Zero-hour and low-hour contracts
The Employment Rights Act will make a substantial difference to how employers handle ‘zero-hour contracts’ and ‘low-hours contracts.’ The aim is to ensure that the contract reflects the hours the individual is actually working.
Making sense of working hours
A new duty will require employers to offer a guaranteed hours contract to qualifying workers on zero‑hours contracts and to those with a low number of guaranteed hours, where they regularly work in excess of those hours. The guaranteed hours must reflect the hours worked over a specified reference period. The legislation also sets out rules governing a worker’s acceptance or refusal of such an offer.
In addition, employers will be required to give reasonable notice of shifts, and of any changes to shifts, for certain workers, including those on zero hours contracts. Workers will also have a right to receive compensation if their shifts are cancelled, rescheduled or curtailed. These requirements will apply to agency workers too.
A consultation will take place to consider:
- How many hours a worker needs to work to fall within the definition of a ‘low‑hours’ worker
- The length of the reference periods
- Potential exemptions; and
- The impact on seasonal work.
The government has also confirmed that the framework will ensure no obligation arises to offer permanent contracts where work is genuinely temporary. Detailed regulations will set out how the new requirements will operate in practice.
The duty to offer guaranteed hours can be disapplied by a collective agreement.
Getting ahead of the changes
These provisions can be disapplied by a collective agreement. If you recognise a union, you may want to consider adding this issue to future discussions and consider what incentives you can offer when negotiating.
Undertake an audit to identify how many workers you engage on zero-hours contracts, including agency workers. We recommend that, for these purposes, you consider anyone whose contract provides for 15 or fewer hours.
Consider how you will keep track of the number of hours these workers work over a period of time.
Review your shift patterns. Do you change these regularly? How much notice do you provide? Consider how you can reduce changing shifts at short notice.
Plan ahead with confidence
This is one of the more complex and technical parts of the Employment Rights Act, and there are many details still to be worked through by the government. We’re can help you make sense of what it means in practice and how it could affect your current arrangements.
Register your interest below and we’ll get in touch when the government has clarified what framework will look like (regulations). We’ll also give you access to guidance notes, practical examples, and other helpful tools.
In due course, we’ll offer ways to help you assess risk, update contractual wording, and effectively mitigate risk. In the meantime, we’ve got a free FAQ document to help you assess how much of an issue this may be for you.