Duty to offer guaranteed hours to agency workers – Part 1

The Employment Rights Bill will place an obligation on hirers relying on agency workers to offer guaranteed hour contracts to any agency workers (or workers supplied by umbrella companies) in certain circumstances.

This two-part article considers what the new rules will be and how they might operate in practice.

Breaking down the duty

Where an agency worker works more than their contracted hours over a particular reference period, the hirer will be required to offer a guaranteed hours contract which reflects the hours that an agency worker regularly worked over that reference period.

What are ‘low’ hours?

The regulations, once confirmed, will set out how many hours are considered ‘low’ hours. The level at which low hours are set will determine how many agency workers fall under this new regime and therefore how significant an impact these requirements will have on businesses.

What is the reference period?

The reference period is to be specified in the applicable regulations, but this is expected to be a reference period of 12 weeks, starting on the first day of assignment, and continuing in 12 week blocks thereafter.

That means that each agency worker could potentially be aligned to a different 12-week reference period, making it very difficult to monitor!

What is the offer period?

When a hirer is obliged to make an offer, it must be made within a particular period of time (to be determined), this will be known as the offer period.

The agency worker will then have a set period (to be determined) within which to accept the offer, this will be known as the response period.

During the response period, the hirer will not be permitted to withdraw an offer of guaranteed hours except in very specific circumstances.

Is the agency worker on a low or zero-hour arrangement?

Agency workers are generally engaged as temporary workers on a business-needs basis. That might mean short-term cover for illness, longer-term cover for maternity leave, or quite often to bolster headcount during peak trading periods.

Some agency workers are employed by the agency or are otherwise engaged as temporary workers only. In many cases, the agency workers will be on zero-hour contracts with the agency due to the flexible nature of agency work. The relevant contracted hours in this case will be those hours required by the hirer, rather than the agency.

If the hirer has requested a worker to be supplied to cover 12 hours per week, that worker could potentially be a low hours worker (depending on where the threshold for low hours is set).

If the hirer requests agency workers to be made available on an as and when needed basis, those agency workers will be considered zero-hour workers.

When will the duty be triggered?

The duty will be triggered if the agency worker has regularly worked above their contracted hours over the 12-week reference period.

So, assuming the agency worker is on a zero-hour contract (as most agency workers are) and they are supplied to carry out work for the hirer for at least a 12-week period, they will work more than their contracted zero-hours each week over the relevant 12-week reference period. This will trigger the duty and the hirer will be required to make a guaranteed hours offer (or GHO) to the agency worker.

A GHO will need to provide an offer of a contract reflecting the hours worked in the initial reference period.

The regulations should set out what is intended to be a ‘reflection’ of the hours worked. It could include:

• days of weeks / times
• working pattern

Importantly, hirers should note that it is our expectation that the contract will be required to be an employment contract (rather than, for example, a casual worker agreement). This also means, based on the current implementation roadmap for the Employment Rights Bill, that once these regulations come into effect, those employees will be entitled to day 1 rights.  Given the scope of the Bill, this will include the right to bring a claim for unfair dismissal and if those employees become subject to redundancy, a full redundancy process will be required to be undertaken.

Are there exceptions for seasonal work?

There will be limited circumstances that will allow the hirer to offer a fixed-term contract including where it is reasonable to consider that the agency worker is only needed to perform a specific task, or they are needed until a specific event occurs (e.g. until another worker returns from leave).

However, it will not be reasonable for the contract to be a limited term contract where the work ‘was of the same or a similar nature as the work done under another worker’s contract’. So, if there are incumbent employees carrying out the same work that the agency worker has been engaged to carry out, it seems that the exception for seasonal fixed-term contracts may not actually be reliable.

The regulations, once they are released, will hopefully shed more light on this.  What we do know is that it will be vital for hirers to state from the outset that the task is limited by completion of a project and/or until a specific event occurs and to have a clear and reasonable rationale for that assessment.

What happens to the existing contract between the agency and the agency worker?

The contract stays in place. This does mean that, if the GHO is accepted by the agency worker, the hirer could end up directly employing that agency worker who might also continue to undertake temporary work through the agency.

In the second part of this article, we will look at how these new requirements might work in practice.