The Labour Government published its long-awaited Employment Rights Bill on 10 October 2024, aimed at upgrading the rights of workers, addressing the issues of “one-sided flexibility” in the workplace, and improving work and financial security.

One of the Bill’s key changes will be to prevent “exploitative” zero-hours contracts and fire and rehire practices. Individuals on zero-hours contracts will gain guaranteed hours if they want them. Those workers and those on low hours contracts will have the right to a guaranteed-hours contract if they work regular hours over a defined period. Employees can request to remain on a zero-hours contract if they wish.

What are zero hour contracts?

Currently it is possible to engage employees and workers on zero hour contracts, whereby there is no obligation on an employer to provide its staff with a minimum number of hours work, or any work at all. This is common in retail and hospitality sectors and can lead to job and income insecurity.

The proposed changes

The Labour Government has made it clear that it intends to address issues of “one-sided flexibility” and insecurity over working hours that have arisen as a result of new technologies and ways of working. The changes announced propose to impose a ban on zero hour contracts and those which do not have a minimum number of guaranteed hours.

The changes introduced will entitle those who work regular hours over a period of time to regular contracts, in order to ensure that all jobs “provide a baseline level of security and predictability”. Regulations will set out the reference period, which is expected to be 12 weeks. This will include mandating that workers are given reasonable notice where any of their shifts or working times are changed, and that they are proportionately compensated in circumstances where shifts are changed or cancelled. It is expected that regulations will provide further details on what reasonable notice must be as a minimum. There will also be reference periods to account for circumstances where hours become regular over a period of time.

If there are workers who wish to remain on a zero-hours contract, they will be able to do so by rejecting the employer’s offer of a guaranteed-hours contract.

What does this mean in practice?

These changes are set to pose a challenge to employers who rely on casual workers on low or zero hour contracts. Such employers will be required to consider how they’re engaging staff and how long for. This is likely to be particularly difficult for industries which fluctuate with seasonal demand. For example, hours worked might rise over the Christmas period and reduce in the New Year. Alternatively, in the farming sector, seasonal workers may be engaged for more than 12 weeks, meaning they could be caught by these changes despite neither party intending the contract to become permanent.

Next Steps

The previous Government was in the process of providing workers and agency workers the right to request more predictable terms and conditions. The Labour Government has now issued an initial consultation seeking views from stakeholders on how this might work and how the new provisions on zero hours contracts may apply to agency workers.