Is it the end for zero hours contracts?

The Government has stated it wants to make “exploitative” zero hours contracts illegal.

Zero hours contracts are used widely across the workforce, with data from August 2024 showing over one million people are on such contracts.

In the Government’s Employment Rights Bill, Labour said zero hours contracts “can benefit both workers and employers but without proper safeguards this flexibility can become one-sided, with workers bearing the financial risk.”

Under the new Bill, a worker will be entitled to a guaranteed number of hours, based on average hours in the preceding reference period.

The drafting for this is unclear, but the aim of having guaranteed hours based on a reference period is to stop an employer from having a contract with one guaranteed hour per week, as an example, to circumvent the legislation.

If the employer fails to offer a guaranteed hours contract, then the employee is permitted to bring an employment tribunal claim.

The Bill proposes that this will compensate the employee for any financial losses suffered as a consequence of not having a guaranteed hours contract. We do not know, however, what the cap will be on any potential compensation.

The next element is that employees will have the right to reasonable notice of a shift where the shift pattern is not known in advance. Again, the detail on what will, or will not, be regarded as reasonable notice of a shift is not in the Bill. Another wait and see.

The next element concerning working hours, is a worker’s right to reasonable notice for the cancellation of a shift. The period for reasonable notice is again unknown, as is the rate of compensation for a breach of these provisions.

Zero and low hours contracts can make it difficult for a person to manage their financial obligations and their personal life.

The current system allows workers to work regularly for an employer but with no certainty about their future hours and earnings. Employers can offer and cancel shifts at last minute, so that much of the financial risk of changing demand is on their workers.

That uncertainty can affect both financial security and well-being, the Government has said.