Short Notice Payments – what agencies need to know

When it received Royal Assent at the end of last year, the Employment Rights Bill became the Employment Rights Act 2025. It is set to be one of the most significant overhauls of employment legislation in recent years. Changes will be introduced on a phased basis, with most coming into effect during 2026 and 2027.

The Act includes a range of measures aimed at ending exploitative zero hours contracts, but alongside these is a lesser-known provision for short notice payments. This is a right for eligible agency workers to be paid if shifts are cancelled, curtailed or moved at short notice.

This update, highlighted to us by the Department for Business and Trade via the FCSA, may not have received much public attention, but it’s an area agencies need to understand to protect both their workers and their business. 

What are short notice payments? 

Under ERA 2025, eligible agency workers will have a right to payment when shifts are cancelled, curtailed or moved at short notice. This ensures workers are compensated even if their expected income is disrupted through no fault of their own.

The government will define what counts as “short notice”, the payment amount and the eligibility criteria in forthcoming regulations. These rules are not yet in force, and the DBT has confirmed that consultation will take place to finalise these details.

Who pays?  

Agencies are responsible for paying short notice payments to their workers. However, often hirers are the party responsible for the shift change. Which creates an important consideration for agencies: can they recover these payments from hirers?

How agencies can recoup costs

The government’s position is that where hirers are responsible for cancelling, curtailing or moving shifts at short notice, the recovery of any associated payments should sit within business to business contractual arrangements between the agency and hirer.

However, many existing agreements were put in place before agencies were aware of the requirement to make short notice payments and may not include any mechanism for recovery.

To address this, ERA 2025 includes a specific provision allowing agencies to recoup these costs in certain circumstances:

• If an agency entered into an agreement with a hirer before 18th February 2026 and has not modified it since, it can recoup the cost of short notice payments from the hirer, so long as the hirer caused the short notice.
• If agreements are made or modified on or after 18th February 2026, agencies will need to include explicit contractual provisions to recover these costs.

This measure recognises that many existing agreements may not have anticipated the obligation to make short notice payments, giving agencies a clear route to recover costs where hirers are responsible. Agencies may wish to seek legal advice to ensure they can protect their interests under new arrangements.

Why this matters for agencies 

While short notice payments may seem like a niche part of ERA 2025, they are crucial for agencies managing temporary and zero hours workers. Ensuring workers are paid fairly for cancelled shifts is not just about compliance, it helps maintain strong relationships with contractors and protects your business from unexpected costs.

Supporting you through change

2026 is shaping up to be one of the busiest yet for legislation impacting the recruitment industry, with the Employment Rights Act and upcoming Umbrella Regulations in April. At Liquid Friday, we’re experienced hands at supporting agencies through change, and this year is no different.

If you have questions about short notice payments or any other legislative updates, get in touch. If we don’t have the answer, we can tap into our network of contacts across industry bodies and government to help you.