Zarah ChoudharyThe Business and Trade Committee’s inquiry into the Employment Rights Bill has raised concerns about unclear rules and potential loopholes that could allow businesses to bypass protections.
These concerned were raised around zero-hours contracts, employment status, and enforcement in particular.
3.1% of people in employment in the UK are on zero-hours contracts, amounting to around one million workers.
These contracts are most common among women, younger workers aged 16 to 24, part-time employees, and those in hospitality and retail.
The bill aims to introduce protections for these workers, including guaranteed hours based on previous work patterns, reasonable notice for shifts, and compensation for last-minute cancellations.
However, the committee called on the Government to clarify what constitutes ‘reasonable notice’ and ensure compensation rules are properly defined.
A 2022 Chartered Institute of Personnel and Development (CIPD) report found that 20% of businesses give less than a week’s notice for shifts, and only a third compensate workers when shifts are cancelled within 24 hours.
The committee also recommended removing references to a minimum number of hours, to prevent businesses from adjusting contracts to avoid their obligations.
Concerns were also raised about employment status, particularly in the gig economy.
Many workers in this sector are classified as self-employed, meaning they do not receive the minimum wage or holiday pay.
Research found that 72% of gig workers rely on these jobs for their income, with 40% working at least 40 hours per week and 26% exceeding 50 hours.
A 2021 investigation revealed that one in three Deliveroo riders earned below the UK minimum wage, with some making as little as £2 an hour.
The committee warned that without clearer definitions, companies could avoid new protections by shifting workers to self-employed or agency contracts.
Agency work and umbrella companies were also highlighted as areas of concern.
The UK has around one million temporary agency workers contributing £34bn to the economy, but the inquiry warned that businesses could increase agency hiring to sidestep the bill’s protections.
Sports Direct’s Shirebrook warehouse was used as an example, where 4,000 agency staff make up more than three-quarters of the workforce.
The committee also flagged concerns about umbrella companies, which have been accused of wage skimming, withholding holiday pay, and lacking proper regulation.
The bill proposed establishing a Fair Work Agency to enforce these new rights, but the inquiry questioned whether it will have enough resources and authority to ensure businesses comply.
It also called on the Government to strengthen oversight of international supply chains to prevent UK companies from benefiting from forced labour abroad.
Workplace harassment and abuse were also a focus.
A 2024 British Retail Consortium report found a 50% increase in incidents of racial abuse, sexual harassment, physical assaults, and threats against retail workers.
The committee backed stronger protections, particularly following widespread allegations of sexual harassment at McDonald’s.
The bill also includes measures to improve trade union access to workplaces and changes to recognition rules to make it easier for workers to organise.
However, businesses raised concerns about potential disruption and costs.
Trade union membership in the UK declined from 32.4% in 1995 to 22.4% in 2023, while industrial action has risen, with 2.5 million working days lost to strikes between June and December 2022, the highest level since 1990.
The Government estimated the bill would cost businesses £5bn annually.
The Institute of Directors warned that it could reduce employment levels, while the Federation of Small Businesses (FSB) expressed concerns about smaller firms struggling with compliance.
Although the bill does not directly address international labour standards, the committee called for tighter regulation of supply chains.
A BBC investigation found that some supermarket products labelled ‘Italian’ contained cotton sourced from China’s Xinjiang region, linked to allegations of forced labour.
Tesco reported two to three cases of exploitation within its operations and 15 within its supply chains, while McDonald’s faced criticism for not disclosing its audit results.
Neil Carberry, chief executive at the Recruitment and Employment Confederation (REC), said: “The committee’s report draws attention to the complexity and scale of this Bill.
“Businesses fear that the Bill will do more harm than good unless the asks made of employers are clear, practical and – as the committee rightly emphasises – properly enforced.
“If that means putting more detail into the Bill as the committee suggests, then a longer timeline is needed than the government currently intends.
“If the government plans to provide that clarity through regulations instead, then a proper partnership with employers and trade unions on fundamental details is necessary.
“What the trade unions negotiated with Labour before the election is one thing, but good employment relations rely on bringing employers and employees together – not pre-election deals that are short on detail and long on potential economic damage. Let’s take time to talk and get things right.”
Carberry added: “The committee points to examples of perceived poor practice by employers and a number of other risks in this report – this is worthy of our time and attention.
“But we must also reflect on the vast majority of employers, who do things the right way.
“They are suffering with a range of rising business costs, including the National Insurance changes brought in by the Budget.
“And they can only create jobs if their firms are sustainable.
“A flexible labour market is critical to this, with different forms of work a fundamental part of generating opportunity and growth – not a route to avoiding anything.
“These employers need Parliament’s support, not more challenges.
“We welcome the report’s acknowledgment of the fact that agency workers usually want the flexibility this way of working offers – that support should flow through to how the Bill and secondary legislation is designed.”
Gary Smith, general secretary at GMB, said: “It’s far from perfect, but this bill is a massive step forward for the lives and well being of working people.
“If this legislation had been in place, GMB members at Amazon Coventry may well have won their fight to make their voice heard, tens of thousands of care workers would not have had to risk going to work with covid and schools wouldn’t be left with crippling support staff vacancies – because they would finally be paid a proper wage.
“Vested interests for bad employers have opposed every gain workers have made, from the minimum wage to equal pay for women.
“More will be needed to ensure the Bill delivers the change that the country voted for, but today represents a pivotal moment.”
