Using temporary staff in 2026: what the Employment Rights Act means for your business before 2027

There is a widespread assumption among businesses that the Employment Rights Act's changes to temporary and flexible working are an agency problem. Your recruitment partner handles the contracts, the payroll and the compliance, so the new duties presumably land with them.

For the single most significant change, that assumption is wrong. The duty to offer guaranteed hours to a qualifying agency worker will sit with you, the hirer, not with the agency supplying them.
That is worth knowing now rather than in eighteen months, because the government is currently consulting on exactly how the regime will work, and the answers will determine how much administrative weight lands on your business. Here is where things actually stand.

We are running two roundtables on this in September - Bracknell and Crawley. Details at the end of this article.

What has already changed

The Employment Rights Act 2025 received Royal Assent on 18 December 2025 and is being implemented in phases across 2026 and 2027. Several provisions are already live and affect anyone using temporary or flexible labour:

• Statutory Sick Pay became a day-one entitlement on 6 April 2026. The three-day waiting period and the Lower Earnings Limit have both been removed, so lower-paid and part-time workers who previously fell outside SSP now qualify from the first day of absence.
• The Fair Work Agency launched on 7 April 2026 as a single enforcement body covering minimum wage, holiday pay and statutory sick pay. It can open proactive investigations without waiting for a worker to complain, a meaningful change from the previous complaint-led model.
• Paternity leave and unpaid parental leave became day-one rights on 6 April 2026.
• The National Living Wage rose to £12.71 per hour on 1 April 2026 for workers aged 21 and over, with the 18–20 rate rising sharply to £10.85.

The government has also published a revised implementation timetable that replaces the original July 2025 roadmap. Some dates moved. If you built a compliance plan against the old version, it is worth re-checking.

What is coming in 2027

Two changes matter most for businesses that use flexible labour.

Unfair dismissal after six months. From 1 January 2027 the qualifying period for ordinary unfair dismissal claims drops from two years to six months, and the statutory cap on compensatory awards is removed entirely. The change applies to dismissals taking effect from that date rather than to employment start dates, which means anyone you hire from around the end of June 2026 onwards will carry the protection by January. The removal of the compensation cap deserves particular attention, because it changes the risk profile of a badly handled dismissal from a bounded cost to an open-ended one.

Guaranteed hours and shift notice. Also expected during 2027, and this is where agency workers come in.

The agency worker provisions, in detail

The Act gives workers on zero-hours and low-hours contracts a right to be offered a guaranteed hours contract reflecting the hours they have actually worked over a reference period, plus rights to reasonable notice of shifts and to payment when shifts are cancelled, curtailed or moved at short notice.

These rights were deliberately extended to agency workers to stop businesses using temps as a route around the new rules. The extension works differently from the direct-employment version, though, because agency work involves three parties rather than two. Here is how the responsibilities split:

The guaranteed hours offer is your duty. Where a qualifying agency worker becomes entitled to a guaranteed hours offer, the obligation to make that offer rests with the end hirer. Secondary legislation may shift it to the agency in specific scenarios, but the default sits with you. If the worker accepts, they become your worker for the purposes of that contract.

Reasonable notice of shifts is a joint duty. Both the agency and the hirer are responsible for giving an agency worker reasonable notice of shifts and of any changes, curtailments or cancellations. Where reasonable notice is not given, an employment tribunal will apportion liability between the two of you based on the facts. This mirrors the approach already used under the Agency Workers Regulations 2010.

Short-notice cancellation payments are the agency's to make, but not necessarily to absorb. The agency pays the worker, on the sensible logic that the worker is already on the agency's payroll. Agencies will, however, be able to recoup those costs from the hirer where the hirer is responsible for the cancellation. In practice, expect this to be dealt with in your terms of business.

Pay parity constrains what you can offer. A guaranteed hours offer to an agency worker cannot be on less favourable pay than they received as a temp, or than a comparable directly employed worker. Because agency workers are frequently on better hourly rates than direct staff doing similar work, this creates a genuine risk of a two-tier workforce and a difficult conversation with your existing team. It is worth modelling before you need to.

Detriment protections are broad. A worker will be able to bring a claim where they are treated detrimentally for intending to accept a guaranteed hours offer, for rejecting one, or for bringing proceedings under these provisions and, unusually, where the detriment is the termination of the engagement itself. Dismissing someone principally because they accepted a guaranteed hours offer will be automatically unfair. Both agencies and hirers will need records explaining assignment decisions.

There is a genuine temporary need exemption, scope still unclear. Businesses will be able to offer fixed-term or temporary contracts, and avoid the guaranteed hours duty, where there is a genuine temporary work need. This is the provision most likely to determine how the regime feels in practice for seasonal, project-based and cover hiring. Its boundaries will be set in regulations and are not yet settled.

What the current consultation is deciding

The government launched a consultation on the zero-hours reforms on 2 June 2026, and it closes on 25 August 2026. The details being settled are not academic; they determine how many of your temps fall in scope:

• The low-hours threshold. Options range from eight to 48 hours a week, with the government's stated preference sitting between eight and 20. A low threshold pulls far more workers into scope.
• The reference period. The government's preference is 12 weeks, and it is consulting on whether guaranteed hours should be calculated on the mean or the median of hours worked.
• Presumed reasonable notice. Options of one, two, three or four weeks for the point below which notice is presumed unreasonable, with the consultation specifically asking whether agency workers should have a shorter threshold, possibly under five days.

If your business relies materially on temporary staff, responding is worth the hour it takes. Regulations follow the consultation, with commencement expected in 2027 and given the complexity, quite possibly the second half of it.

What to do now

Nothing here requires action this quarter. But the businesses that handle this well will be the ones that did the groundwork before the regulations landed, rather than the ones scrambling in late 2027.

1. Audit your flexible labour. How many temps do you currently engage, for how long, and at what weekly hours? Anyone regularly working above the eventual low-hours threshold across a 12-week period is a potential guaranteed hours offer. Most businesses genuinely do not know this number.
2. Separate genuine temporary need from rolling cover. Seasonal peaks, defined projects and maternity cover are one category. A "temp" who has quietly been in the same seat for two years is another, and carries materially different risk.
3. Model the pay parity problem. If you had to convert your longest-serving temps onto guaranteed hours at no less favourable pay, what would that do to your permanent salary bands? Find out before you are obliged to.
4. Get your shift notice practice in order early. Reasonable notice is a joint duty, and tribunals will apportion liability on the facts. Habitual late cancellations are the behaviour most likely to generate a claim.
5. Review your terms of business with your agencies. Recoupment of short-notice cancellation payments, notification routes for shift changes, and record-keeping responsibilities should all be explicit rather than assumed.
6. Track hours properly. Whatever the final thresholds, compliance depends on knowing what each worker actually worked across a rolling reference period. Systems that cannot produce that on demand will need upgrading.

Join the conversation: our September roundtables

Most of the questions this raises do not have clean answers yet, which is precisely why they are worth discussing with people facing the same decisions.
We are hosting two roundtables in September, bringing together HR leaders, operations directors and business owners to work through what the Employment Rights Act means in practice. These are small, informal sessions built around discussion rather than presentation, the value is in comparing notes with peers on how they are reading the genuine temporary need exemption, what they are doing about pay parity, and where they are choosing to act early versus wait for the regulations.

Bracknell | Thursday 17 September: To register your interest, contact Natasha Wyatt: Natasha.wyatt@huntress.co.uk
Crawley | Tuesday 29 September: To register your interest, contact Kathryn Sanders: Kathryn.sanders@huntress.co.uk

Places are limited. If you use temporary or flexible labour and would like to attend, do get in touch. If neither date works, let us know, and we will keep you posted on future sessions.

Where Huntress fits

We have placed temporary and contract staff across the UK for more than 25 years, which means the operational side of this, hours tracking, reference periods, assignment records, notice practice, is work we already do. What changes in 2027 is that a duty which businesses have historically been able to treat as their agency's problem becomes, in the most significant respect, theirs.

The practical answer is not to use fewer temps. Flexible labour will remain essential, and for genuinely temporary need the exemption exists precisely to preserve it. The answer is to work with a partner whose records, systems and terms of business are built to survive the scrutiny the Fair Work Agency and the tribunals are about to bring.

If you would like to review how your current temporary workforce sits against the incoming rules before the regulations land, your local Huntress team can help you map it.

Find your nearest office and get in touch.

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This article is general information about forthcoming legislation and is not legal advice. Much of the detail remains subject to consultation and secondary legislation, and dates may change. Please take specific legal advice on your own circumstances.