What is Changing?
The proposal under the New Employment Rights Bill (NERB) is to ban the use of ‘exploitative’ zero-hours contracts and replace such contracts with a new right for employees to have a contract that reflects the hours regularly worked (in a 12-week reference period). The legislation will also apply to workers on low-hours contracts – as of yet we do not know how low hours will be defined? The NERB also repeals the Workers (Predictable Terms and Conditions) Act 2023, which had been expected to come into force this year. The legislation would have given workers the right to request a predictable work pattern if they lacked predictability and met the requirement of 26 weeks’ continuous service.
However, it does say that workers should be given reasonable notice of any change in shift or working time (regularity of hours) with compensation that is proportionate to the notice given for any shifts cancelled or curtailed.
What is the impact?
Clause 1 of the Bill introduces a new obligation on employers to offer “guaranteed hours contracts” to qualifying workers. This applies to workers who, over a specified reference period, regularly work more hours than those guaranteed in their contracts, effectively making it illegal for employers to offer zero or minimal guaranteed hours while expecting workers to fulfil a higher workload. While we are still awaiting clarity on how this reference period will be structured the new contracts will need to reflect the hours worked during the reference period, and failure to offer such a contract could lead to a tribunal claim.
This move is designed to protect workers from the uncertainties associated with zero hours contracts and ensure that those who consistently work a regular pattern have this reflected in their contract. However, there are complexities to watch out for. For example, it’s not yet clear how employers should handle seasonal work or fluctuating demand, which could lead to unintended consequences such as employers limiting hours or restricting workers from developing regular patterns. The Bill also includes exceptions for contracts that are genuinely temporary, such as those that expire upon the completion of a specific task or event. This gives employers some flexibility, but care will need to be taken to ensure that these exceptions are not overused to undermine the spirit of the law.
Clause 2 of the Employment Rights Bill introduces a new right for workers to receive reasonable notice of their shifts. The intention is to give employees greater certainty about their working hours, enabling them to plan their lives with more confidence. The detail of what constitutes “reasonable notice” is yet to be finalised, but the government aims to ensure that workers have adequate time to prepare for shifts or changes in working hours.
Closely related to the new right to reasonable notice is the right to compensation when shifts are cancelled or changed with insufficient notice. Clause 3 of the Bill makes it clear that workers will be entitled to compensation if their shifts are cancelled at short notice or if their hours are curtailed. The exact level of compensation and the definition of “short notice” will be set in Regulations in due course, but it is expected that any notice given less than seven days before the shift will fall into this category.
For employers, this adds real complexity, as you will need to balance flexibility with the financial implications of cancelling or altering shifts. If an employer cancels a shift too close to the scheduled time, you will need to compensate the worker for the lost hours, potentially paying out for work that wasn’t performed. This could have a considerable financial impact, especially for businesses that rely on short-notice adjustments to their workforce, such as those in retail, hospitality, or care.
What do you need to think about?
You will need to review how you allocate shifts to workers and ensure that your internal processes are aligned with this new requirement for reasonable notice. Once the regulations are published, businesses may need to adopt more formalised scheduling systems to avoid breaching the law. In practice, this could mean introducing software or other tools that ensure shifts are communicated well in advance to workers.
As always if you have any questions regarding the above or if you’d like to discuss these or any other points further please give one of our expert team a call or get in touch via our Contact Form.