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 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:
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.
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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.
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.
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:
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.”
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:
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.”
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:
There are several alternative options to zero-hours contracts that employers may wish to consider, including:
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.
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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