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The Clock Is Ticking: What the Government's Zero Hours Consultation Means for the Temporary Recruitment Sector

  • Rob Wilks
  • Jun 29
  • 8 min read

The Government has launched a consultation that could fundamentally reshape how temporary staffing works in the UK. Published on 2 June 2026, Make Work Pay: Ending One-Sided Flexibility – Reforms of Zero Hours and Similar Contracts sets out proposals to implement three new workers' rights under the Employment Rights Act 2025 (which received Royal Assent on 18 December 2025). The consultation closes on 25 August 2026, and the industry needs to be fully engaged.


For those of us in the temporary recruitment sector — running agencies, managing compliant umbrella companies, or leading businesses that depend on flexible labour supply — this consultation is not a distant policy debate. It has direct, practical consequences for how we operate and supply chain liabilities. This blog breaks down what is being proposed and why we encourage the recruitment industry to pencil a consultation response themselves.


The Context: What the Government Is Trying to Do

The Government's stated ambition is to end what it calls "one-sided flexibility" — a situation where workers on zero hours or similar arrangements bear all the risk of uncertain demand, with no income security or predictability. The foreword to the consultation document is candid: a worker could, in theory, be working 40 hours a week for the same employer for years and still have no contractual guarantee of work the next day.


Nobody in the recruitment supply chain would defend genuinely exploitative practices. The challenge is that the Government's proposed solutions, drafted with the directly employed workforce principally in mind, have been extended wholesale to agency workers — and that extension creates a set of structural problems that the temporary staffing model, by its very nature, is ill-equipped to absorb.


The three rights being consulted upon are:


1. A right to guaranteed hours — where an employer (or, for agency workers, a hirer) must offer a contract reflecting the hours regularly worked over a defined reference period.

2. A right to reasonable notice of shifts — workers must receive adequate notice of when they are required to work.

3. A right to payment for shifts cancelled, moved, or curtailed at short notice — where a shift is changed or cancelled within a defined "short notice period," the worker is entitled to a compensation payment.


The consultation is not asking whether these rights should exist — that is already settled in primary legislation. It is asking how they should be designed and what parameters should be set in regulations. That is precisely the window in which the recruitment sector must make its voice heard.

The Three-Way Problem No Policy Can Easily Solve

Before examining the two most damaging proposals in detail, it is worth understanding why the agency model is fundamentally different from a direct employment relationship — and why the Government's own consultation acknowledges the complexity, even if it does not fully resolve it.


When a client engages an agency worker, there is often a complicated supply chain underpinning the relationship: the worker, the recruitment agency (even MSPs), often an umbrella company and the hirer. The worker has a contract or arrangement with the agency and often the umbrella company; they work under the direction and supervision of the hirer.


Those downstream of the end-hirer are often not the employer in the traditional sense (like a direct engagement) nor managing day-to-day work. The end-hirer mostly dictates when workers are needed and for how long — but it is those down the supply chain that would bear liabilities under these proposals.


The consultation explicitly acknowledges this: under the Act, hirers have the obligation to make guaranteed hours offers to qualifying agency workers. If a worker accepts, they would move onto a direct contract with the hirer — effectively exiting the agency relationship. For short notice payments, the Act places obligations on agencies to make payments to workers, while the consultation explores the mechanism by which agencies would then recover those costs from hirers.


On paper, this pass-through is logical. In practice it a recipe for disaster with at best increasing the like of contractual disputes but at worse encouraging end-hirers to reduce their use of agency workers.

Issue One: The Right to Guaranteed Hours


What the consultation proposes

Agency workers who work regularly for a hirer will qualify for a guaranteed hours offer from that hirer. The offer must reflect the hours they actually worked during that period and would be based on a reference period (the Government's preferred and suggested length is 12 weeks). If the worker accepts, they transfer from agency engagement to direct employment with the hirer.


Subsequent reference periods follow — potentially every 12, 26, or 52 weeks — meaning the duty to assess and potentially offer guaranteed hours is a recurring obligation.


Why this is a serious problem for temporary recruitment


It directly undermines the temporary workforce model.

The entire proposition of temporary staffing is that a hirer can access flexible resource for variable, fluctuating, or project-based demand, without taking on permanent headcount. The moment a hirer is required to offer guaranteed hours to an agency worker who has been deployed consistently for 12 weeks, one of two things will happen: the hirer accepts the obligation and takes the worker direct, removing the revenue from the agency — or the hirer rotates workers more frequently, before the reference period can trigger, artificially disrupting what might otherwise be a productive, stable arrangement.


Neither outcome serves workers, hirers, or agencies well.


It will accelerate the removal of agency workers from long-term placements. 

Hirers who value a particular worker but do not wish to trigger a guaranteed hours obligation will face pressure to end assignments just before the 12-week mark. This creates a perverse incentive: the workers who are performing best and who have settled into a role are precisely those most at risk of being cycled off to prevent qualification. If the Government's objective is to deliver stability for workers, this mechanism threatens to do the opposite.


It creates administrative complexity that will not scale. Agencies operate across multiple hirers simultaneously, often managing hundreds of workers at any given time. Under these proposals, agencies and hirers will need to track the start dates of every placement, the hours worked in each reference period, whether those hours meet regularity requirements, and which workers are approaching qualification windows. For smaller agencies, this burden could be disproportionate relative to the margin earned on a placement.


The "accepted offer means direct engagement" provision removes the worker from the agency. This is not just a compliance burden — it is a structural revenue risk. If a worker accepts a guaranteed hours offer from a hirer after the proposed 12 weeks, the agency loses that worker and that income. There is no recognition in the consultation of the role the agency played in sourcing, vetting, onboarding, and managing that worker. The agency carries cost and risk through the placement, only to find that success — a settled worker in a consistent role — triggers a mechanism that removes them from the agency's books entirely. The proposal is silent on temp to perm fees too – could the proposals make negotiating a temp-perm fee more difficult? Or could it drive down margins further as agencies choose to offer free temp-perms?

Issue Two: The Right to Reasonable Notice and Short Notice Payments


What the consultation proposes

All workers — including agency workers — should be provided with reasonable notice of upcoming shifts and if any shifts are cancelled, moved, or curtailed within a defined "short notice period", entitled to a compensatory payment. The short notice period will be set in regulations, and the consultation asks whether it should be between 24 and 96 hours before a shift is due to start.


The compensation amount is not yet determined; the consultation seeks views on whether payment should reflect a proportion of the shift value, a flat rate, or some other formula. Hirers would hold the primary responsibility for ensuring reasonable notice is given. However, in the agency context, the consultation proposes that agencies would make the payment to the worker and then recover the cost from the hirer.


Why this is a serious problem for temporary recruitment


The agency becomes liable for costs it did not cause. Short notice cancellations in temporary staffing almost invariably originate with the hirer. A factory experiences a production line failure; a care home receives a last-minute reduction in patient numbers; a retailer decides to close a department for deep cleaning. None of these decisions are made by the agency — yet under the proposed model, the agency is in the front line of making payment to the worker and then pursuing cost recovery from the hirer.


In a well-governed, well-resourced relationship with a sophisticated hirer, that recovery mechanism might work. But temporary recruitment agencies — particularly smaller, niche, or regionally focused businesses — frequently operate on thin margins and within relationships where power sits firmly with the client. The prospect of issuing a credit note or invoice dispute to a large hirer every time a shift is cancelled is not trivial. It will strain relationships, increase credit risk, and in the worst cases, simply not be recovered.


It introduces financial exposure for the agency before the liability is settled. The consultation suggests agencies would pay the worker, then claim from the hirer. But what if the hirer disputes the cancellation circumstances? What if the hirer is slow to pay? What if the hirer argues that one of the proposed exceptions applies? The agency has already paid out; the recovery is uncertain. For agencies operating on slim margins, even a handful of unrecovered short notice payments per week represent a material financial risk.


The exception framework adds, rather than reduces, complexity. The consultation proposes several exceptions to the right to short notice payments — for example, where the cancellation is caused by an event genuinely outside the hirer's control, or where the worker themselves initiated the change. This is sensible in principle. In practice, however, establishing which exception applies in each case will require documentation, process, and potentially dispute resolution. Agencies will need to create systems to log the reason for every cancellation, gather evidence from hirers, assess whether an exception applies, and communicate this to workers — all in real time, for what may be very large numbers of shifts on any given day.


It will deter hirers from using agencies for genuinely short-notice requirements. One of the most valuable things a temporary recruitment agency provides is the ability to supply workers at short notice. A hirer facing a sudden absence or an unexpected demand spike calls the agency — and the agency delivers. Under these proposals, the risk of short notice payments may cause hirers to think twice before making that call. They will question whether they can confidently guarantee a shift length, and if they cannot, whether the cost of a cancellation payment makes the arrangement economically viable. The unintended consequence is a reduction in flexible, responsive temporary supply at exactly the moments when hirers most need it.

The Industry's Responsibility: Respond to This Consultation

The consultation closes on 25 August 2026. This is not a theoretical exercise — the responses gathered will directly inform the regulations that give these rights their practical shape: the hours thresholds, the reference period lengths, the definition of regularity, the short notice window, the payment rates, the exceptions, and the recovery mechanisms.


Whilst Clipper Contracting Group will be submitting their own response, on top of collective responses from the likes of the FCSA and the REC, we would encourage recruitment businesses of all sizes to engage. Whether you respond individually as an agency or contribute through a trade body, the Government needs to hear from practitioners about the real-world consequences of these proposals as currently framed. The consultation is explicitly asking about unintended consequences — that is an open door.


In particular, the industry should be making the case for:

  • Delaying the initial period for which guaranteed hours would be calculated. Rather than starting from their first day of engagement, proposing a period akin to probation, similar to how AWR operates.

  • A clear and workable definition of "temporary need" that provides real protection for assignments that are time-limited or project-based.

  • A short notice payment mechanism that places primary financial and administrative liability on the hirer, not the agency — with a clear, enforceable recovery route that does not leave agencies exposed.

  • A short notice period at the lower end of the proposed range, recognising that last-minute changes are inherent to the sectors that rely most heavily on agency labour.

  • Stronger exception provisions that reflect the operational reality of demand volatility in sectors such as logistics, healthcare, hospitality, and manufacturing.


The Government has said it wants these reforms to work for workers and businesses. The recruitment sector's role in supporting flexible labour markets — enabling people to work, helping businesses grow, and connecting talent to opportunity — is not incidental. It is central to how the UK economy functions. That story needs to be told, clearly and with evidence, before August is out.


The consultation closes at 11:59pm on 25 August 2026.

 
 
 

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