Almost half of retailers are planning to increase their use of agency workers as proposed changes to zero-hours contracts threaten to raise the cost of flexible labour, new research from RSM UK has found.
The findings come as the government reveals its plans to reform zero-hours contracts, with its impact assessment estimating the changes could cost businesses up to £3 billion a year.
RSM UK’s Workforce survey found that 48 per cent of retailers will look to agency workers to provide flexible resource, as they seek to manage new obligations around guaranteed hours. Almost a third (32 per cent) of retailers said they were concerned about having to provide guaranteed hours to workers.
However, RSM warned that moving to agency workers may not allow retailers to avoid the requirements, with the proposed right to guaranteed hours also applying to agency workers in certain circumstances and the end user potentially retaining liability for compliance.
The survey found that 88 per cent of retailers are already making changes to their use of zero-hours contracts. Nearly a third (28 per cent) said they would instead offer guaranteed hours, while 21 per cent said they would stop using zero-hours contracts altogether. A further 16 per cent plan to reduce their use of zero-hours workers.
Charlie Barnes, head of Employment Legal Services at RSM UK, said the complexity of the new rules was effectively pushing retailers towards the same outcome as an outright ban.
“The new legislation is leading retailers to essentially stop using zero hours contracts by either offering guaranteed hours, reducing the use or not using them at all,” he said.
Barnes warned that retailers could face increased administration and higher labour costs if they are required to guarantee a set number of hours even when demand is low.
“This will ultimately drive-up costs and push retailers to explore alternative ways to fill labour gaps with many turning to agency workers to avoid the legal and administrative burden,” he said.
However, he added that the government’s consultation document suggested there could be exemptions for businesses using seasonal workers or staff to cover particular events, which he said would be welcome news for retailers.
Jacqui Baker, partner and head of retail at RSM UK, said the changes could also reduce opportunities for workers who value the flexibility offered by casual employment.
“The harsh reality is that this is leading to less opportunities for those who value or rely on the flexible nature of casual work, particularly young people,” she said.
She added that retail, leisure and hospitality employers would bear much of the impact as they continue to face higher employment and business rates costs.