I wonder what changes have been proposed to zero-hour contracts in the Employment Rights Bill?

On 10^th October 2024 the Employment Rights Bill 2024 (the Bill) was introduced to Parliament. Although the Bill has been in the spotlight for a few weeks now there is still a long way to go before the Bill receives the Royal Assent, and we still don’t know when the changes will become effective. Nonetheless, this does not mean that employers should forget about the Bill for the upcoming years but, instead they should familiarise themselves with the potential changes and use this time to prepare their business for the upcoming winds of change.  

In this article we will solely focus on the proposed changes to zero-hour contracts that have been made in the Bill, and what these proposed changes would mean for employers.

WHAT ARE ZERO HOUR CONTRACTS?

Zero hours contracts are where an employer is not obligated to provide a minimum number of working hours, and the employee or worker is not required to accept any work offered. Employers are also not currently required to provide a specific amount of notice of shifts offered to a casual employee or worker and are able to cancel shifts at any time. This flexible arrangement allows employers to adjust staffing levels based on demand, but it also means workers may face inconsistent income and hours.

ADVANTAGES AND DISADVANTAGES OF ZERO HOUR CONTRACTS

Although zero-hour contracts can provide both parties with greater flexibility, it can be argued that this flexibility is one-sided, putting employers in a better position with casual employees or workers potentially facing financial uncertainty.

However, there are some protections for those on zero-hour and minimum hour contracts. The Employment Rights Act bans exclusivity clauses for employees and workers on zero hours contracts. An exclusivity clause is a clause that prohibits the individual from working for another employer. In 2022, such clauses also became unenforceable in the contracts of employees and workers whose net average weekly wage did not exceed the lower earnings limit. The ban on exclusivity clauses helps protect workers who rely on multiple employers to satisfy their financial needs.   

Nonetheless, negative publicity surrounding zero-hour contracts and them being viewed as ‘exploitive’ has led to the Labour Government proposing changes to zero-hour contracts as set out in the Bill.

PROPOSED CHANGES IN THE EMPLOYMENT RIGHTS BILL

Although in the past few months the media discussed that “exploitive” zero-hour contracts will be “banned” this is not entirely the case as the Bill proposes additional restrictions on zero-hour contracts rather than solely banning them altogether.

Firstly, the Bill proposes to introduce a “right to guaranteed hours”. This means that individuals engaged on zero-hour contracts will be entitled to a guaranteed hours contract if they work for a regular number of hours over a certain period of time (which is likely to be a 12-week reference period). These proposed changes will also cover those who work minimum hour contracts. However, in their case they would need to be regularly working a number of hours which exceeds the minimum number of hours specified in their current contract. Nonetheless, this proposal in the Bill does not place a requirement on a casual employees or workers to accept the “guaranteed hours” if they do not wish to; they will have the right to remain on zero-hour contract.

It is important to note that the Bill states that there will be a statutory requirement on employers to offer “guaranteed hours” to those engaged on zero-hour contracts, even if they know that the employee or worker does not wish to accept it.

In addition, the Bill also proposes to impose a requirement on employers to provide their casual employees or workers with reasonable notice of any shifts that they request them to work.

The Bill also proposes a requirement on employers to make payments to those on zero-hour contracts if their shifts are cancelled, curtailed, or moved at short notice.

The Government have not provided any information on how these changes will work in practice, such as what constitutes “reasonable notice”. However, it is likely that more information will be introduced on this prior to any such changes taking effect.

Finally, employers should also note that the current Government has said it plans to scrap the previous government’s Workers (Predictable Terms and Conditions) Act 2023, which would have given workers the right to request predictable terms and conditions of work.

CONCLUSION

In conclusion, the proposed changes to zero-hour contracts in the Bill will not dramatically change zero-hour contracts as we know them. However, these proposed changes may have a significant impact on employers who currently rely on the flexibility of zero-hour contracts. It is vital that employers know how this change will affect their business and that and they take appropriate steps in ensuring that their business will be compliant with the new legal requirements in the near future.

Our Peace of Mind Team will keep clients informed of any changes and provide specific advice on new protections or procedures once they take effect. If you have any other questions about the recent proposals made in the Bill, or have any other employment law related questions, please contact our Employment Law team by emailing employment@warnergoodman.co.uk or by calling 023 8071 7717.