Changes in work: zero hours contracts

By Claire Campbell, CEO

We at Timewise know there is a lot of change in the air – and that it can feel challenging to keep up. We have prepared a few guides on key forthcoming workforces changes, to help you stay a step ahead.

Zero tolerance to zero hours?

Labour’s plan to Make Work Pay was set out before the election and reiterated in the King’s speech. One consistent element has been the focus on zero hours contracts and banning of exploitative work arrangements, in favour of more balanced flexibility – that works, both for employers and staff.

The use of zero hours contracts in the UK has been growing and we now have over 1 million people on this type of employment contract as their main job. Although this only affects a small proportion of workers overall, some sectors are heavily reliant upon these contractual arrangements – including food and hospitality, health and social care and transport. Certain groups are also disproportionately affected – figures from the Work Foundation suggest that women, young workers (including those aged 16-24 who are not students), and black workers are all more likely than others to be employed on this basis.

A zero hours contract is one where the employer does not guarantee the worker any hours of work and instead offers work as and when it is available. They have been heralded in the past as the solution to flexible work, but this comes at a price – with only a tiny minority of people employed on these contracts having access to regular pay and rights. 3 in 4 workers on zero hour contracts are in severely insecure work.

Labour’s new deal states that it:

“…will end ‘one sided’ flexibility and ensure all jobs provide a baseline level of security and predictability, banning exploitative zero hours contracts and ensuring everyone has the right to have a contract that reflects the number of hours they regularly work, based on a 12-week reference period.”

This raises the question of whether all zero hours contracts will automatically be considered exploitative, or whether the ban will only apply to contracts which are deemed to be too one-sided in terms of flexibility and power. The definition of ‘exploitative’ is to be determined, and will be part of the consultation and legislative processes.

There are also questions about the 12 week reference period, and how this would practically be managed and implemented, and whether employees will be able to ‘opt in’ to this type of contractual arrangement, if they desired it.

Whilst the detail of the new government’s changes are still to be progressed through parliament, what can employers be doing now to prepare for this particular upgrade to workers’ rights?

Check your mindset

See this as an opportunity to rethink what good looks like for your staff.

Challenge the assumption that zero hours contracts are the only way to get you the flexibility that you need to run your business – more secure employment with some guaranteed hours and/or a predictable pattern is likely to enable you to fill vacancies more easily and retain and develop your staff.

Get creative – think about other innovative ways of organising work and schedules such as annualised hours, fixed term and temporary contracts for peak times, overtime arrangements, opt-in solutions for rostering and shift swaps. These can bring you the flexibility that you need within your workforce, and can help reduce your reliance on minimum hours arrangements.

Check your practice

The issue with zero hours contracts for many people is that they can provide a lot of flexibility for the employer and no stability or security for the individual, as they do not guarantee hours or income and make it hard to predict earnings week to week.

Ask yourself:

Do you have zero hours employees who regularly or semi-regularly work a similar number of hours or pattern each week? This could be formulated into a regular contract which commits to guaranteed hours and gives greater security to your team members.

Do you give reasonable notice of adjustments to shifts and cancelled shifts? Best practice is up to 4 weeks ahead. Cancelling shifts at short notice without pay is the type of exploitative practice which the bill is likely to clamp down on.

Do all your workers receive statutory pay for sickness, holiday, maternity / paternity / adoption leave, and is this calculated fairly where a reference period is used for eligibility? We know that at present unscrupulous employers can try to avoid their obligations by using zero hours contracts and cutting hours to get around eligibility for maternity or other pay. This type of loophole is likely to be closed.

Zero hours arrangements can be valuable for some employees wanting to work additional hours or second jobs, alongside a secure, regular contract of work. For example, health and social care staff who choose to pick up agency shifts alongside substantive roles may find that zero hours arrangements give them the flexibility to pick and choose whether they work additional hours or not. Ask yourself whether there are other, better, overtime arrangements which you could consider. These may have the added bonus of more consistent workers, helpful for training and for service user / patient care.

Talk to your team members about their needs and preferences. Often people accept zero hours contracts because they can’t see any other way to get the flexibility that they need in their working week. Don’t assume that it is working for them.

What to expect next

Detailed, practical guidance will be needed to implement the planned changes, including a clear explanation for employers of what is meant by exploitative, and whether all zero hours contracts are in scope. If zero hours contracts are to be permitted in certain cases, the government will need to set out arrangements for monitoring this and ensuring workers’ rights are protected.

Whatever the detail that emerges, there is a clear ambition and opportunity here to improve the predictability and security of working hours and income for workers, which is a welcome direction of travel. At Timewise we look forward to contributing to the detail of the new regulations, and supporting more employers to create good quality jobs.

Published September 2024

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