EMPLOYMENT RIGHTS BILL: IN DEPTH SERIES - ZERO HOURS CONTRACTS
Employment Rights Bill: In Depth Series – Zero Hours Contracts
The UK government’s newly published Employment Rights Bill introduces proposed regulations that could significantly impact zero-hour contracts (ZHCs), commonly used in sectors like hospitality, retail, and social care. ZHCs provide employers with flexibility to manage fluctuating workloads by offering employees work without guaranteeing hours. However, they’ve faced criticism for instability, with workers experiencing last-minute shift changes, insufficient hours, and financial unpredictability.
Background and Current Controversies
Recent analysis suggests approximately 1 million UK workers are on zero-hour contracts, representing about 3% of the workforce. While ZHCs are praised for their flexibility, they’ve drawn substantial criticism. Many workers report little control over their hours, making it challenging to predict income, plan for personal commitments, and arrange childcare.
“Employers who rely on zero-hour contracts should prepare to adapt to these upcoming changes. By focusing on proactive planning, transparent scheduling, and fair compensation practices, businesses can ensure compliance and maintain a positive relationship with their workforce as these regulatory changes take effect.”
Data from the Living Wage Foundation indicates that 59% of ZHC workers receive less than a week’s notice for shifts, and 13% receive under 24 hours’ notice. Additionally, over a quarter of ZHC workers report wanting more hours, with financial instability as a key issue. Given these concerns, the Bill aims to curb exploitative practices and establish a more balanced employer-worker relationship.
Proposed Changes in the Bill
The Bill’s proposals address three primary aspects of zero-hour employment:
Right to Guaranteed Hours: Employers must offer workers a contract with guaranteed hours if they meet certain eligibility requirements, reflecting hours worked during a designated reference period (likely 12 weeks). Workers can reject the offer, opting to remain on a flexible ZHC if preferred.
Reasonable Notice of Shifts: Employers will need to provide reasonable notice of shifts. If shifts are assigned or altered with insufficient notice, workers may seek redress via employment tribunals. While specific parameters are forthcoming, this aims to provide workers with more scheduling predictability.
Compensation for Short-Notice Cancellations: Employers will be required to compensate workers for shifts cancelled, moved, or shortened at short notice. The exact parameters for what qualifies as “short notice” and compensation levels are yet to be defined, with the government pledging to release these details through consultation.
Implications for Employers
1. Increased Administrative Requirements: Employers using ZHCs will likely face increased administrative demands, including tracking worker eligibility for guaranteed hours, managing notice periods, and compensating for last-minute cancellations. For many, the need to monitor and implement these requirements might necessitate new procedures and potentially increase costs.
2. Shift Scheduling and Financial Planning: Organisations may need to revise staffing strategies to ensure predictable scheduling, avoiding frequent last-minute adjustments. Employers will benefit from maintaining clearer work patterns for employees to reduce tribunal claims and comply with the Bill’s stipulations.
3. Tribunal Preparedness and Compliance Training: Employers could experience an increase in employment tribunal cases as workers gain new rights to challenge short-notice scheduling and shift cancellations. Training management teams on compliance with reasonable notice guidelines will be essential to prevent litigation.
Nuances worth consideration
It is important to note that these amendments will apply to “low hour or pay” contracts as well as the traditional casual “zero-hour”. There is currently no definition of “low” in this context but this will be established as part of the consultation process.
It is also of note that the definition of “qualifying worker” under the legislation – i.e. those afforded protection, does not include agency workers. This is an element which may be amended as it is agency staff who often face the biggest precarity.
Finally, in situations where it is not absolutely clear whether those engaged are self-employed or a worker, the individual will face the usual hurdle to prove their status first. Even with the high profile judgments on gig economy workers, Labour’s plan to introduce a single status has been shelved which may have a knock on effect here.
Potential Benefits
Despite these adjustments, the Government believe there to be benefits to these changes to employers as well as workers. Clearer scheduling could reduce worker turnover, improve employee morale, and enhance recruitment efforts in competitive labour markets. Providing stability for employees may also support operational predictability, as workers are more likely to remain with companies that offer job security.
Government Consultation
The government has initiated a consultation on these amendments, with particular emphasis on applying these measures to agency workers. Employers and industry stakeholders are encouraged to participate, providing input on the proposed changes and their implementation. Access the consultation here.
It is likely any changes won’t come into effect until Autumn 2026, giving time to establish new systems and ensure employers are ready to comply.
Employers who rely on zero-hour contracts should prepare to adapt to these upcoming changes. By focusing on proactive planning, transparent scheduling, and fair compensation practices, businesses can ensure compliance and maintain a positive relationship with their workforce as these regulatory changes take effect.
This article is part of a series of in depth looks at different elements of the Employment Rights Bill. For more articles in the series, see our full range of commentary here.