Zero-hours contracts have long been a topic of debate in the UK, offering flexibility for employers while leaving workers with uncertain job security. However, recent updates to employment law, particularly the new Employment Rights Bill, have changed this. These updates could have a significant impact on businesses that rely on zero-hours contracts, as well as the workers who depend on them.
What Are Zero-Hours Contracts?
Zero-hours contracts are a type of employment arrangement where employers do not guarantee any minimum hours of work. Workers are only called in when needed, and they are paid only for the hours they work. They are also under no obligation to accept work that is offered to them. Equally, an employer cannot prevent a worker from looking for work or accepting work from elsewhere. This form of contract is commonly used in industries like hospitality, retail, and care work, where demand can be unpredictable.
While zero-hours contracts can offer flexibility, they also create uncertainty for workers. They will most likely have limited control over their work schedules, with some facing unpredictable income due to the lack of guaranteed hours. Conversely, employers often benefit from the flexibility of adjusting staffing levels based on demand, without committing to fixed hours.
Last year, we spoke about the Workers (Predictable Terms and Conditions) Act 2023 in our blog on upcoming changes to employment law. This was repealed, but there has now been the introduction of the Employment Rights Bill, which aims to address many of the issues associated with zero-hours contracts.
Overview of the New Employment Rights Bill
The Employment Rights Bill is aimed at modernising UK employment law. It introduces a range of reforms to improve workers’ rights and create fairer working conditions, particularly for those on unpredictable contracts like zero-hours agreements.
The Bill is expected to be passed into law no earlier than summer 2025, although many of the reforms will likely not take effect until 2026.
The Bill includes provisions designed to ensure better protections for workers, more transparency for employers, and clearer rules surrounding key aspects of employment contracts, such as hours of work and cancellation periods.
Key sections of the Bill that directly address zero-hours contracts include provisions to protect workers from sudden shift cancellations and the introduction of minimum guaranteed hours, among other measures.
For more information on the Employment Rights Bill, click here.
Key Changes to Zero-Hours Contracts
The introduction of the Employment Rights Bill brings several important changes to zero-hours contracts, including:
Notice Periods for Shifts – Employers will be required to provide workers with reasonable notice before scheduling a shift. If they cancel the shift with less than the required notice, before the shift would have started, (“short notice”), workers may be entitled to compensation. There will also be a right to compensation for shifts that are moved or curtailed at short notice. This change is designed to balance the flexibility of zero-hours contracts with the need for workers to have more stability and fairness in their employment.
Minimum Guaranteed Hours – Under the new regulations, zero-hours workers could be entitled to a minimum number of guaranteed hours per week, if they work regular hours over a defined period. This provides greater job security and predictability for their income.
Implications for Employers
For employers, the key changes brought by the Employment Rights Bill require a closer look at how zero-hours contracts are currently managed within their businesses. Here’s what employers need to know:
Compliance: Employers must adjust their contracts to comply with the new notice period requirements and the minimum hours provision.
Flexibility vs. Stability: While flexibility remains, employers will face challenges in balancing it with the increased stability required by law. Businesses may need to reassess staffing practices to ensure that workers’ rights are respected, and that this balances with business needs.
Benefits of Compliance: Though adjusting to these changes might require additional administrative effort, complying with the new regulations can benefit employers in the long run. For example, improved employee morale, reduced risk of disputes, and enhanced employer reputation are all positive outcomes of staying compliant.
Implications for Employees
For workers on zero-hours contracts, the changes brought about by the Employment Rights Bill are a significant step forward. Here’s what employees need to know:
Stronger Protection: Workers will now benefit from greater financial protection if their shifts are cancelled, moved, or curtailed at last-minute, making zero-hours contracts a more secure option.
Clearer Expectations: With the introduction of minimum guaranteed hours and notice periods, workers will have clearer expectations about when they’re working and how much they’ll be paid.
Increased Confidence: These changes empower workers to understand their rights and confidently address potential issues with employers, knowing they have stronger legal protections in place.
Practical Tips for Employers
To ensure a smooth transition to the new regulations, here are some steps employers can take:
Review and Update Contracts – Ensure all zero-hours contracts are updated to reflect the new minimum hour requirements, notice periods, and cancellation policies.
Provide Training – HR, Senior Leaders, and Managers should be trained on the new legislation, and how this fits into updated company policies and procedures, so they can handle any changes and requests efficiently and compliantly.
Communicate Changes to Employees – Employers should clearly communicate the changes to workers to ensure they understand their rights under the new legislation.
Conclusion
The Employment Rights Bill marks a major shift in the way zero-hours contracts are managed. The changes will enhance protections for workers while providing businesses with clear guidelines to follow.
At Thrive Law, we are committed to helping businesses and employees adjust to these changes, ensuring compliance with the law, while fostering a fairer, more secure working environment.
If you’re unsure about how the new regulations will affect you as a worker, or your business, don’t hesitate to contact us at enquiries@thrivelaw.co.uk for expert guidance and support. Let us help you stay ahead of the curve!
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Disclaimer
Please note this blog is for reference purposes only and is only accurate at which the date it was published. It does not constitute legal advice and should not be relied upon as such. Specific Legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any actions. Please contact us if you have any questions on enquiries@thrivelaw.co.uk.
