers

Get a grip of exactly what usage there is of contingent workers in the organisation. Are there pockets of agency workers, contractors, zero-hours workers and the like not known to the HR team?

PWD due to be adopted by EU on 14 October

Coincidentally, the EU Platform Workers Directive may be adopted at the Council of Ministers meeting on 14 October. Under this there will be a presumption of employment status for all platform workers (which is very widely defined and could include normal agency workers, whose selection or deployment involves any material element of automated decision-making), with that presumption only being rebuttable if the platform can show that the worker is genuinely self-employed under local employment law rules. Some Member States of the EU have already implemented this sort of rule.

Our Insight provides more detail of how the PWD will operate.

It will be interesting to see if the UK government introduces legislation of this nature – it might be politically attractive to harmonise with the EU on this.