The next instalment in our ongoing series of articles offering further insight into what employers should expect from the Employment Bill will concentrate on the changes being introduced in respect of zero hour and low hour contracts.

What type of contracts will be affected?

Many organisations use zero hour and/or low hour contracts to provide flexibility within their staffing arrangements where work levels fluctuate.

Zero hours contracts (also referred to as casual contracts) are a form of contract where a business does not guarantee a minimum number of working hours to an individual worker. Under this form of contract, there is no obligation on the business to provide work and no obligation on an individual to accept work.

Low hour contracts (also referred to as minimum hours contracts) represent a similar arrangement; only in this case a worker is guaranteed a set number of hours but can be offered additional hours as the business requires. As with zero hours contracts, there will normally be no obligation on an employer to offer additional hours and no obligation on the employee to accept them.

What is the current position?

Although often subject to negative press, organisations are currently free to use zero hour and/or low hour contracts as they see fit.

What will change under the Employment Rights Bill?

The Government’s intention is to “make work pay” by providing additional security and predictability for workers engaged under zero hour or low hour contracts. As such the Bill will provide employees with the right to:

• A guaranteed hours contract – organisations that engage zero or low hour workers will be required to offer such workers guaranteed hours reflecting the hours worked during a defined reference period which we expect to be 12 weeks. Such guaranteed hours must be offered on terms that are no less favourable than those the individual was previously engaged under.
• Reasonable notice of shifts – organisations will be required to give workers who work on zero hour or low hour contracts reasonable notice of shifts they are being asked to work, as well as reasonable notice of cancelations or changes to those shifts.
• Compensation for last-minute cancellations or shift changes – if organisations fail to provide reasonable notice of shift cancelations or changes, they will be required to pay workers a set compensation payment.

The Government have not yet determined what will be treated as “reasonable notice” or on the amount of the proposed cancelation payment that will apply.

Will this change impact agency worker arrangements?

Amendments announced to the Bill in March, mean the changes being applied to zero and low hour contracts will also apply to agency workers. Consequently, the hirer will be responsible for offering regular hours contracts to agency workers and the agency will be liable for cancelation payments. This means it will not be possible for organisations to avoid the impact of these changes by increasing their usage of agency workers.

How should employers prepare for this change?

We currently expect the proposed changes on zero hour and low hour contracts to come into force in 2026.

Organisations that rely on such contracts within their workforce should start reviewing their arrangements to assess the degree of flexibility genuinely required and to consider alternative work arrangements.

At the same time if the current work arrangements regularly see shifts offered on short notice or cancelled without notice then managers should consider how staff planning can be improved to avoid potential compensation payments in the future.

FMGS are available to assist employers seeking to review their contracts of employment and work arrangements in advance of the introduction of the Employment Bill.

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