Changes to Zero-Hour Contracts

Zero-hour contracts have been a contentious issue in the UK for many years.  These contracts do not guarantee any minimum working hours and have been criticised for creating job insecurity and exploitation of workers.  These contracts, because of their flexibility, can be seen positively, however, by both employees and employers.

In 2015 the Conservative government banned “exclusivity” clauses in zero-hour contracts to remove the bar on workers finding work elsewhere.

The government’s proposals have evolved from an initial plan (in opposition) to ban zero-contracts entirely to the current position which is:

• A ban on "exploitative" zero-hour contracts
• Workers to be given the right to a contract reflecting their regularly worked hours (based on a 12-week reference period)
• Employers to be required to provide reasonable notice for shift changes, with compensation for cancelled shifts.

An important aspect of these proposals is how the government plans to define “exploitative” and, at the time of writing, we do not know how they intend to do this.

New Day-One Rights

At present eligibility for several employment rights is dependent upon a qualifying period of continuous service in employment.  The most significant right is the right to bring an unfair dismissal claim.

The government proposes to remove the qualifying period (currently two years) for an unfair dismissal claim making it a “day one” right.  This right would be subject to further provisions on probationary periods but, at present, it is unclear what these provisions will say.  In addition, the wording relates to “workers” and so, subject to our comments above, this change could be extended further if the changes to employment status are implemented in future.

This change alone is very likely to have significant implications for employers.  Employees can already bring claims for unfair dismissal if they allege that there has been discrimination or that the dismissal was for other prohibited reasons (e.g. that they had “blown the whistle” or raised health and safety concerns) but this proposal is likely to lead to far more employment tribunal claims with the associated costs for employers.

Trade Unions

In opposition the Labour party pledged to “update” existing trade union legislation and repeal provisions put in place by previous Conservative and coalition governments.

They intend to repeal the Trade Union Act 2016 which applied restrictions on trade unions in relation to industrial action.  These restrictions included raising ballot thresholds, increasing the notice period for industrial action, restrictions on picketing and the expiry (after 6 months) of mandates for industrial action.  These restrictions will disappear.

The intention is also to repeal the Strikes (Minimum Service Levels) Act 2023 which gave the government powers to set minimum service levels for certain sectors which would have had the effect of restricting industrial action.

Dismissal and Re-engagement ("Fire and Rehire")

Dismissal and re-engagement, often referred to as "fire and rehire," has been a topic of debate for some time.

On 18 July 2024, a new ACAS Statutory Code of Practice came into force.  This Code can be taken into account by Employment Tribunals in relevant cases. Prior to the general election, there had been a proposal, by the previous government,  to allow tribunals to uplift awards if the Code was not followed, but this was not enacted.

The new Labour government intends to go further in addressing this issue. They have pledged to end "fire and rehire" as a lawful means of changing terms and conditions. However, they have accepted that businesses should be able to restructure where there is genuinely no alternative.

The government emphasizes that employers must follow a proper process "...based on dialogue and common understanding between employers and workers." Their intention is to replace the current Statutory Code with a new one that aligns with this approach.

Conclusion

The Government's proposed employment law reforms have the potential to significantly transform the UK's employment landscape. From simplifying employment status to banning exploitative zero-hour contracts and introducing new day-one rights, these changes aim to create a fairer and more secure work environment for employees but they will also have significant implications for employers.

By staying informed, seeking professional advice, and fostering open communication with their workforce, businesses stand the best chance to navigate these changes successfully.

For further information and professional advice tailored to your specific circumstances, feel free to contact our team at Hempsons.

Andrew Davidson
Partner and National Head of Employment
Hempsons
Email: a.davidson@hempsons.co.uk
Phone: 01423 724129
X: @andrew_davidson

For more detailed insights, visit us at www.hempsons.co.uk.