Ban on ‘exploitative’ zero-hours contracts
Now: Zero-hour contracts are allowed but can’t include clauses preventing employees working elsewhere.
What the Bill says: The Bill does not seek to define, and ban, “exploitative” zero-hours contracts, as had been expected. This is, however, presumably the intended net effect of a range of provisions, including the introduction of a right to guaranteed hours which are covered below.
Read more:
Employment Rights Bill unpacked: will guaranteed hours guarantee flexibility for both parties
Right to guaranteed hours
Now: No explicit right to have a more predictable working pattern.
What the Bill says: The Bill sets out detailed and complex rules which require employers to make an offer of guaranteed hours to a qualifying worker after the end of every reference period, if the worker’s hours exceed the minimum number set out in their contract. The reference period still needs to be defined in regulations, but the government anticipates an initial period of 12 weeks.
A qualifying worker is not only someone working under a zero hours contract but also someone with a low number of guaranteed hours. What constitutes a “low” number of hours is not set out in the Bill and will be defined in regulations, as will potential additional requirements regarding the number and regularity of those hours.
The offer of guaranteed hours must reflect the hours worked during the reference period. Regulations will provide additional details regarding the specific working pattern or days that must be offered. It also remains to be confirmed what prescribed form the offer must be made in and – importantly – how long it must remain open for, although Bill amendments state that the offer period will be no less than a week.
There are exceptions. Addressing the possibility of short-term labour needs, the Bill provides that the offer can be a fixed-term contract if that is reasonable (i.e. not permanent guaranteed hours). “Reasonable” could include when there is a “temporary work need” or when the worker is needed for a specific task, but the scope of this is uncertain . There is also an open-ended provision for further exceptions to be set out in the regulations.
The obligation to offer guaranteed hours will cease to apply if the worker resigns or has been fairly dismissed during the qualifying period or a limited-term contract came to end (in certain circumstances). If the termination occurs after the offer but before acceptance, the offer is considered withdrawn.
Also, importantly, Bill amendments allow for the duty to offer guaranteed hours to be disapplied by the terms of a collective agreement. It appears that these contracting out provisions don’t require this to be substituted with a similar entitlement.
A worker who is not offered hours on these terms can bring an employment tribunal claim, with the maximum award to be set out in regulations. Employers will also need to be aware of the tribunal claim (introduced as an amendment to the Bill) which aims prevent manipulation of work patterns to avoid the application of these provisions. Essentially, this applies if the right to guaranteed hours would have been applicable had the employer not restricted the hours available during the reference period.
Following consultation, amendments to the Bill also confirm that these provisions will apply to agency workers. It will be the responsibility of the end hirer to make any guaranteed hours offer, although regulations may place obligations on the agency in some scenarios. The collective agreement contracting out provisions can also cover agency workers.
In a subsequent round of amendments, new requirements have been introduced to ensure that the pay offered to agency workers under a guaranteed hours offer is no less favourable than the agency terms they’d been working under or those of comparable workers. Additionally, the amendments stipulate that when an agency worker accepts a guaranteed hours offer from an end-hirer, they will become a worker (rather than an employee).
Also, an amendment was passed in the House of Lords which would change the requirement from an obligation on employers to proactively offer guaranteed hours to an obligation to grant this if requested by an employee. While this would fundamentally change the impact of these reforms, this is very likely to be struck down in the Commons.
What next: Consultation on these measures is expected in autumn 2025. Then, according to the Roadmap, these measures (including their application to agency workers) will take effect in 2027.
However, a number of key provisions – such as the length of the reference period, exceptions to the right, potential conditions for qualification relating to regularity of hours, and what constitutes a “low-hours contract” – remain to be determined in secondary legislation. Detailed government guidance is also expected.
Read more:
Employment Rights Bill unpacked: will guaranteed hours guarantee flexibility for both parties?
Employment Rights Bill unpacked: zero hours reforms extended to agency workers
Right to reasonable notice of work schedules and proportionate compensation
Now: No statutory right to notice of shifts.
What the Bill says: The Bill introduces a right to reasonable notice of a shift an employee is required to work, including the time, day and how many hours are to be worked. This duty will apply to workers employed on a zero hours or minimum hours basis, as well as workers who do not have a set working pattern.
There is also a right to reasonable notice of any change or cancelled shift. This includes the extension of contractually guaranteed shifts. What is “reasonable” notice will depend on the circumstances, but regulations will set out a specific minimum time.
Cancelled shifts include the situation in which a shift is offered to more people than are needed, and then the worker is ultimately not required because someone else has agreed to cover it. However, under Bill amendments, a worker will only have entitlement to payment for a short notice cancellation etc. if they had reasonably believed that they would be needed for that shift. This provision potentially helps to clarify the scope of these rules when shifts are offered to a large number of workers.
There is a duty on employers to make a payment to workers each time there is a change to a shift at “short notice”. Details will be clarified in regulations, but compensation will be proportionate to the cancellation or curtailment. In terms of the definition of “short notice”, an amendment has been agreed in the House of Lords which would define this as cancellations less than 48 hours before a shift is due to start. This is, however, very likely to be struck down in the Commons, so the definition in future regulations remains key.
Importantly, Bill amendments allow for these provisions to be disapplied by the terms of a collective agreement. It appears that these contracting out provisions don’t require this to be substituted with something similar.
Following consultation, amendments to the Bill confirm that these provisions will apply to agency workers. It will be the responsibility of both the employment agency and end hirer to provide an agency worker with reasonable notice of shifts. The responsibility for paying any cancellation or curtailment payments falls to the agency only, although this can be recouped from the end hirer.
What next: Consultation on these measures is expected in autumn 2025. It’s anticipated that this will consider how much notice must be given, what payment must be made, how any compensation will be calculated and any exceptions.
Then, according to the Roadmap, these measures (including their application to agency workers) will take effect in 2027.
Read more:
Employment Rights Bill unpacked: shifting the power for shift workers
Employment Rights Bill unpacked: zero hours reforms extended to agency workers