Agency workers (supply and hire)

UK employment law reforms on the horizon (as of April 2026)

All reforms contained within the Employment Rights Bill ("ERB") for the benefit of 'workers' will also be for the benefit of agency workers. These include:

Other key reforms in the ERB affecting the supply and hire of agency workers include:

Implementation Status

  • Details of the implementation of these new rights is detailed in the relevant sections on this site; the statutory sick pay reforms and introduction of the Fair Work Agency are set for April 2026 and the provisions around guaranteed hours and shift cancellations are set for 2027.
  • Further regulations are expected regarding the powers of the FWA and the introduction of guaranteed hours contracts and compensation for shifts cancelled at short notice and which may be shaped by consultations.

     
Action
  • Employers should be mindful of the fact that the ERA will have an impact on the agency workers they engage and which will have direct consequences for their business, as well as the terms of their relationship with agency business suppliers. It will be important to audit the use of agency workers within the organisation and the terms of any arrangements with agency suppliers to ensure compliance.
In detail

Statutory sick pay

  • As employed earners (for the purposes of the Social Security (Contributions and Benefits) Act 1992), agency workers are entitled to statutory sick pay ("SSP") – subject to the current qualification criteria.
  • From 6 April 2026, SSP will be payable from day one of sickness absence (rather than from the fourth day of absence – with the first three "waiting days" being unpaid).  The current lower earnings limit (£123 per week) will be removed and SSP will be set at either the flat rate in force from time to time (currently £118.75 per week) or a prescribed percentage of the employee's weekly earnings, whichever is lower.
  • Our workforce solutions team look at this in more detail.

Fair work agency

  • The launch of the new Fair Work Agency ("FWA") which will amalgamate functions from several government bodies to create a single enforcement agency for a range of employment rights is likely to be significant for agency workers. Key functions being merged from existing government bodies include the enforcement of the national living/minimum wage from HMRC, anti-modern slavery and gangmaster licensing from the Gangmasters and Labour Abuse Authority (GLAA), and the conduct of employment agencies and businesses from the Employment Agency Standards Inspectorate. The FWA will also have powers to enforce holiday pay and statutory sick pay, which have historically been difficult for employees to enforce.  

Guaranteed hours contracts

  • The ERA contains provision which will require the organisation hiring the services of the agency worker (the "Hirer") to offer a Qualifying Agency Worker (QAW) a guaranteed hours contract at the end of a prescribed reference period (yet to be determined by regulations). For clarity, the Hirer is the client to whom the QAW is supplied, not the employment business ("agency") engaging and supplying the QAW.
  • A QAW is an agency worker who, during the reference period, worked for and under the supervision and direction of the Hirer for the reference period hours (also yet to be defined in regulations). The reference period hours must satisfy conditions as to number and regularity (or such conditions as are otherwise specified) and when the QAW worked the reference period hours, they must not have been an excluded agency worker (which broadly means they must not have been engaged by the agency under a collective agreement which expressly excludes the right of the Agency worker to be offered a guaranteed hours contract and which replaces that right with other terms).
  • The exception to the Hirer's duty to make an offer of a guaranteed hours contract and circumstances in which an offer may be withdrawn arise where, during the reference or offer periods, the QAW stops working for and under the supervision and direction of the hirer in the relevant circumstances. Relevant circumstances are where the QAW either chooses not to continue the assignment (for reasons other than the Hirer's conduct), the Hirer tells the agency to stop supplying the QAW due to the QAW's incapability or misconduct, or carrying on the work would break the law.
  • If the Hirer withdraws an offer, they must tell the QAW before the deadline by which the QAW could have accepted the offer (the response period).
  • The Secretary of State has the power make regulations adding further situations where no duty to offer a guaranteed hours contract arises or where offers may be withdrawn. These are likely to form part of the consultation on the regulations which we expect during 2026.

Cancellations and changes to shifts

  • The ERA grants agency workers the right to reasonable notice of shift cancellations or changes and to receive compensation when shifts are cancelled or changed at short notice.

Rights to Reasonable Notice

  • Under the ERA agency workers must receive reasonable notice of shifts as well as changes to or cancellation of shifts from the agency or the Hirer. Notice will be presumed unreasonable if it is given less than a specified time before the shift starts. The specified time will be clarified in regulations that are due to be consulted on from late 2025 into 2026.

    Both agencies and hirers will be liable for breaches of these notice requirements to the extent they are responsible for those breaches. Hirers will not be liable if they provide timely notice to the agency. Agencies must pay agency workers compensation for shifts that are cancelled, moved, or curtailed at short notice but will be entitled to recoup such payment from the Hirer if the late notice was the fault of the Hirer. Short notice means less than a specified time before the shift starts or changes. The specified time will be clarified in regulations.

    Agency workers will be able to bring complaints to the employment tribunal for breaches of these notice requirements and for any non payment by the agency of compensation where there have been breaches. Tribunals can order compensation for breaches.
  • Where the agency worker can show that curtailing, moving or cancelling shifts has been used as a mechanism to reduce the number of, or to distort the pattern of reference period hours, such that the agency worker does not become a QAW for the purpose of being offered a guaranteed hours contract, then the agency worker can bring a complaint to an employment tribunal against a Hirer and/or the agency. Where an employment tribunal upholds the agency worker's complaint it will make a formal declaration confirming that the complaint is valid and may award compensation to be paid by the Hirer or agency, as appropriate.
  • The amount of compensation should be fair and reasonable, considering all circumstances, to cover any financial loss the agency worker has sustained. The agency worker has a duty to mitigate their loss. The maximum amount of compensation will be specified in regulations and will be based on a number of weeks' average weekly pay of the AW subject to a cap to be specified in regulations.
  • Compensation for cancelled shifts addresses immediate financial loss, but does not negate the agency worker's right to pursue a claim if they believe the cancellations were intended to prevent them from qualifying for a guaranteed hours contract.
Impact

Statutory sick pay

  • The ERA's removal of the current lower earnings limit and the waiting period before entitlement to SSP can be established is therefore as significant for Agency workers as it is for employees. 

Guaranteed hours contracts

  • In summary organisations that use agency workers (Hirers) will be obliged (unless exceptions or exemptions apply) to offer them a guaranteed hours contract if they have been regularly working for and under the supervision and direction of the Hirer over a set "reference period". The exact length of that reference period and how many hours count as "regular" will be set in future regulations which will be consulted on from the end of 2025 and into 2026. This right does note apply if the worker is covered by a clear, written collective agreement (put in place via the agency) that expressly replaces the right to a guaranteed hours offer with other terms. In addition the obligation to make or keep an offer open can also fall away if, during the reference period or the period when the offer would be made, the worker stops working for the organisation because they choose to, their assignment is terminated due to their capability or conduct or continuing in the assignment would break the law. If an offer is not going to be made or is being withdrawn the Hirer must inform the QAW before the end of the response period for accepting or rejecting the offer.
  • The wider implication of the right to an offer of a guaranteed hours contract and, more specifically, an agency worker accepting that offer, is likely to be the agency worker becoming, as a matter of law, the employee of the Hirer for the duration of the guaranteed hours contract, which will then make the relationship subject to the new day one right not to be unfairly dismissed as well as all existing and new employment law.