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Written by: Amy Stokes & Victoria Wenn
According to a recent survey by the Trades Union Congress, over a million people in the UK are working on zero hours contracts.
Before the election, Labour indicated that it intended to abolish these contracts entirely. However, the Employment Rights Bill (ERB) stops short of this. Instead, it sets out several new (and rather complex) obligations on employers to prevent ‘exploitative’ zero hours contracts with the aim of giving workers greater security and predictability. The government has also recently confirmed that the proposals will apply to agency workers, to prevent employers trying to circumvent their obligations that way.
Although much of the detail in relation to the proposed reforms on zero and low hours contracts is still to be clarified, we look at the key proposals, how they are likely to impact your business and what you can do now to prepare.
Guaranteed hours contracts
In broad summary, employers will be required to offer eligible zero and low hours workers a permanent ‘guaranteed hours contract’ (GHC) reflecting the hours they regularly worked during a set reference period. We don’t yet know what the reference period will be, but the government has suggested 12 weeks.
Workers do not have to accept a GHC, and they may continue working on their existing contract if they choose to do so. If they turn it down, an employer may need to continue offering them a GHC every 12 weeks, which would be a significant administrative burden (although further clarification on this is required).
However, employers will be able to contract out of this obligation by way of a collective agreement which is incorporated into a worker’s terms and conditions. It also seems likely that employers will be able to engage workers on fixed-term contracts to cover seasonal fluctuations or other busy periods, but this is something to keep under review as further details emerge.
Right to reasonable notice of shifts
Certain zero and low hours workers will have the right to ‘reasonable’ notice of shifts that an employer has required or asked the worker to work (including notice of cancellations or changes to shifts).
It is not yet clear what the government means by ‘reasonable notice’ and we are expecting this to be defined in further regulations.
Right to payment for cancelled, moved or curtailed shifts at short notice
Broadly speaking, this obligation will apply both: (i) where an employer has required or asked a zero or low hours worker to work a shift, and (ii) where a worker has asked to work a shift and their employer has agreed.
Much of the detail needs to be defined in regulations. For example, we don’t yet know what is meant by ‘moving’ a shift, or the meaning of ‘short notice’, or how the relevant payment will need to be calculated.
As things currently stand, it is difficult to assess the impact of these reforms on businesses because many of the key details are still to be defined.
What is certain is that the hospitality sector, used to being able to rely on flexible staff, will need to adapt and adjust its practices soon.
To maintain flexibility in this new frontier, employers will need to be more organised and strategic in terms of monitoring working patterns, fluctuations in workload, and how and when staff are engaged. Once a worker accepts a GHC, they will be a permanent member of staff with contracted hours, and employers will also need to be conscious of possible overstaffing, which could lead to redundancies.
Preparation and planning will be key, and we suggest that employers take steps now to audit their use of zero and low hours workers (including agency workers) and review what this would look like if a 12-week reference period applied. In addition, employers could start looking at patterns in workload, including identifying any busy periods. Once we have further details about the proposals in the ERB, it may also be worth investing in technology to help with organisation and planning going forward. We are not expecting these reforms to come into force until 2026, so we recommend that employers keep a close watching brief on developments as they arise.
TLT LLP
We’re a full-service law firm with over 25 years’ experience in the leisure, food and drink sector. Our clients range from national pub companies and leading restaurant chains to experiential leisure operators, sports venues and major festivals. We live and breathe your issues, using our sector knowledge and legal expertise to provide highly commercial advice.
