Government Response to BTC on Employment Rights Bill: Fair Work Agency, Employer Support, Zero Hours Contracts and Status Reform

The government recently responded to recommendations from the Business and Trade Committee (BTC) in relation to aspects of the Employment Rights Bill 2024/25 (the Bill), including providing a commitment to ‘consulting thoroughly on the detail of implementation’, and ensuring ‘that sufficient time and support is provided to adapt to changes ahead of their commencement’.

The role of the Fair Work Agency

Several BTC recommendations relate to the Fair Work Agency (FWA) which, under the Bill, is to take over enforcement of certain employment rights currently overseen by various existing agencies (such as the national minimum wage and tipping).

The BTC asked the government to revisit the regime for enforcing equality law, including setting out how the Fair Work Agency will work with the Equality and Human Rights Commission (EHRC). The government has confirmed that the FWA’s remit will not include equality legislation but that the Bill provides a solid basis for information sharing between the FWA and the EHRC, which will retain its current responsibility to enforce the Equality Act 2010.

The BTC expressed concern that, if the FWA is to be given new powers, it will also need more resource. The government confirmed that it is committed to ensuring the FWA has the resources and powers to tackle labour exploitation. With employment tribunals experiencing delays, in part due to a lack of resources, it remains to be seen whether the FWA will have the resources it needs to be effective.

Further, the government is considering how to strengthen the statutory regime relating to modern slavery statements and will set out further steps in due course, to address demands for more reporting and penalties for non-compliance, which will be enforced by the FWA.

Employment status reforms will take longer to undertake and implement

Under the government’s Plan to Make Work Pay, it committed to move towards a single status of worker and a simpler two-part framework for employment status, ending the lack of clarity that exists currently with individuals being classified as either employees, self-employed or workers. This commitment does not form part of the Bill.

The BTC urged the government to prioritise its employment status review to address the issue of workers being incorrectly classified as self-employed, at the same time as implementing the Bill. In recognising that the current employment status framework is complex, the government has confirmed its commitment to consulting on reform to employment status but stated that some reforms, such as this, will take longer to undertake and implement to get the framework right.

Guaranteed hours contracts: Eligibility threshold to remain

Under the Bill, employers will be required to offer a guaranteed hours contract reflecting the qualifying hours workers regularly work over a reference period. Regulations will specify the threshold number of hours below which a worker will be eligible for guaranteed hours. The BTC has expressed concern that this creates a loophole that can be exploited by companies to avoid their obligations.

The government has confirmed that the threshold number of hours will remain and will be consulted on prior to being defined. The government believes that if there was no hours threshold, workers who already have predictability and security of income would be in scope of the new right (such as full-time employees who work overtime).

Help for employers

With the Employment Rights Bill currently making its way through Parliament, employers are advised to keep abreast of developments and be ready to act once there is greater certainty over the detail of the changes contained within the Bill, including when the changes will come into effect.

AfterAthena has also prepared a range of guides and updates to specific areas of law affected by the Employment Rights Bill to help employers prepare for these generational changes to employment law: