Zero-hours contracts are used to engage somebody with no minimum level of work or pay. In some contracts, the individual is obliged to accept work offered, but not in all. Any exclusivity clause, preventing employees from working elsewhere, is unenforceable but there are no other restrictions on the use of zero-hours contracts. Currently, workers on zero-hours contracts do not have statutory minimum guaranteed hours, a statutory right to receive reasonable notice of changes to shifts or working time, or to receive compensation for cancelled or shortened shifts. The Government has promised to put an end to ‘exploitative’ zero-hour contracts.
Proposed Law
The government recognises that variable hours can suit both workers and employers but aims to provide a level of security and predictability for workers, ending one sided flexibility. There will be a new requirement for employers to offer qualifying workers guaranteed hours. The right to guaranteed hours will apply to workers who are either working under a zero-hours contract or who have a low number of minimum guaranteed hours but work more than those hours in a reference period, which looks likely to be a 12-week period.
Offering a guaranteed hours contract
Employers must offer a new or varied contract that reflects the hours worked during the reference period. A valid offer must set out the days of the week, and times on those days when the employer will make work available, or working pattern of days and times.
An offer must be made after an initial reference period and after each subsequent reference period. If an employee accepts a new or varied contract with guaranteed hours exceeding the low number threshold, there will no longer be a need to monitor their hours or make further offers.
Accepting guaranteed hours
An employee has until the end of a “response period” to accept the offer. If they do so, they will begin working under their new or varied contract from the day after they tell the employer (unless a later date is agreed between the parties).
If the worker doesn’t want guaranteed hours
There is no obligation for a worker to accept any offer of guaranteed hours. The worker can reject the offer within the response period. However, it seems that employers will be obliged to keep making offers at the end of each subsequent review period. Employers can treat the offer as rejected if a response is not received within the designated response period.
Variation of other terms
Employers will not be able to change other terms when making an offer of guaranteed hours and only the minimum hours can be varied.
If entering into a new contract, the parties will be required to enter into new terms and conditions which must not be any less favourable on the whole, such as a lower rate of pay or removing benefits.
Responding to fluctuations in staffing requirements
If an offer is accepted, the guaranteed hours become a permanent fixture of the worker’s employment and the employer will be required to provide that level of work and pay to the worker. There is no scope to later unilaterally reduce the number of guaranteed hours.
Temporary Workers
A permanent change to terms and conditions may not be feasible for employers where the reference period has included unusually high levels of work. There are exceptions for when the work is temporary and it will be considered reasonable to make an offer for a limited-term contract instead.
Exceptions to the requirement to make an offer of guaranteed hours
There will be no need to make an offer where the worker is fairly dismissed or resigns during the reference period or offer period (before an offer is made). Similarly, there will be no need to make an offer if a “limited term contract” ended because of a specified event.
Non-compliance and claims in the Employment Tribunal
A worker who is not offered hours on the required terms can bring an employment tribunal claim.
If successful, a Tribunal must make a declaration and may also make an award for compensation based on financial loss. In practice, this will likely be based on the guaranteed hours that should have been offered, but the usual rules around mitigation will apply.
Workers also have a right not to be subject to a detriment because they accepted or rejected any offer.
Next steps and how employers should prepare
Consultations are expected to start next year and the majority of changes are expected to take effect in 2026. There are, however, useful preparations that could be made:
- Reviewing employment contracts and consider offering employment contracts with fixed hours to staff currently engaged on zero-hours contracts who have regular patterns of work.
- Auditing the current workforce to identify the proportion engaged on zero-hours contracts and minimum hours contracts.
- Reviewing how a 12-week average calculation would impact zero hours or low hour workers. Begin considering the contractual working patterns of these workers and what hours are worked in practice.
- Tracking seasonal fluctuations in demand for work. Any evidence around predictable fluctuations will help support any belief there is only a temporary work need and a limited-term contract is needed.
- Reviewing the current use of fixed-term contracts to address any seasonal work requirements.
- Reviewing processes for managing requests for work and cancelling shifts and consider how these need to be changed.
This new right should also be viewed in conjunction with other provisions, such as the right to reasonable notice of a shift an employee is required to work and the right to reasonable notice of any change or cancelled shift.
Get in contact with an employment lawyer at Rowberry Morris
If you would like advice or need further guidance on this or any employment issue, please contact the Employment Team at Rowberry Morris by phone on 01189812992 or email at employment@rowberrymorris.co.uk