The government has faced considerable criticism from the House of Lords regarding its proposals under the Employment Rights Bill to introduce an entitlement to guaranteed hours of work. The right will require employers to offer workers on a zero-hours or low-hours contract a minimum number of hours, based on an average of what they have recently worked for that employer over a certain reference period.
The government is also introducing rights for workers to be given reasonable notice for the cancellation or curtailment of shifts with penalties for those that fail to do so. Its stated intention is to provide more financial security for those on zero-hours or low-hours contracts. The government has included exemptions, including where there is agreement with a recognised trade union, or where it was reasonable to offer a limited- term contract.
There remains considerable concern at the lack of clarity around several aspects of the legislation at this late stage. Despite feedback from employers, the government has failed to provide further clarity on several key aspects of the legislation, such as what a low-hours contract is, what the reference period is that will be used to calculate the average hours, when it is reasonable for an employer to offer a limited-term contract, and what would count as reasonable notice of a shift cancellation. The government is instead committing to further consultation on these aspects after the legislation has come into force, with regulations and guidance being used to provide that clarity.
However, that does not help employers that are now trying to prepare for the impact this will have on their business models and their future labour supply requirements. For example, will employers which use seasonal workers be able to rely on the limited contract exception or will they have to consider the impact of the right to offer guaranteed hours for this cohort? The government indicated during a House of Lords debate that there would be such an exemption for seasonal workers but has stated that this will be covered in forthcoming guidance, although did not commit to a timeframe for when that will be introduced.
This lack of certainty stunts growth because it means employers cannot properly prepare for the future and are second guessing what their labour costs will be. Sadly, it will also inevitably result in employment tribunals being left to judge cases based on their specific circumstances.
The government says it wants to retain some flexibility with the legislation, which is understandable given the need to adapt to different economic environments and market conditions, however, what employers are desperate for now is some certainty so that they can properly plan for the future. Hopefully, the government will act sooner rather than later.
Charlie Barnes is head of employment legal services at RSM UK
