The government has launched a consultation on plans to end what it describes as “exploitative” zero-hours contracts, with retailers and other employers invited to help shape how the new rules will operate in practice.
The consultation, announced by the Department for Business and Trade on Tuesday (2 June), forms part of the Employment Rights Act and seeks views on measures that would give qualifying workers the right to guaranteed hours contracts, reasonable notice of shifts, and compensation when shifts are cancelled, moved or shortened at short notice.
Business secretary Peter Kyle said the reforms would provide greater certainty for workers while maintaining flexibility for those who prefer zero-hours arrangements.
“It’s not right that people can work regular hours but still have no certainty about their pay from week to week,” Kyle said. “Banning exploitative zero-hours contracts is totemic because this government believes that people should be treated with dignity and respect at work.”
The government said more than 18 million people currently experience uncertainty over their working hours and earnings, with many receiving less than a week’s notice of shifts. It estimates that workers in some of the most deprived areas could save up to £600 a year by reducing the hidden costs associated with insecure work.
Under the proposals, employers would be required to offer qualifying workers guaranteed hours reflecting the hours they regularly work over a reference period. The government’s preferred option is a 12-week reference period, though the consultation is seeking feedback on the detail.
Workers would still be able to choose to remain on a zero-hours contract if they prefer the flexibility.
The consultation also explores what should constitute “reasonable notice” of shifts and how compensation for short-notice cancellations should operate. Employers who fail to provide reasonable notice could face employment tribunal claims.
For convenience retailers, the reforms could have significant implications for workforce planning and labour costs. The consultation comes as retailers continue to grapple with rising employment costs following increases in National Insurance contributions and the National Living Wage.
Read More: What the Employment Rights Act means for retailers
While ministers have stressed that the reforms are intended to preserve genuine flexibility, trade unions have already raised concerns that the government may be diluting Labour’s original manifesto commitment.
Retail union Usdaw criticised the consultation after officials indicated a preference for limiting the right to a guaranteed-hours contract to workers contracted for somewhere between eight and 20 hours a week.
Usdaw general secretary Joanne Thomas said such a threshold would exclude many workers who routinely work substantially more hours than those stated in their contracts.
“It is deeply disappointing that the government is intending to not give all workers the right to a guaranteed hours contract, despite that being the very clear manifesto commitment,” Thomas said.
She argued that many retail employees are contracted for relatively low hours but regularly work additional shifts that can be withdrawn at an employer’s discretion, leaving them with little financial security.
The union warned that setting a threshold could create unintended consequences by encouraging employers to alter scheduling practices to avoid workers qualifying for guaranteed-hours contracts.
Pressure on ministers is also mounting from Labour-affiliated trade unions, which have launched a campaign urging the government to extend the right to guaranteed-hours contracts to all workers regardless of their contracted hours.
The campaign argues that limiting eligibility would leave many workers vulnerable to unpredictable earnings and undermine Labour’s pledge to ensure contracts reflect the hours people actually work.
Retailers express concern
The proposals have also drawn concern from retailers, with the British Retail Consortium (BRC) warning that the reforms must not undermine employment opportunities in the sector.
Responding to the consultation, BRC chief executive Helen Dickinson said the government needed to strike the right balance between tackling exploitative employment practices and preserving flexibility for employers.
"With over a million young people out of work or education, government cannot afford to get this wrong," she said. "Crack down on bad employers by all means, but not by adding costs and rules that deter good employers from hiring in the first place."
Dickinson said retail provides a key route into employment for many young people and warned that excessive regulation could reduce entry-level job opportunities.
The BRC argued that the government's preferred 12-week reference period for determining guaranteed hours may not reflect the seasonal nature of retail employment, particularly during peak trading periods such as Christmas. The trade body said a reference period of less than 26 weeks could leave retailers with little choice but to reduce the number of flexible roles available during busy periods.
The organisation also raised concerns about proposals to define low-hours contracts as those between eight and 20 hours a week, arguing that an upper threshold of 20 hours would be disproportionate and could require employers to repeatedly offer permanent contracts to large numbers of workers.
On shift scheduling, the BRC warned that proposals requiring up to four weeks' notice for shift changes would be "out of step with the realities of retail", where staffing requirements can fluctuate in response to customer demand and trading conditions.
Retailers, trade bodies and workers will be able to submit evidence and responses until the consultation closes on 25 August. The government said the feedback would help determine the final shape of the regulations before the measures are implemented.
Employment rights minister Kate Dearden said the reforms aimed to strike a balance between security and flexibility.
“These reforms put workers in the driving seat, giving those who want guaranteed hours the certainty they deserve, whilst protecting others who prefer the flexibility a zero hours contract offers,” she said.