Zero hours reform: What recruitment agencies need to know

The Government’s consultation on zero hours reform could bring important changes for recruitment agencies that supply temporary workers.

The proposals, which form part of the Employment Rights Act 2025, are designed to give workers greater certainty around their hours and working patterns. However, they could also introduce additional responsibilities for recruitment agencies and the businesses they work with.

Although the final regulations have not yet been confirmed, now is a good opportunity for agencies to review their existing processes and consider how future changes could affect their operations.

At QUBA Solutions, we work exclusively with recruitment agencies. We understand the challenges of managing contractor payroll, maintaining healthy cash flow, processing timesheets and keeping back-office operations running smoothly. As employment legislation continues to evolve, having efficient systems and the right support in place will become increasingly important.

Why recruitment agencies should be paying attention to zero hours reform

Flexibility has always been central to temporary recruitment. Agencies need to respond quickly to changing client requirements, while ensuring workers are paid accurately and clients receive a reliable service.

The proposed reforms are intended to improve security for workers, but they may also require agencies and their clients to review how temporary assignments are managed, how working hours are recorded and how changes to shifts are communicated.

Recruitment agencies that already have clear processes and reliable systems in place are likely to find it much easier to adapt as zero hours reform is introduced.

What is changing?

The consultation is seeking views on how three new employment rights should operate in practice:

• The right to be offered guaranteed hours based on the hours regularly worked during a qualifying reference period.
• The right to receive reasonable notice of shifts and any changes to scheduled working hours.
• The right to compensation where shifts are cancelled, shortened or moved at short notice.

The consultation closes on 25 August 2026 and will help shape the regulations that sit behind the Employment Rights Act 2025.

The Government is seeking feedback on several key areas, including:

• The length of the reference period used to calculate guaranteed hours
• When workers should become eligible
• How seasonal and temporary workers should be treated
• What should be considered reasonable notice for shift changes
• How compensation for cancelled shifts should be calculated

The outcome will influence how temporary assignments are managed across the recruitment sector.

Preparing for the changes

New employment requirements often have an impact across multiple areas of a recruitment business, from recording hours worked and communicating assignment changes to payroll, invoicing and client reporting.

If the proposals are implemented, agencies may need to demonstrate:

• Accurate records of hours worked
• Reliable timesheet information
• When assignments and shift changes were communicated
• Details of cancelled or amended shifts
• Clear audit trails to support employment practices where required

For agencies relying on manual administration or disconnected systems, meeting these requirements could become increasingly time-consuming.

Reviewing your processes now and investing in reliable technology can help reduce administration, improve accuracy and make adapting to the new regulations much simpler.

Why efficient back-office processes matter

Recruitment agencies already balance candidate sourcing, client relationships, payroll, invoicing and compliance every day. As employment requirements become more complex, efficient back-office operations become even more valuable.

Accurate payroll, reliable timesheet processing and effective credit control don’t just support compliance. They improve productivity, strengthen client relationships and give agencies more time to focus on growing their business.

Maintaining cash flow during periods of change

Legislative change can create uncertainty, but weekly payroll deadlines and contractor payments remain a constant.

Having access to flexible funding and dependable financial support helps agencies maintain healthy cash flow, meet payroll commitments and continue supporting clients without disruption.

For recruitment businesses, financial stability is just as important as operational efficiency when adapting to change.

Industry feedback

Industry bodies including the Recruitment & Employment Confederation (REC), APSCo and the CIPD have welcomed the consultation while emphasising the need for regulations that protect workers without creating unnecessary complexity for businesses that rely on flexible labour.

Their feedback highlights an important point: the recruitment industry has a valuable opportunity to help shape legislation that reflects the realities of supplying temporary workers.

Have your say

The consultation remains open until 25 August 2026, giving recruitment businesses the chance to influence how these reforms are implemented.

The Government is looking for feedback on qualifying periods for guaranteed hours, reasonable notice for shift changes, the treatment of temporary and seasonal workers, and compensation for cancelled shifts. These decisions will determine how the legislation works in practice.

At QUBA Solutions, we encourage recruitment agencies of all sizes to take part, either by submitting their own response or contributing through industry bodies such as the Recruitment & Employment Confederation (REC) or APSCo. Agencies working with temporary labour every day are well placed to explain how the proposals could affect workers, clients and recruitment businesses alike.

When preparing your response, consider whether the proposals:

• Reflect the realities of temporary and project-based assignments
• Balance worker protection with the flexibility employers and agencies rely on
• Clearly define responsibilities for agencies and end clients
• Recognise the operational demands of sectors such as logistics, healthcare, hospitality and manufacturing

The recruitment sector plays a vital role in connecting people with work and helping businesses respond to changing demand. This consultation is an opportunity to ensure the final regulations reflect the practical realities of the industry.

Respond to the consultation: Make Work Pay: Ending One-Sided Flexibility – Reforms of Zero Hours and Similar Contracts

QUBA’s response – Executive Summary

By publishing our response, we hope to provide useful context for others in the recruitment industry and encourage businesses to make their voices heard before the consultation closes:

“Whilst the government’s intention to provide directly employed workers with more security and predictability are well placed, and we support the underlying aims in this regard, we do not consider that the proposed changes are appropriate in the context of the temporary labour market where workers are engaged via agencies or umbrella companies. 

In most cases within the temporary agency labour market, end-hirers engage agency workers to support fluctuating short-term or project-based demand. Whilst these roles may involve regular working patterns, and hours in excess of contractual minimum requirements, these assignments are inherently designed to address short-term requirements where there is no underlying permanent employment need.  To introduce the right to guaranteed hours in these circumstances risks denying agency workers the flexibility they enjoy whilst unnecessarily increasing administrative burden on businesses that do not have any ongoing labour requirement.

Further, whilst we appreciate and recognise the benefits to workers of providing reasonable notice of shifts, the urgency and unpredictable nature of staffing is one of the main reasons why hirers use agency workers.  In contrast to many directly employed workers, agency workers may refuse shifts, and so to implement a notice requirement in these circumstances would again introduce an unnecessary administrative burden and curtail the flexibility of a model designed to address urgent staffing needs.

Finally, whilst we appreciate workers may suffer financial consequences where shifts are cancelled or curtailed at short-notice, the proposal that short-notice payments should be made by recruitment agencies, rather than the end-hirer which, in most circumstances is the party responsible for the cancellation or curtailment, risks leaving recruitment agencies liable for costs which are outside of their control.  Therefore, if the government proceeds with the extension of the short-notice provisions to agency workers, we recommend that liability for payment should sit with the end-hirer, not the agency. 

In summary, the proposals appear primarily designed to address insecurity in direct employment relationships and we do not consider that they will transfer appropriately to the temporary agency labour market.  Our recommendation, therefore, is that agency workers should be excluded from the proposals in their entirety.” 

Sources

UK Government – Make Work Pay: Ending One-Sided Flexibility – Reforms of Zero Hours and Similar Contracts

UK Government – Employment Rights Act 2025

Personnel Today – Employer bodies urge ministers to keep zero-hours reforms simple