Published: 15 May 2025 | by Brightmine
The policy intent behind the measures relating to zero and low hours workers in the Employment Rights Bill is to end one-sided flexibility and “exploitative zero hours contracts”. This does not mean that there will be an outright ban on such contracts. What it does mean is that there will now be a legislative framework, the intention behind which is to deliver a better level of predictability and security for workers. Barrister and mediator Alison Frazer looks at the practical implications for HR.
According to the Government’s own statistics, there are over 1 million workers in the UK on zero hours contracts. These contracts are attractive to employers, particularly in industries such as hospitality or retail, as they allow employers to respond flexibly to surges in demand. For workers who are juggling other projects, jobs or caring responsibilities, the lower commitment required by a zero hours contract can free them up to manage their other demands. However, if a worker puts all their eggs in the zero hours basket, they may be vulnerable to last-minute cancellations and financial uncertainty.
The Bill creates a series of new rights. Workers will have the right to:
- a guaranteed number of hours if they work regular hours over a defined period;
- reasonable notice of a shift, and reasonable notice of cancellation of, or change to, a shift; and
- payment for cancelled, moved or curtailed shifts.
These new rights will cover those on a zero hours contract or arrangement and those who have low minimum guaranteed hours, but who usually work more than those hours in any reference period. The “reference period” for the purposes of the new law is yet to be defined by regulation but is likely to be 12 weeks. “Low hours workers” are not yet defined but the inclusion of this category in the Bill is to stop employers circumventing the zero hours rules by simply offering staff contracts for a cynically low number of hours.
Employers’ obligations
The obligation is on an employer to offer a qualifying worker a guaranteed minimum number of hours after they have worked a 12-week reference period. Employers must offer workers a new contract that reflects the hours worked during the reference period and must specify the days of the week and times when the employer must make such work available. Alternatively, they should set out a working pattern of days and times.
The employer is obliged to inform existing workers about their rights within two weeks of them commencing work or within two weeks of the law coming into force. It must also ensure that the information is readily available to them at any time afterwards, for example via an accessible portal within the company intranet.
“Response period”
The law gives the worker a “response period” within which to respond to the offer. This is not yet defined. The guaranteed hours contract takes effect the day after the day on which notice is given. There is no obligation on the worker to accept the guaranteed hours, but if they continue working on a zero hours or low hours contract during the subsequent 12-week reference period the employer must provide them with an offer again. This may make it administratively burdensome for some employers, particularly in circumstances where the worker has made it clear that they have no intention of taking any guaranteed hours in the future.
If the guaranteed hours are accepted by a worker and they exceed the number of hours required to qualify as a low hours worker, the employer does not then need to provide them with a fresh offer after the 12-week reference period. The Bill makes it clear that, when offering the guaranteed hours, an employer is not entitled to use the offer as a vehicle for changing the worker’s terms and conditions to make them less favourable. For example, an employer will not be allowed to reduce the worker’s travel allowance to compensate for a guaranteed increase in hours.
“Limited term” contracts
For employers that use zero hours workers to manage demand, there is nothing to prevent them from engaging workers for fixed periods, for example when there is a high level of demand for delivery services over Christmas. The Bill states that employers may offer “limited term” contracts in certain prescribed circumstances such as:
- where the worker is employed to perform a task;
- where the worker is needed only until the occurrence of an event; or
- where there is a temporary work need and the contract will expire when the employer reasonably considers that the need will come to an end.
The requirements of reasonableness are as yet undefined but it is anticipated that this will encompass most commercial practices that respond to demand or cycles in a given industry.
Practical considerations
- Employers will need to carry out an audit of their workplace to find out how many workers are engaged on zero or low hours and to assess their working patterns over a given period. It will also be necessary to ensure that there are adequate means of recording hours, such as electronic door cards or any other type of clocking-in system.
- To ensure that efficient and accurate systems are in place, employers may need to update their software to monitor hours in each reference period, so that they can calculate the guaranteed hours and issue a notice. This will be particularly necessary if there are many zero hours workers on different contracts or even workers working across different departments. Having accurate ways of monitoring information is crucial so that employers can provide information to workers as soon as the changes come into force and on an ongoing basis, where necessary.
- It may also be necessary to consider how the changes will impact the management of staff and the overall workforce strategy. It is a good idea to start planning now so that any changes can be discussed at a higher operational level. Some employers may decide that if they are now required to offer guaranteed hours, it will be necessary to reduce the number of zero hours or low hour workers that they engage. Such employers will also need to work out whether these workers are employees by law.
- The Bill also makes provision for day-one rights for unfair dismissal for employees, so any redundancy process would need to be carried out fairly, ie with the requisite notice and consultation. If there is doubt about whether a worker is an employee or not, employers might err on the side of caution and take them through a process.
- Amendments to the Bill now make it possible for trade unions to reach collective agreements with employers to contract out of the obligations. What that means for workers and employers who use collective bargaining arrangement is unclear at this stage. How such an agreement would be reached and what could be offered to workers as an alternative to these rights would need to be determined by way of a consultation process.
Agency staff
Following consultation with stakeholders, the Government has amended the Bill so that agency workers will be included in the right to be offered guaranteed hours. The obligation to make an offer of guaranteed hours will fall on the end hirer. Employers and agencies will need to look at their contracts to ensure that they renegotiate any indemnity clauses.
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