How the Employment Rights Bill will change zero hours contracts and affect agency workers 

Is there going to be a ban on zero hours contracts? 

The Employment Rights Bill was published on 10th October 2024. One of the measures introduced in the Bill is for workers on zero-hours (or low-hours) contracts to have the right to be offered a new contract, or to vary their existing contract, so as to guarantee them a minimum number of hours that reflect the amount of work they have carried out in a set reference period (likely to be 12 weeks).  

Workers would then be entitled to accept or refuse the offer, and, seemingly, if it is rejected, the employer must continue to make fresh offers at the end of every reference period.   

A worker would qualify for an offer of guaranteed hours if over the course of the reference period they ‘regularly’ work more than the minimum number of hours under their contract.  So, while there is unlikely to be an outright ban, retaining zero hours contracts may become unworkable for many businesses. 

The Bill also proposes to introduce a right to reasonable notice of a shift that the worker is required to work, including the time, day and how many hours are to be worked. This right will apply to workers engaged on zero hours or a minimum hours basis, as well as workers who do not have a set working pattern.  There would also be a right to reasonable notice of any change or cancelled shift, although there is no clarity yet as to what “reasonable” notice is. There would also be a duty on employers to compensate workers each time there is a change to a shift at short notice.  

How will this affect agency workers? 

The Bill includes the power to extend its scope to cover agency workers and the Government launched a consultation about this in October last year.  The Government’s response to that consultation was published on 4^th March leading also to a set of amendments to the original Bill being put forward.  The upshot is that agency workers will now be included in the new right to be offered guaranteed hours and the right to reasonable notice of shifts. This is largely to prevent employers from trying to bypass the new rules by hiring agency workers instead. 

Which party will be responsible? 

The right to be offered guaranteed hours will be the responsibility of the end hirer, as the Government believes they are best placed to forecast and manage the flow of future work.  The right to reasonable notice of shifts will be the responsibility of both the agency and the end hirer, on the basis that either party might be responsible for giving notice. Like other workers, agency workers will be entitled to compensation if shifts are changed or cancelled at short notice. The agency will be responsible for paying this compensation as the Government believes it will be the most efficient option as the worker will already be on the agency’s payroll. The agency will be able to recover a proportion of this payment from the end hirer to reflect their responsibility for the change. 

Is there any way that these new rules can be avoided altogether? 

One of the amendments that has been put forward is a new provision to allow employers and trade unions to reach a collective agreement to contract out of the right to guaranteed hours and reasonable notice of shifts, for both workers and agency workers. This means an employer and a recognised trade union would be able to reach an agreement that expressly excludes or expressly replaces the new rights if this is incorporated into the workers’ contracts. For agency workers, the collective agreement can be with the person who has the contract with the agency worker.   

This collective agreement option may be appealing to many employers who are concerned about the administrative complexity of the new rights and how these will impact their business.  However, whether unions are going to be readily agreeing to terms in a collective agreement, which take away individual workers’ rights, remains to be seen.  

There is still a huge amount of unknown detail on the practicalities of the new rights with further consultation and amendments likely before the new rights become law.   

We will keep you updated on any changes in the proposals for zero hours and other important developments in the ERB as they happen.