Under the new Employment Rights Bill, the UK Government will introduce new rules on the use of zero-hours contracts. The proposed changes promise to provide greater security and predictability for workers.
In this post, we outline these proposals, highlight the main issues of zero-hours contracts on workers, and explain how UK businesses should prepare for this particular area of employment reform.
Zero-hours contracts: the proposed new rules
Zero-hours contracts are casual contracts that provide zero guaranteed shifts or pay to workers. Essentially, the workers are permanently on call. The employer does not have to give them work, and the individual does not have to accept shifts when offered.
These contracts are designed to provide flexibility to both workers and employers. However, they only benefit a minuscule minority of the labour market.
For the most part, zero-hours contracts benefit only the employer, whilst the workers experience unacceptable levels of contractual and financial insecurity, unpredictable shift patterns, and a lack of access to employment rights and protections.
To tackle the issue, the new UK Government will introduce changes to the use of zero-hours contracts. Rather than an outright ban, as was initially proposed, the new rules under the Employment Rights Bill will give workers the right to:
- a contract that reflects the number of hours they regularly work, based on a 12-week reference period
- request and opt-in to zero-hours contracts, allowing for ad-hoc flexibility where this is the preference of the worker
- reasonable notice of any changes to their shifts
- proportionate compensation for any shifts that are cancelled or curtailed
These changes aim to end the ‘one-sided’ flexibility of ‘exploitative’ zero-hours contracts, ensuring that all workers have a baseline level of job security and predictable hours.
Employers will still have the option to hire workers on fixed-term contracts, including for seasonal work. Moreover, employees will not be prevented from earning overtime pay. This leaves room for businesses to manage fluctuating demands by hiring individuals on temporary contracts and offering overtime to existing staff.
The issue with zero-hours contracts
Recent analysis from the Work Foundation—a leading think tank at Lancaster University—reveals that a record-high of 1.1 million workers in the UK are on zero-hours contracts as their main job. The majority of these workers are under the age of 25.
Their use has been growing steadily for several years. Between 2015 and 2023 alone, the number of people in this working arrangement increased by around 345,000 (47%).
The data also suggests that 73.5% of workers on these contracts are in severely insecure work, with only 6.1% enjoying secure employment that provides regular income and access to rights.
The bar graph below highlights the prevalence of zero-hours workers across certain industries—most notably the hospitality sector—with the vast majority experiencing severely insecure work.
Disproportionate impact on ethnic minorities, women, and young workers
Further, the analysis shows that zero-hours contracts disproportionately affect certain workers who are already impacted by structural barriers in the UK labour market, including:
- Black workers – 2.7 times more likely than white workers to be on zero-hours contracts
- Workers from multiple/mixed backgrounds – 2.3 times more likely than white workers to be hired on these casual contracts
- Women – 1.2 times more likely than men to be on zero-hours contracts
- Young workers (under 25s) – 5.9 times more likely than other age groups to be on zero-hour contracts. These individuals are not just students – young workers who aren’t students are still 3.5 times more likely to be on these contracts
Commenting on the findings, Alice Martin, Head of Research at the Work Foundation, said:
“Zero-hour contracts have previously been hailed as the answer to flexible work, but our research shows too often it is only employers that have choices, workers do not.”
“While they may provide ad-hoc flexibility for a small minority of professionals who actively choose this way of working, our analysis suggests that for the vast majority, these contracts represent precarity.”
“Putting more power in the hands of workers would combat the unfair use of zero-hour contracts, and is a healthy step towards a secure and flexible jobs market.”
Majority of zero-hours contract workers want regular hours
According to a new poll conducted by the Trade Union Congress (TUC), 84% of workers on zero-hours contracts want stable, regular work hours. The results of the survey, which were released on 30 August 2024, reveal that:
- 75% of those polled are struggling to meet living expenses due to insufficient hours being offered
- 66% of zero-hours workers are seeking extra work
- 58% of people on zero-hours contracts have their requests for more hours refused by their employers
- 52% have had their shifts cancelled with less than 24 hours notice
- 66% say they did not receive any compensation for their cancelled shifts, with only 5% being fully compensated
The TUC’s poll also reveals that even amongst those who choose to work in this way due to their need for flexibility, 61% would rather have a contract with guaranteed shifts.
These findings highlight the importance of the upcoming changes to zero-hours contracts in the Employment Rights Bill.
However, critics of the Government’s revised plan are concerned that the new rules are not going far enough. The loophole allowing workers to opt-in to zero-hours contracts leaves room for unscrupulous employers to exploit workers by pressuring them to accept these contracts.
Henry Chango Lopez, general secretary of the Independent Workers Union of Great Britain (IWGB), said:
“Workers are often forced to accept poor conditions and precarious contracts across sectors due to desperation and extreme power imbalances between employers and employees in the UK.”
What steps should employers take to prepare?
Currently, no implementation date has been given by the UK Government for the changes to zero-hours contracts. Similarly, no detail has been provided on what constitutes an ‘exploitative’ contract of this type.
Nevertheless, employers can make many useful preparations in the meantime, such as:
- Reviewing their existing workforce to identify the number of workers on zero-hours contracts and the nature of their work
- Considering the benefits of offering other types of employment contracts to those workers
- Assessing the potential impact of the 12-week reference period on the workers and business
- Reviewing the way they manage requests for work and the cancellation of shifts to highlight areas for improvement
- Consulting with workers, employees, and managers on current practices and proposed changes
There are several alternative options to zero-hours contracts that employers may wish to consider, including:
- Part-time employment on a temporary or permanent basis
- Fixed-term contracts (e.g. to cover seasonal increases in demand)
- Offering annualised hours to manage fluctuations in workload
- Offering overtime to their existing employees
- Training existing workers in other areas of the business, enabling them to cover different roles as and when required
- Employing additional staff to ensure you have cover for planned and unplanned leave
- Using agency staff and self-employed freelancers
These new arrangements may take time, and your staffing costs could increase. It’s important to start planning and preparing for the proposed changes in advance by assessing your resourcing needs and the alternative options available to you.
As we await the release of official guidance on the new rules for zero-hours contracts, employers should exercise caution and consider consulting an HR specialist or the Advisory, Conciliation and Arbitration Service (Acas) for advice.
Thanks for reading
We hope you’ve found this post useful. We will update this guidance accordingly when further updates are available on the proposed changes to zero-hours contracts.
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