Zero hours contracts have been a contentious issue in UK employment law for several years. These contracts are typically defined as arrangements where the employer does not guarantee any minimum number of working hours, and the worker is only paid for work actually carried out. Over 4 million people in the UK are currently in insecure jobs, with over 1 million on zero hours contracts.
Recent developments
In recent years, steps have been taken to address concerns about zero hours contracts:
In 2015, the government banned exclusivity clauses in zero hours contracts, allowing workers to accept shifts from multiple employers.
The Workers (Predictable Terms and Conditions) Act received Royal Assent in September 2023, aiming to give workers the right to request more predictable working patterns. The Act, which is expected to come into force in September 2024, aims to enforce the suggestions provided by the Taylor Review of Modern Working Practices, which was released on July 11, 2017.
Labour's proposed reforms
The Labour Party has outlined several key proposals regarding zero hours contracts as part of their "New Deal for Working People":
Banning "exploitative" zero hours contracts.
Ensuring workers have a right to a contract that reflects the number of hours they regularly work, based on a 12-week reference period.
Providing workers with reasonable notice of any changes in shifts or working time.
Offering proportionate compensation for cancelled or curtailed shifts.
Labour has declared that these reforms are designed to eliminate 'one-sided flexibility' and guarantee that all jobs offer a fundamental level of security and predictability.
Potential impact on employers
While the full details of Labour's proposals are yet to be finalised, employers should be aware of potential impacts:
Resourcing challenges: Restrictions on zero-hours contracts could reduce employers' ability to flex resourcing to meet fluctuating demand.
Administrative burden: Employers may need to review and respond to more requests for flexible working, predictable terms, or contracts reflecting recent work patterns.
Risk of misclassification: Some businesses might be tempted to engage people on a self-employed basis, potentially exposing themselves to employment and tax liabilities.
Preparing for potential changes
Although Labour has promised to introduce legislation within 100 days, it may take longer for these reforms to be fully implemented. However, employers can take steps to prepare:
Audit the current workforce to identify the proportion of zero-hour contracts in use.
Review how a 12-week average calculation would impact workers currently on zero-hours contracts.
Assess processes for managing work requests and shift cancellations, including any AI systems used for scheduling.
Train managers on potential new work allocation processes.
Additional considerations
It's worth noting that Labour's position on zero-hours contracts has evolved. Initially, they proposed a complete ban, but have since moved towards targeting "exploitative" practices while recognising the value of flexibility for some workers and industries.
The reforms are part of a broader package of employment law changes proposed by Labour, including measures related to fire and rehire practices, day-one unfair dismissal rights, and the introduction of a single worker status.
Further reading
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