Zero-hours contracts

The Labour government has long viewed zero-hours contracts as exploitative and pledged to end what it sees as unfair, one-sided flexibility. While the Employment Rights Act (ERA) does not go as far as banning zero-hours contracts, it introduces complex new rules to limit their use and provides new rights for workers to ensure greater predictability and security around working hours.

Current position

Despite recent criticism, there are currently no restrictions on contracts that offer no minimum level of work, or only a very low number of guaranteed hours. Many employers also use agency workers and other contingent resources to manage fluctuations in demand, particularly in retail, agriculture and hospitality.

Proposal

Under the ERA, employers must offer guaranteed hours to workers whose actual worked hours exceed the minimum stated in their contracts over a defined reference period. The new law will protect those working under zero-hours contracts and those qualifying as ‘low-hours’ workers – those with guaranteed hours below a certain threshold (still to be confirmed).

Preparing for the new law

The new rules are not due to come into force until 2027. Details such as the reference period and the low-hours threshold have yet to be confirmed and will be set out in further regulations. However, employers should start preparing now by reviewing their workforce and assessing their reliance on zero-hours contracts or low-hours workers for periods of 12 weeks or more (12 weeks is likely to be the reference period).

We can help by auditing current practices, running stress-tests for staffing models and advising on best practice across the gig economy and other industries to update systems and train managers.