Legislation introduced in Parliament to upgrade workers’ rights includes a reshaping of zero-hours work regulations. Pete Taylor offers his perspective on the proposed changes
As October progresses, the recruitment and HR industries are focused on the detail of the government’s Employment Rights Bill, which is set to impact thousands of businesses and employees across the UK in the coming months.
Zero-hours contracts remain a central topic of discussion around the Bill, specifically Labour’s plans to give workers on zero hours contracts the ability to move to guaranteed hours contracts which reflect the hours they regularly work over a 12-week reference period. If more hours become regular over time, subsequent reference review periods will provide workers with the opportunity to reflect this in their contracts. This is a seismic change, which will require major HR adaptation for employers.
Navigating these changes successfully will require both flexibility and fairness
Collectively, according to a recent report from Public First, the gig economy accounts for roughly £25bn in UK GDP. The size of the industry is truly huge – so it is clear that these changes will have massive ripple effects on workers and the economy, and the importance of how these new regulations are going to work cannot be understated.
Why zero-hours contracts matter
Currently, about one million workers are employed under zero-hours agreements across the UK, spanning various industries. In fact, the research from Public First shows that 40% of people state that flexibility is more important to them over guaranteed hours. But it is a tricky balance to strike. While these contracts offer flexibility for both worker and employer, they can also be abused and leave employees in precarious positions, without guaranteed hours or long-term security.
The decision to try to eliminate ‘exploitative’ zero-hours contracts is obviously a sensible one, and we should all welcome the government’s focus on fairness. But it raises complex questions: how does the government plan to define ‘exploitative’ contracts, and how will these be implemented in practice?
Temporary and flexible working arrangements can be valuable for both employees and employers, but clarity is needed on which contracts will be deemed unacceptable. It’s crucial that the government strikes a balance that supports both employees seeking job security and businesses that rely on workforce flexibility.
What Labour’s proposal means for workers
And it seems Labour is trying to do that, in a sense, by giving workers the option to transition to a guaranteed-hours contract after three months of service or choosing to remain on zero-hours. This initiative addresses growing concerns over the potential exploitation of employees who depend on such contracts for their livelihoods, particularly in sectors like hospitality, retail and logistics, and gives them a lot more stability. But it will come with many challenges, not least the logistical implications of contract redesign, through to potential increases in probation assessment resource.
It is also essential to acknowledge that zero-hours contracts can be crucial for many businesses, especially small and medium-sized enterprises, during seasonal peaks or fluctuating demands. For many workers, the flexibility provided by these contracts is equally vital, especially for those balancing other commitments, such as caregiving, education or health-related issues.
There is a balancing act between offering flexibility to workers and ensuring job security. An outright ban on zero-hours contracts would have been an unwelcome approach. Many workers, particularly those balancing other commitments or preferring part-time arrangements, actively seek out flexible work. Removing that choice would have been counterproductive for both workers and businesses.
The benefits of zero-hours contracts are welcomed by so many workers, as evidenced by the Recruitment and Employment Confederation’s (REC) Voice of the Worker campaign. The campaign features real-life examples of workers who are hugely in favour of zero-hours contracts – representing people who are international students, so can therefore only work limited hours a week, people who get diagnosed with life-changing illnesses, for example – who all need this kind of flexibility to suit the changes in their lives.
Keeping businesses compliant
As these new ways of working and associated regulations emerge, it’s essential businesses pay close attention to how the new regulations will be defined and implemented to ensure they are not caught off-guard by these changes and remain fully compliant.
The labour market has always been dynamic, and businesses that fail to adapt to regulatory shifts may find themselves at a disadvantage, facing penalties or reputational damage if they don’t comply with new laws.
Additionally, clear communication with employees will become crucial. Workers who are currently on zero-hours contracts should be made aware of how these changes impact their rights. Businesses need to be transparent about the options available to employees, such as the potential to transition to guaranteed-hours contracts after three months.
Employers who proactively address these concerns will foster greater trust and loyalty among their workforce, positioning themselves as responsible and fair employers. It’s also equally important employees on zero-hours contracts understand their rights and how the newly defined regulations impact them.
In the face of this regulatory shift, the UK’s recruitment industry stands at a crossroads. On the one hand, there is relief that zero-hours contracts have not been entirely banned. On the other, concerns remain about how to fairly distinguish exploitative practices from legitimate business needs. The reality is that the world of work is changing rapidly. Navigating these changes successfully will require both flexibility and fairness.
Transparency will be key
Ultimately, as the government moves towards implementation, the emphasis should be on transparency. Both employers and employees need to be well-versed in the legalities to ensure a smooth transition and avoid any negative impacts on business operations or workers’ livelihoods. A proactive approach – through education, training and policy adjustments – will be key to navigating the complexities of whatever new regulations eventually come into force.
Pete Taylor is Managing Director at Gi Group
