We’ve written previously on the significant reforms to employment rights incoming from the Labour government, and the publication of the eagerly awaited Employment Rights Bill provides some much-needed clarity. See our overview article here on the Employment Rights Bill. The reforms include a particular focus on zero-hours contracts; changes aimed at providing greater security and predictability for workers whilst trying to maintain flexibility for businesses.
It’s worth noting that these will not be the first restrictions on zero-hours contracts. In 2016, we wrote on the perceived abuse of zero-hours contracts and workers and the then Conservative government’s response of banning exclusivity clauses.
How are zero-hours contracts likely to change?
A ban on ‘exploitative’ zero-hours contracts
In 2021, Labour published its Green Paper, “A New Deal for Working People”, which included, amongst other things, an intention to ban zero-hours contracts. Labour then watered down this promise, moving to an intention to ban ‘exploitative’ zero-hours contracts, but with no clear explanation of what would amount to ‘exploitative’.
Surprisingly, the Employment Rights Bill doesn’t include any ban on zero-hours contracts. The Labour government has rowed back on its toughest stated stance on this. However, the range of limitations it imposes will likely put strict limitations on their use.
The right to guaranteed hours
Employers will be required to offer guaranteed hours to zero-hours workers after the end of every reference period. However, this requirement will also extend to workers with a “low” number of guaranteed hours who regularly work more than those hours. This unexpected extension to the reach of this requirement is a measure designed to avoid employers seeking to circumvent the new rules by moving their zero-hours workers on to guaranteed hours contracts with very low guaranteed hours.
What amounts to a “low” number of hours has yet to be defined though. Another unknown is how long the reference periods are going to be, although Labour’s Next Steps to Make Work Pay suggests it could be 12 weeks. We will know more detail, and the practical implications, as consultation on the proposed legislation progresses.
The reality that zero-hours contracts can be beneficial to both parties, appears to be recognised by the fact that a worker will be able to decline an offer of guaranteed hours. It appears however that the offer must still be made, including (presumably) future offers. This seems an unnecessary administrative burden on employers.
It remains to be seen what form the offer of guaranteed hours will need to take and, more importantly, how long the offer will need to be kept open for.
The right to reasonable notice of work schedules
Attempting to give workers greater ability to plan their lives, Labour will ensure workers employed on a zero-hours or minimum hours contract (as well as workers who do not have a set working pattern) are given reasonable notice of a shift they are required to work. This will include the time and day of the shift and how many hours will need to be worked. Coupled with this right, those same workers will need to be given reasonable notice of any change to, or cancellation of, a shift. Any worker denied reasonable notice will be entitled to a proportionate level of compensation.
The regulations will need to define what the minimum amount of notice, and a proportionate level of compensation, will look like, as well as any exceptions to these rules.
Agency workers currently fall outside the remit of the above changes, but the Bill includes the power to extend its application to that group too.
What do employers need to do now?
Although no implementation date has yet been given for these changes, and they may not come into effect until as far away as 2026, they are significant, so it is still worth employers getting prepared in advance of the changes. Employers should:
- Review their workforce to identify what proportion of them would fall within the scope of these changes, let’s call them the ‘affected workers’.
- Consider the benefits of offering other types of employment to those affected workers.
- Explore how the business would be affected if its affected workers needed to be given guaranteed hours in line with what they have worked over, say, the last 12 weeks.
- Review shift scheduling practices, including how (and with what notice) shift cancellations are made.
- Train managers to ensure compliance with any new regime that is incoming.
The Stephens Scown employment team works in partnership with organisations to improve their contracts and advise on employment issues. To discuss this or any other HR issue call 01392 210700 or employment@stephens-scown.co.uk.