Zero hours contracts define circumstances where a worker is engaged by a business on an ad hoc basis. The business does not have to provide any minimum level of work and the employee does not have to take any work offered.
Zero hours contracts can provide flexibility for both businesses and workers, which may suit a range of workers including some students and those operating in the gig economy.
However, there have been concerns raised around the use of zero hours contracts in relation to vulnerable, low-income workers. The lack of certainty around the hours that may be offered may act as hurdle to those seeking job security and guaranteed income, and last minute changes and cancellations to shifts by businesses can leave the benefits of these contracts seeming somewhat one-sided.
Reform
Whilst there will not be an end to zero hours contracts altogether, the Government has set out its intention to end one-sided flexibility and the exploitation of workers through zero hours contracts.
The Employment Rights Act (‘ERA’) will:
- introduce a duty on employers to offer a guaranteed hours contract. The guaranteed hours would reflect the hours qualifying workers regularly work over a reference period (not yet confirmed but expected to be 12 weeks). Workers may reject such an offer and remain on a zero hours contract as they wish;
- introduce a duty on employers to give reasonable notice of shifts and shift changes/cancellations and afford workers the right to seek compensation from the business in the Employment Tribunal if they fail to comply. A notice will be presumed unreasonable (unless proven otherwise) if:
- for shift cancellations, it’s given less than a specified amount of time before the shift would have started;
- for changes to the shift start time, it’s given less than a specified amount of time before either the original or new start time;
- for other shift changes, it’s given less than a specified amount of time before the shift begins or after it has already started;
- require employers to make payments to workers if they cancel or change a shift at short notice;
- provide workers with the right not to be subjected to a detriment where they accept or rejects a guaranteed hours offer or decline to work a shift for specified reasons; and
- introduce automatic unfair dismissal if the primary reason for dismissal is the employee’s acceptance or rejection of an offer for guaranteed hours made by the employer.
What does this mean?
The proposals will allow greater security for workers who are seeking guaranteed hours or income, without removing the benefits of zero hours contracts for those workers who are not.
Although the changes are not planned to take effect until 2027, employers will need to ensure that they are fully informed and up-to-date with the new requirements posed upon them which, at present, remain unclear. It is not yet known what will be considered a presumed ‘reasonable notice period’ for cancellation and changes to shifts.
The new requirements to provide payments/compensation to workers in the event of shift cancellations/changes at short notice risk posing a significant financial impact to business. During government consultation, care will need to be taken to account for those industries that are more susceptible to last-minute changes.
In addition, it is not yet clear how businesses will be expected to calculate the hours a worker regularly works for the purpose of making a guaranteed hours offer. Reference only to a 12 week period may negatively impact those businesses that are subject to seasonal fluctuations in demand. Relevant calculations may see such businesses having to offer guaranteed hours in excess of what they can realistically provide during quieter periods.
If you would like to discuss zero hours contracts or anything else affected by the Employment Rights Act, please contact a member of the Employment team.
To find out what other aspects of employment law are affected by the Employment Rights Act, read our blog “The Employment Rights Act – When to expect change”.
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