Employment Rights Bill | Casual and Seasonal Staff – What will the Proposals Mean for Employers?

There has been much debate in the past on the use of zero hours contracts, with many believing that they prey on low-income workers and do not allow individuals to have a guaranteed income or the benefit of job security.

In 2015, the Conservative government banned zero hours contracts from containing exclusivity terms and now the Labour government seeks to go further in the Employment Rights Bill in the hope of ending one-sided flexibility. The proposed rules are complex and, as much of the detail is still to be set out in regulations, there remains huge uncertainty around the specifics. We set out the key principles below and how it will impact employers.

So, what does the bill say?

Duty to offer guaranteed hours

The bill will introduce a duty on employers to offer a guaranteed hours contract that reflects the hours a qualifying worker regularly works over a reference period. Whilst the duration of the reference period has not yet been specified, the suggestion is that it will be 12 weeks.

An employer will be required to make a guaranteed hours offer to a qualifying worker at the end of every reference period.

Provision of information

Employers will also be required to take reasonable steps to ensure that workers are given specified information in relation to their rights to guaranteed hours, within two weeks of the worker starting employment or becoming a qualifying worker.

What is a qualifying worker?

To meet the definition of ‘qualifying worker’ the individual will need to satisfy certain criteria including:

• Working under a zero or low hours contract during the reference period.
• Working a certain number of hours regularly, and
• If working under a low hours contract, the hours actually worked in the reference period exceed the minimum number of hours provided for under the contract.

Extending the right to low hours contracts is in effect an anti-avoidance measure to stop employers deliberately putting workers onto contracts of, say, one or two hours per week. How the regulations define a low number of hours will be crucial for employers. If too high, it could significantly restrict organisations’ ability to adjust staffing levels on short notice and will increase the administrative burden by bringing more workers into scope.

Reasonable notice of shifts and changes to shifts

An employer will have to give a zero or low hours worker reasonable notice of:

• A shift (specifying the date, the time and end time and the number of hours to be worked) that the employer requires the worker to work, and
• Where a shift has been agreed, any changes to the shift time and hours.

Regulations will set out what will be presumed to be unreasonable notice (unless shown otherwise).

Compensation for cancelled, moved or curtailed shifts

Workers will be entitled to compensation if their shift is cancelled, moved, or curtailed at short notice. What classes as short notice will be set out in regulations, but it will not exceed seven days. Regulations will also set out the amount of compensation to be paid and when.

Automatic unfair dismissal relating to guaranteed hours

It will be automatically unfair to dismiss an employee if:

• The reason (or principal reason) is that the employee accepted or rejected a guaranteed hours offer (or proposed to do so).
• The employer tried to avoid compliance with the duty to offer guaranteed hours; or
• The employer dismissed a worker because they are entitled to or believed they were entitled to a guaranteed hours offer.

It will also be automatically unfair to dismiss an employee as redundant for these reasons.

Right not to suffer a detriment

A worker will have the right not to be subjected to a detriment on the grounds that:

• They accepted or rejected a guaranteed hours offer (or proposed to do so).
• Declined to work a shift on the basis that they believed the employer failed to comply with the duty to give reasonable notice of a shift or cancellation.
• Brought proceedings in good faith against the employer in relation to failures relating to the right to guaranteed hours, reasonable notice of shifts or payments for cancelled, moved or curtailed shifts, or
• They are subjected to a detriment by any act or failure to act by their employer on the ground that they are, or their employer believes that they are, entitled to a guaranteed hours offer.

What if an employer gets it wrong?

A worker will be able to bring an employment tribunal claim for automatic unfair dismissal or detriment, or if their employer fails to fulfil any of their duties relating to guaranteed hours contracts.

What will this mean for employers?

The new rules are likely to have a significant impact on any business that engages staff on zero or low hours contracts. Employers in sectors where seasonal fluctuations in staffing are commonplace, such as hospitality, will find the rules especially difficult to navigate.

Whilst the new suggested provisions do not go as far as banning zero hours contracts, they may have the effect of employers choosing to use them less.

The provisions may also incentivise employers to offer irregular work patterns, so that workers do not regularly work over the low hours threshold, and therefore do not qualify for a guaranteed hours offer.

Whilst the provisions are not set to come in force until 2026, we advise that employers identify any workers engaged on zero or low hours contracts at an early stage, so they are able to consider the impact of these provisions well in advance of them coming into force, and again once more of the detail is known later this year and early in 2026.

It would also be useful for employers to assess why certain individuals are engaged on a zero hours basis, as it may be that in many cases a fixed term contract, or even permanent employment, may be more appropriate.

If you would like to discuss the above, please contact a member of the employment team.