Background

Arguably one of the most difficult stated aims in Labour’s New Deal for Working People was its move to ‘ban exploitative zero hour contracts.’

Whilst the term ‘zero hour contract’ has no strict legal definition (and certainly the use of casual labour with no guaranteed working hours is far from a new phenomenon), in recent years the increase in such arrangements under the ‘gig economy’ has led the term to becoming synonymous with the idea of unscrupulous employers taking advantage of vulnerable, low-income workers.

In a laudable attempt to try and slay this employment law dragon, the new Employment Rights Bill introduces a number of new concepts that it hopes will protect staff working under these types of arrangements.

It’s worth noting that the provisions do not currently apply to agency workers, but this is a matter for ongoing consultation.

Guaranteed working hours

The new law will create an obligation to offer workers contracts which include a set number of guaranteed hours which ‘reflect’ the hours they have actually worked over a specific reference period. This will mean employers will not be able to engage staff to work lots of hours without guaranteeing a proportion of those hours under a contract.

The right will apply to those workers who are working under a ‘zero hours’ arrangement or a low number of minimum guaranteed hours. The Government has yet to confirm what amounts to a worker with low guaranteed hours and where this threshold lies will have a huge impact on which arrangements will be affected.

The reference period over which a worker’s hours are calculated is likely to be 12 weeks based on the consultation documents to date but is yet to be confirmed. It’s also unclear how calculating subsequent reference periods will be dealt with.

The offer of guaranteed hours must also set out the pattern of days and times during which those guaranteed hours will be available, conceivably allowing workers to enjoy more predictable working patterns.

Any offers made must form a permanent change to the workers terms and conditions, unless specific exemptions apply. This includes where there is only a temporary need for the worker in question.

If a company fails to make offers to its workers when the right arises, those workers will be able to bring a tribunal claim and most commentators think that compensation will be based on the guaranteed hours that should have been offered.

There are real concerns that if the regulations are too complicated then they simply will not be used (much like the current shared parental leave provisions).

Reasonable notice of shifts

The law intends to make sure workers are given ‘reasonable’ notice, both of their shift patterns and changes to their shift patterns. A minimum notice period will be introduced though what will amount to ‘reasonable notice’ has yet to be defined. The law also starts with a presumption that if the required minimum notice is not given then any notice was not reasonable, unless the contrary is shown.

Where reasonable notice is not given, workers can bring a claim for compensation and such compensation will be the amount the tribunal considers just and equitable in all the circumstances to compensate the worker for any financial loss attributable to the unreasonable notice, subject to a cap (to be specified in regulations).

The level at which any compensation is capped is likely to have a material impact on whether companies will comply with the regulations or just choose to accept any additional financial burden for non-compliance.

Compensation for cancelled shifts

Closely linked to  the above, the law intends to make sure workers are given compensation if they have their shifts cancelled at ‘short notice.’ It also applies when shifts are moved or shortened.

How much compensation will be awarded and what amounts to ‘short notice’ is still to be defined. Most commentators best guess at what ‘short notice’ will be is 7 days and this is already the period set out as the minimum notice for when shifts are curtailed or altered rather than cancelled.

Where ‘short notice’ is given, workers can again bring a claim for compensation and such compensation will be the amount the tribunal considers just and equitable in all the circumstances. However, this will not exceed the amount of remuneration the worker would have been entitled to had they worked the original shift as planned. The regulations may specify different payment amounts depending on the length of notice given.

Conclusion

As ever, and in line with probably the majority of the changes under the Employment Rights Bill, the devil will be in the detail but certainly it won’t be long before employers who operate with more flexible workforces will have a lot more to think about. The changes are expected to be in force some time in 2026.

At the very least, those employers will need to review their current arrangements, consider how to implement more considered and more predictable shift planning, as well as potentially budgeting for additional operating costs.

If you’re a business and would like more information about this issue, please contact Stephen Mutch stephen.mutch@pannonecorporate.com

The General Election is just around the corner and is expected to bring a changing of the guard, with Labour firm favourites to take over the post.

A change in government would bring a change in approach, and while the manifestos are light on the detail, they do give us an indication of where possible reforms may come.

Labour has pitched itself as the party that will ‘make work pay’ for working people, in a bid to improve both living standards for those in employment and economic growth. This includes stimulating more funding for training, skills and technology, to help make the UK more efficient and increase productivity levels – something we currently lag behind on compared to our international peers.

An important dynamic in the productivity debate is how workforces function and the legislation that sits around them. So what could we see from a Labour government when it comes to employment law and HR? Let’s look at the detail.

Zero hour contracts

Labour’s plan to ‘make work pay’ includes ending “one-sided” flexibility by banning “exploitive” zero-hour contracts and providing a baseline level of security and predictability for all jobs.

The party believes that too many working people face insecurity when it comes to their working hours, bearing all the risk and being unable to plan and live well. However, the inclusion of the word “exploitive” suggests that Labour has moved away from its earlier pledge for an outright ban on zero-hours contracts.

Under Labour’s proposals, everyone will have the right to have a contract which reflects the number of hours typically worked by reference to a 12-week period.  Workers will also be entitled to receive reasonable notice of any change in shifts or working time, whilst also receiving compensation (proportionate to the notice given) for any cancelled shifts. Anti-avoidance measures will be implemented where necessary to protect the integrity of these policies.

The plans will not prevent workers from the right to be paid overtime rates, nor will it prevent employers from offering fixed-term contracts such as seasonal work.

Basic day one rights

Labour has indicated that it wishes to address what it sees as the unfairness of the current system that requires employees to have two years’ continuous service* before they can bring a claim of ordinary unfair dismissal. The party believes this is an arbitrary requirement which is preventing people from changing jobs and enjoying the resultant wage increases that often accompany such moves, and preventing employers from being able to hire the best candidates.

The length of service required for employees to bring a claim of ordinary unfair dismissal has fluctuated since its inception as a right in 1971. The current requirement of two years’ service was introduced by the Conservative government in 2012 (the requirement remains 12 months in Northern Ireland).

An unintended consequence of the two-year bar has been a rise in the number of discrimination claims brought by employees seeking to find a remedy for the termination of their employment in its early stages. It will be interesting to see if such claims reduce if the right of unfair dismissal becomes available from day one.

Labour has assured employers that they will still be able to operate probationary periods, although how this will work in practice is not yet clear. Commentators have speculated that perhaps dismissals within an employee’s probationary period will be deemed fair so long as a set process is followed.

*While we wait for the outcome of the election, it is worth flagging a point that often catches employers out. Where an employee is dismissed with immediate effect and paid in lieu of notice, the statutory minimum notice period of one week is added on to the dismissal date, meaning that employees dismissed after 103 weeks (one week less than 2 years) can still claim unfair dismissal.

Discrimination, equal pay, and the menopause

Labour’s ‘New Deal for Working People’ plan also includes proposals to promote equality, by tackling the gender pay gap and providing support in the workplace for those going through the menopause.

Large firms will be required to develop, publish and implement action plans to close the gender pay gap. Similarly, employers with more than 250 employees will be required to publish information about ethnicity and disability pay gaps.

There is also a commitment to re-instate the ability for equal pay claimants to draw on comparators in other organisations, where workers’ terms and conditions can be attributed to a single source, and to put a stop to employers outsourcing services to avoid paying equal pay. Labour plans to implement a regulatory and enforcement unit for equal pay with involvement from trade unions.

In relation to the menopause, businesses with more than 250 employees will be required to produce Menopause Action Plans, setting out how they will support employees going through the menopause. For smaller employers, Labour will produce and publish guidance on measures relating to uniform, temperature, flexible working and how employers should record menopause related leave and absence.

Right to switch off

To address what it describes as the ‘inadvertent blurring of the lines’ between work and home life caused by the change in working practices following the pandemic, Labour has committed to bringing in a ‘right to switch off’.

This isn’t a new concept. We can look to a number of European countries which have already given employees some form of right to disconnect, including Ireland. A voluntary code of practice statesthat employees should not be required to carry out work outside normal working hours regularly and should not be penalised for refusing to do so. The code also sets out that employees must respect their colleagues by avoiding work-related contact outside of normal working hours.

Labour’s proposal indicates that it will follow a model similar to that adopted in Ireland, ‘giving workers and employers the opportunity to have constructive conversations and work together on bespoke workplace policies or contractual terms that benefit both parties.’ It seems most likely at this stage that a code of practice will be introduced which can be taken into account by employment tribunals on liability and compensation, but does not in itself create a standalone claim, much like the current Code of Practice on Disciplinary and Grievance Procedures.

Working in partnership with trade unions

Unsurprisingly, one of the areas of employment law that a new Labour government would address is industrial relations.

Its stated aim is to bring in a new era of partnership that sees employers, unions and government working together in co-operation and through negotiation, rather than what it describes as ‘the Conservatives’ scorched earth approach to industrial relations.’

As a starting point, Labour would repeal the trade union legislation brought in by Conservative governments over the past 14 years, specifically, the Trade Union Act 2016, the Minimum Service Levels (Strikes) Bill and the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022.  In particular, repeal of the Trade Union Act 2016 would potentially remove the requirement for at least 50% of all eligible members to vote in a ballot for industrial action in addition to a majority vote in favour, and reinstate the previous minimum period of seven rather than the current 14 days’ notice of strike action.

Referring to the disruption caused by strike action over the past two years, Labour believes its proposals will remove the barriers that currently make it harder for unions to engage in the bargaining and negotiation that settles disputes, and put the UK in line with high-growth economies that benefit from a more co-operative industrial relations culture.

A matter of time

If the polls are right and we have a new Labour government on 5 July, we expect the employment landscape to change quite quickly. Labour has committed to implementing its new its deal for working people within the first 100 days in government.  Over the coming months, it’s essential that businesses keep a watchful eye over a changing landscape to ensure their policies and procedures keep up with the changes.

If you’d like to discuss this blog in more detail, contact Fiona Hamor.

Photo credit: Chrisdorney