Around one million temporary workers and contractors work across the United Kingdom on any given day, many of them in the NHS, social care, and logistics, choosing agency arrangements precisely because those arrangements bend around their circumstances. A set of proposed reforms moving through the post-consultation stage could alter that calculation materially. The Recruitment and Employment Confederation (REC) submitted its formal response to the government the week of 1 September 2026, arguing that without a carve-out for genuinely temporary and short-notice roles, the guaranteed-hours package risks reducing the volume of agency shifts on offer and, more troublingly, pushing workers into bogus self-employment to preserve the flexibility they already hold.

The consultation closed the week before 1 September 2026. A statutory instrument is now the milestone to watch. What sits inside that package matters for anyone whose job involves covering unpredictable demand, and for anyone currently on an agency register: the government intends to require employers to offer eligible zero- or low-hour workers a contract reflecting the regular hours they worked across a defined reference period. That framing sounds like greater security. In practice, the REC and several NHS bodies say the mechanics could hollow out the roles the reform is designed to protect.

What the reform actually proposes

Three linked measures form the core of the package: a guaranteed-hours entitlement calculated over a backward-looking reference period, a requirement to give reasonable advance notice of shifts, and compensation payments when shifts are cancelled at short notice. These provisions form part of the Employment Rights Act 2025, which received Royal Assent following the Employment Rights Bill 2024, and implementation is being phased via secondary legislation. The UK government's own impact analysis puts the annual cost to businesses at between £1bn and £2.9bn. Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), translates the upper figure into concrete headcount terms: £2.9bn is approximately the cost of employing 137,000 full-time workers aged 18 to 20 on the National Minimum Wage. That is the scale of the accounting adjustment being placed on employers who rely on flexible labour. Carberry put the daily figure bluntly, noting that ministers are asking employers to absorb costs of up to £8 million a day at a time when employment costs are already elevated and the labour market needs strengthening.

For employees: what changes for agency workers

If you are currently on an agency register, the starting point is recognising that agency work in the United Kingdom is already subject to meaningful statutory protection. The Agency Workers Regulations 2010, Regulation 5, give you the right to pay parity with comparable direct-hire colleagues after 12 qualifying weeks on the same assignment. You also accrue paid holiday entitlement from day one under the Working Time Regulations 1998, and you retain access to the National Minimum Wage under the National Minimum Wage Act 1998. The reform does not remove those rights. What it may change is the volume of shifts your agency can offer you, and whether some hirers attempt to reclassify roles to sidestep the new obligations.

Neil Carberry, chief executive of REC, framed the concern in straightforward terms, warning that the real risk facing agency workers is from firms offering fewer shifts, or, as is already being observed, some firms trying to claim jobs are self-employed, which would strip away rights those workers currently hold.

The self-employment risk carries real practical weight. A contractor label removes entitlement to holiday pay, statutory sick pay, pension auto-enrolment under the Pensions Act 2008, and the agency-worker protections that accumulate over time. If you are currently on an agency book and receive communication in the coming months suggesting a move to a self-employed engagement, that merits careful consideration. ACAS (the Advisory, Conciliation and Arbitration Service) provides free guidance on employment status at acas.org.uk, and Citizens Advice can help you assess whether a reclassification holds up against HMRC's employment status framework before you agree to any change.

The flexibility dimension cuts both ways. REC's Voice of the Worker research found that 79% of temporary agency workers said this type of employment met an important need for flexibility, 68% said agency work offered a better work-life balance, and 53% said it was the right type of role for their current stage of life. A guaranteed-hours contract calculated from a backward-looking reference period may not serve those workers in the way the policy intends. Carberry illustrated the point using NHS nursing staff, observing that a nurse working a regular shift at a hospital once or twice a week over a few months does not necessarily want that pattern to continue indefinitely, and that many workers may conclude agency work is no longer worth the administrative burden and leave the sector altogether.

Three practical steps are worth taking now if you work in health, social care, hospitality, or logistics as an agency worker. First, track your shift offers for changes in pattern or volume over the coming months. Second, note any communication about contract-form changes that would move you off PAYE. Third, keep your own records of hours worked, assignment dates, and rates, because the reference-period mechanism means the shifts you accept in late 2026 may shape the guaranteed-hours offer that lands on your desk in 2027.

For HR and staffing planners: the operational squeeze

For those responsible for workforce planning, contingent-labour strategy, or recruitment budgets, this reform arrives directly on the profit and loss account and on the capacity to cover unpredictable demand spikes. The REC's analysis identifies three pressure points that merit modelling before the secondary legislation takes effect.

1. Reference-period exposure

Every worker who crosses the eligibility threshold during the reference window becomes a candidate for a guaranteed-hours offer. That translates into a payroll liability sized to peak or steady-state usage rather than trough. Organisations running seasonal spikes, extended project cover, or prolonged absence cover using agency staff should audit which assignments could crystallise into a permanent commitment under the final rules. The government's own cost estimate of £1bn to £2.9bn annually spans a range wide enough to suggest the secondary legislation will determine much of the real-world impact.

2. Shift-management overhead

Reasonable-notice and cancelled-shift payments move cost onto the moment a shift is dropped. In sectors where last-minute cancellations are operationally baked in, including retail cover, care rounds, and event staffing, the arithmetic on calling in a temp at all changes. Carberry noted that temporary work exists precisely because employers face short-term, seasonal, or unpredictable demands, and that firms have alternative ways to meet that demand, including overtime and overseas supply, or they can simply leave growth that cannot be met sustainably unfulfilled. For HR teams, that is a candid description of the substitution risk: demand does not disappear, it routes elsewhere, often at higher cost or lower quality.

3. Classification risk

The temptation to move roles off agency contracts and into self-employed engagements will increase as costs rise. Treating that as a cost-saving strategy rather than a compliance risk is a serious error. HMRC's employment-status framework, including the tests applied under the off-payroll working rules (commonly known as IR35 in the private sector), does not become less rigorous because a new reform introduces fresh cost pressure. Misclassification under the existing framework exposes the business to back-pay claims, National Insurance liability, and significant reputational exposure. Any classification review triggered by the guaranteed-hours reform needs sign-off from employment-law counsel, not just procurement. The Chartered Institute of Personnel and Development (CIPD) has consistently flagged misclassification as one of the most prevalent compliance risks in contingent-labour arrangements, and the reform context makes that risk more acute, not less.

The NHS and social care pressure point

Health and social care sit at the sharpest end of this reform because those sectors run on flexible cover that by definition cannot always be planned in advance. NHS Employers and the NHS Alliance had already raised formal concerns before REC submitted its consultation response. NHS Employers specifically warned that reforms which are not carefully designed could make NHS Bank work less attractive and reduce workforce availability, which is the reverse of the outcome patients need at a time when waiting lists remain a central political pressure point.

Carberry connected the workforce mechanics directly to patient outcomes, arguing that sweeping curbs on flexible work risk making agency roles less available and less attractive, deepening the recruitment and retention crisis across health and social care. He stated that guaranteed hours add costs, bureaucracy, and legal risks that make it harder to deploy temporary staff at short notice, and that when health and social care providers cannot fill gaps quickly, patients pay the price through reduced access to safe and timely care.

He also pointed to what he described as a policy contradiction: the government's stated intention to reduce NHS agency use to control costs sits in tension with a reform that, in his analysis, would make agency work less viable and strip services of the emergency cover they depend on. Carberry's position, as submitted to the consultation, is that the government's approach to NHS agency spending lacks sufficient analysis of what happens to workforce availability when the flexible supply route is constrained.

What REC is asking for

The REC's position is not opposition to the reform in principle. Carberry was explicit that firms do not want to derail the government's agenda and genuinely want to make the changes work, but that doing so requires substantive discussion about implementation and a specific exemption for genuinely temporary work, including agency staffing.

Without that redesign, Carberry warned, the reform faces a significant policy irony. In his submission to the consultation, he argued that unless government and unions come to the table with businesses to redesign these powers, the ultimate losers will be the people that the change is claimed to protect.

It is worth noting that the dossier gaps flagged by the editorial team include the absence of a formal TUC, Unison, or Unite the Union response to the REC's exemption demand. Unite represents workers across logistics and manufacturing sectors where agency labour is prevalent, and its position on whether a broad exemption would benefit or harm its members in practice has not yet been publicly confirmed at the time of writing. That is a substantive missing piece: if the major unions back the exemption, the redesign becomes politically easier; if they oppose it, the government faces pressure from two directions simultaneously.

Key takeaways for UK agency workers and workforce planners

• The consultation closed the week before 1 September 2026; the statutory instrument implementing the guaranteed-hours provisions is the next critical milestone for both workers and HR teams to monitor.
• UK government analysis puts the annual cost to business at £1bn to £2.9bn; REC benchmarks the upper figure as equivalent to the employment cost of 137,000 full-time NMW workers aged 18 to 20.
• REC's Voice of the Worker data shows 79% of temporary agency workers value the flexibility of agency arrangements, and 68% cite a better work-life balance compared with permanent roles.
• For workers: the Agency Workers Regulations 2010 and Working Time Regulations 1998 protect existing rights regardless of the reform. The immediate risk to watch is any attempt to reclassify your engagement as self-employed. ACAS provides free status guidance.
• For HR and staffing planners: the CIPD recommends auditing contingent-labour classification arrangements before new statutory instruments take effect. Model reference-period exposure, cancelled-shift cost, and HMRC misclassification risk as three separate but linked line items.
• NHS Bank work and social care flexible cover sit at the sharpest operational end of this trade-off, and NHS Employers has already formally flagged the workforce-availability risk to ministers.