The Employment Rights Bill – Proposed Changes to Zero Hour Contracts and Requirements for Shift Workers

Claire Treacy, Senior Associate

The Employment Rights Bill was announced by the Government on the 10^th October 2024. It set out a large number of employment reforms that the new Labour Government intend to introduce. One of them being a proposal to ban “exploitive” zero hour contracts and another being the requirement to give reasonable notice of shifts and any changes to shifts, as well as an obligation to make a payment to workers where shifts are cancelled, moved or cut short at short notice. Given the hospitality sector relies heavily on the use of zero hour contracts and shift work is the norm these reforms are going to be a huge change for the sector when they come into force. In acknowledgement that businesses will need time to prepare for the changes the Government have said they will come in no earlier than October 2026.

To help you plan for these changes below is a summary of what the Government have proposed so far. We will be keeping you updated through this Hospitality Bulletin and our Employment Law Bulletin as we find out more about these reforms – details of how you can sign up to our Employment Law Bulletin are at the bottom of this page.

1. To ban “exploitive” zero hour contracts there will be an obligation to offer a “guaranteed hours contract” to qualifying workers

• “Qualifying workers” will be those who, over a specific reference period (likely 12 weeks), regularly work more hours than those guaranteed in their contracts.
• The obligation will be to offer them a contract which reflects the hours they have worked during the reference period. For example, if the worker regularly works 10 hours in a 12 week period the obligation will be to offer them a contract which guarantees them at least 10 hours per week.
• Workers do not have to accept the “guaranteed hours contract”. Some workers will enjoy the flexibility of a zero hours contract, however, many will no doubt enjoy the financial security that a guaranteed hours contract offers them.

If employers do not offer a guaranteed hours contract to qualified workers once this reform has come into force then workers will be able to pursue a claim in the Employment Tribunal. We do not yet know what this claim will look like and how much businesses could be liable for if they are in breach of this requirement.

The Government recognises that businesses could utilise agency workers to prevent the need to offer guaranteed hours contracts to their workers. Therefore, the Government is currently consulting on how this obligation should apply to agency workers. As a result, it will not be possible to use agency workers to avoid the need to offer a guaranteed hours contract to qualifying workers. The consultation will consider, amongst other things, whether it should be the agency or the hiring business that will be obliged to offer the guaranteed hours contract.

2. A new obligation on employers to have to give reasonable notice of shifts and any changes to shifts

• It is understood that this new obligation will apply to zero hour contract workers and workers that work on a shift pattern where they do not know their hours in advance.
• “Reasonable notice” will not be defined. Whether “reasonable notice” has been given will be dependent on what notice the Government says should be “presumed reasonable” and relevant factors the Government say that should be considered. Therefore, what is “reasonable notice” will likely be different for every business.

The Government will be consulting on these issues before they set out the regulations and confirm which workers this obligation will apply to, what “presumed reasonable” means and what relevant factors should be taken into account by an Employment Tribunal to determine if “reasonable notice” of shifts or a change to shifts has been given.

However, what is known is that once this reform comes into force eligible workers will be able to pursue an Employment Tribunal claim against their employer if they believe they have not been given reasonable notice of a shift or a change to a shift.

The Government are also consulting on the application of this obligation to agency workers. For example, should it be the hiring business or the agency that is required to give this “reasonable notice” to agency workers.

3. A new right for qualifying workers to receive a payment from their employer if they have their shift cancelled, moved or cut short at “short notice”

• It is currently unclear as to who will be a “qualifying worker”, what the payment will be and what is meant by “short notice”.
• It might be that a “qualifying worker” will be the same group of workers that are entitled to receive reasonable notice of their shifts or a change to their shifts and we would expect that the payment will be in proportion to what the qualifying worker would have earned had their shift not been cancelled, moved or cut short. However, we will need to wait to find out this detail until after the Government have consulted on these points.

Again, what we do know is that once this reform comes into force eligible workers will be able to pursue an Employment Tribunal claim against their employer if they have had their shift cancelled, moved or cut short at short notice.

The Government are also consulting on the application of this to agency workers. For example, should it be the hiring business or the agency that will be responsible for the payment.

 This is a snapshot of some of the Employment Law reforms set out in the Employment Rights Bill. For a more in-depth analysis of these reforms and some of the other reforms in the Bill please sign up to our seminar on the 28th November here. To keep up to date with the reforms set out in the Employment Rights Bill and other employment law updates please sign up to our mailing list here.