The Employment Rights Bill, introduced to Parliament on 10 October 2024, outlines the Labour Government’s proposed reforms aimed at enhancing workers’ rights while benefiting businesses and delivering economic security. Among these reforms is a move to end the use of ‘exploitative’ zero-hour contracts to address what the government describes as one-sided flexibility. Rebecca Nally explores the implications of this proposed change.
The move to end the use of zero-hour contracts follows research indicating that 84% of workers on such contracts would prefer guaranteed hours. Zero-hour contracts, often referred to as casual contracts, require employees to be prepared to work when called upon, without the guarantee of a set number of hours.
Despite the headlines, the proposed reforms will not end the use of zero-hour contracts entirely. Instead, workers on zero-hour or low hours contracts, will have the right to a guaranteed hours contract if they work regular hours over a specified reference period. However, details regarding the length of this reference period have yet to be confirmed.
For a contract to guarantee hours to a worker, it must specify:
a) Either
i) The specific days of the week and times when the employer is required to make work available to the worker for the offered number of hours, or
ii) A working pattern of days and times, based on which the employer is required to provide work for the offered number of hours
b) The specified days and times, or the working pattern, must reflect the hours worked during the reference period.
In practice, this will require employers to carefully consider the hours they offer when recruiting or altering a worker’s contract. However, the draft legislation also allows employers to issue guaranteed hours contracts on a limited-term basis, giving them the flexibility to offer short-term guaranteed hours and later revert to zero-hours contracts.
While this reform does not prevent the use of zero-hours contracts for those who wish to remain on them, it will provide stability and security of earnings for workers who seek more predictable hours.
The new legislation will also repeal the Workers (Predictable Terms and Conditions) Act 2023, which would have come into effect this year. The 2023 Act would have made it possible for workers to request predictable working patterns, provided they had 26 weeks of continuous service.
Further reforms related to zero-hours workers include:
- The right to reasonable notice of a shift that the employer requests or requires the worker to work. However, no further detail on what constitutes “reasonable notice” has been provided yet.
- The right to payment for cancelled, moved and curtailed shifts for zero-hours/irregular shift workers who were informed of the change at short notice. Again, further details of what constitutes “short notice” are pending.
Based on this information, there a few factors that businesses should consider:
- The cost of providing regular hours to employees who were previously on zero-hour contracts, especially during quiet periods.
- The need for regular reviews with employees on low/zero-hour contracts to assess the feasibility of their contractual arrangements.
- The organisation and communication of shifts will become critical.
Zero hours contracts can be appealing to workers looking for independence and they offer flexibility for employers. However, their use has also been controversial, particularly due to the exploitation of workers, especially younger workers, who have suffered from instability and financial insecurity.
Overall, this proposed reform aims to strike a balance between the needs of businesses and workers. It ensures zero-hour contracts can still be used where workers are comfortable with the arrangement, while providing stability and guaranteed hours for those who are not.
These measures are not expected to come into force for a few years, following a period of consultation.
For now, employers can continue to enjoy one-sided flexibility, but they should be prepared to tread more carefully when recruiting and offering shifts in the future.
Published 20 November 2024
