The Employment Rights Bill is one of the most significant and large-scale changes to employment and industrial relations legislation that contractor recruitment leaders have seen, writes Tania Bowers, global public policy director at the Association of Professional Staffing Companies (APSCo).
Concerns over the Employment Rights Bill Lords' amendments
Two elements of the Employment Rights Bill (ERB) are causing this niche recruitment sector (and the recruitment sector as a whole) significant concern:
- The introduction of across-the-board 'day one' protection against unfair dismissal for all employees; and
- The scope of the 'zero-hours' reforms and in particular "the right to be offered" a role by the end-hirer after 12 weeks, with the broadbrush inclusion of agency workers.
What Lords ERB amendments did hirers like and why?
Accordingly, the following Lords' amendments were welcomed by contractor representatives, including the recruitment and workforce solutions sectors:
- Limiting the right for workers on zero-hours contracts to be offered a guaranteed hours contract only "if requested by an employee", converting it into a "right to request".
Why it matters: The effect of this limitation would be to reduce the end-hirer's administrative burden to make an offer after 12 weeks.
And this is of particular relevance to contractors who, by definition, are a flexible, third-party workforce.
- Reducing the qualifying period for ordinary unfair dismissal claims to six months (from two years), instead of abolishing it altogether as the bill would have originally done.
Why it matters: The effect of this reduction would be to provide employers with enough time to assess suitability.
We believe its inclusion in the ERB would have struck a fair balance.
A disappointing govt. response, given the economic green shoots
However, these Employment Rights Bill amendments would have sought to remove prominent Labour manifesto commitments.
So although we've said it is disappointing, it was perhaps to be expected that the amendments would not survive the Commons vote on the Lords' amendments (on September 15th 2025).
A brighter backdrop for contractors is taking shape
APSCo research in recent months is showing the first fragile green shoots of economic recovery, particularly in respect of year-on-year increases in permanent vacancies across IT/Technology and engineering.
And we've seen a stronger cross-sector upturn year-on-year across contract vacancies and placements.
It is clear to us that legislative and economic uncertainty is driving employers towards contractor and consultancy SOW (Statement of Work) assignments.
But the incoming 'day one' rights policy may be making employers cautious about creating new jobs.
Why limiting the ERB's zero-hour reforms is key
For years, our association has been talking to ministers in this area, and today we're consistent in our view — the zero-hour changes should not apply to agency workers.
We believe the ERB's changes to zero-hour contract working should be restricted to those individuals on genuinely zero-hour contracts who are at risk of exploitation.
We don't believe that the changes should apply to contractors — the vast majority of whom work on fixed-term contracts for/of services, through employment businesses with standard hours, and a fixed assignment period or start/end date.
Government reassurance
It is noteworthy that the new minister for the Department of Business and Trade, Peter Kyle, moved to offer some reassurance about the content of the Employment Rights Bill on September 15th 2025.
Mr Kyle said: "The bill refers to exploitative zero-hours contracts. It is clear that some people will want employment on different terms, and we have flexibility in the bill for those circumstances."
A 'zero-hours' impact assessment is wanting
However, the uncertainty, inevitable administrative burden and opportunity cost of implementation are likely to dampen employer hiring intentions. We foresee this dampening across both the permanent and contract labour markets.
Our position? We will continue to call out the failure of the government to complete any meaningful impact assessment of the zero-hour reforms until we see such an assessment.
ERB: Where is it right now?
The Employment Rights Bill (ERB) is nearing the end of its journey through parliament.
The bill could receive Royal Assent by early November 2025.
The House of Lords is unlikely to hold up the ERB (and likely, therefore, to delay it), as it was a core Labour Party manifesto commitment.
When will the Employment Rights Bill apply from?
Either way, the bill's major provisions will not take effect immediately, with most scheduled to come into force from late 2026 or 2027.
Many ERB measures require further consultation and secondary legislation. The minister's comments may offer some scant comfort as to the approach that contractors and their recruiters can expect.
Before the ERB, it's the Employment Status Consultation
Meanwhile, a consultation on employment status for employment rights is also expected (before 2026).
Like others in the contractor and hiring spaces, we would welcome greater clarity on self-employment.
Finally, the ERB and its impact on contractor job opportunities
Contractors will still find opportunities, particularly in more highly skilled roles aligned to the UK's Industrial Strategy (the strategy document is here).
Opportunities for IT contractors will also stem from public sector ambitions to digitalise.
Our members at APSCo are reporting increased client interest in both outside IR35 and consultancy resources, which is positive for independent contractors, who operate outside the scope of "agency work."
