Employee Rights Bill – Zero Hours Contracts
In the government’s Plan to Make Work Pay, it set out an ambitious agenda in relation to how to fit employment rights with a changing economy.
The government has been consulting on the application of changes to zero hours contracts and on 4 March 2025, it published its response to the consultation of zero hours contracts and how they apply to agency workers.
The link to the consultation is here Government response to the consultation on the application
of zero hours contracts measures to agency workers
What were the original proposals?
Right to guaranteed hours
To end one sided flexibility, low and zero hours workers who satisfy certain conditions will have to be offered by the employer a contract with guaranteed hours that reflects the hours worked during a specific reference period. It is anticipated that the reference period will be 12 weeks.
The right will apply to qualifying zero hours and low hours workers. At the moment we do not know what the definition of low hours will be.
What will happen is that when a worker’s hours over the reference period exceed the minimum number of hours provided for under the contract, an employer will then have to offer a contract which effectively reflects the number of hours they regularly work.
Such an offer will have to be made after the initial reference period and then after each subsequent reference period. The offer will have to set out the days and times when the employer will make work available or set up what working pattern is.
A worker will have a response period to decide whether or not to accept the offer of a guaranteed hours contract. So the key point here is that whilst the employer has to offer a guaranteed hours contract to the worker, they do not have to accept this.
It will however inevitably reduce the flexibility that employers have if they use zero hours contracts and employers will have to address their staffing structures if these types arrangements are routinely used..
Right to reasonable notice of shift changes and compensation payments
Workers on a zero hours contract will be given the right to have reasonable notice of shifts and shift
changes and also to payment for any shifts that are moved or cancelled at short notice. At the
moment, the government has yet to clarify what they mean by "moved" or "short notice".
What has changed in the consultation?
The ban on zero hours contracts will now apply to agency workers and also umbrella companies will be regulated. The whole aim is to continue to strengthen workers’ rights. There will be a responsibility on both the employment agency and the end hirer to provide an agency worker with reasonable notice of shifts
There will be a similar responsibility to make proportionate payments where a shift is changed or curtailed without sufficient notice. This responsibility will be on the employment agency but they will be allowed to re-coup this from the end hirer if the agreement with the entire covers this.
It will be the responsibility of the end hirer to offer guaranteed hours to qualifying agency workers but there may well be an exception for genuine seasonal demand work.
The initial response from some of the major recruitment agencies has been that this could make management of agency workers almost unworkable and it could lead to a reduced hiring and potentially then more individuals being engaged on a self-employed basis.
It is anticipated that the changes to zero hours contracts will not come into effect until sometime in 2026 but the situation seems to be changing on a weekly, sometimes daily basis.
