Atypical working arrangements: understanding the proposed legislative changes

The Employment Rights Bill aims to minimise the uncertainty that those who work on zero or low-hour contracts face by introducing guaranteed hours and reasonable notice of shifts. Employers need to prepare for the impact these changes will have.

Who are atypical workers?

Atypical workers are individuals who are typically engaged on zero-hour contracts or have irregular working arrangements. Zero-hour contracts are agreements where there is no obligation for an employer to provide work, nor is the individual under an obligation to undertake any work offered. They can be advantageous as they are flexible arrangements which can suit both the employer and worker. However, they give workers a lack of security in terms of their working hours and income.

There are some protections for individuals on zero-hour contracts under current law. For example, employers cannot prohibit anyone on a zero-hour contract from working elsewhere.

What changes are proposed?

The Employment Rights Bill seeks to bolster protection for such individuals and remove the uncertainty for those engaged on zero-hour contracts or low hour contracts. Under the new law, qualifying workers after a set reference period will have the right to be offered a guaranteed hours contract.  The reference period is yet to be confirmed but is likely to be 12 weeks. The guaranteed hours which the employer offers must reflect the hours worked over the defined reference period.

Qualifying individuals will be those on zero-hour contracts and low hour contracts, who regularly work over their specified hours. This means employers will not be able to avoid these requirements by having workers on a contract guaranteeing a minimum but low number of hours. How the government will chose to define a ‘low hour contract’ is not yet know, but will be critical in terms of how many individuals are caught by these new provisions.

Qualifying workers will also have the right to reasonable notice of shifts, and any change or cancellation of a shift. Where a shift is cancelled, moved or curtailed at short notice, they will also be entitled to compensation. However, the position on what constitutes ‘short notice’ and what level of compensation the individuals will be entitled to remains uncertain. For the latter, there have been suggestions that the figure will equate to how much the employee would have earned had they worked their shift. If this is the case, it could be quite costly to employers. Therefore, it is important that reasonable notice is given if shifts are indeed changed.

Employers will also need to take reasonable steps to ensure workers are given specified information in relation to these newly acquired rights during an initial information period. This will be within the first two weeks of their engagement. However, if any workers have existing zero-hour contracts they will also need to be informed of their rights within two weeks of the law coming into force.

Further amendments have been made to the Employment Rights Bill during its passage through Parliament. It will now also be possible for employers to enter into collective bargaining agreements with a Trade Union to contract out of these provisions, but they must be replaced with another contractual arrangement. This may include alternatives such as incorporating the arrangement into the individual’s contract. As of yet, we do not know the parameters that will be put in place here.

The other area which has been clarified is that these new rights will also apply in respect of agency workers, with responsibility for the guaranteed hours offer calling on the hirer, the hirer and the agency both having responsibility for giving reasonable notice, and the agency being responsible for paying any compensation although potentially with the ability to recover this from the hirer in certain circumstances.

What do we know so far?

Whilst much of the new law being introduced remains uncertain, we do have certainty over a few a few areas, including:

• if a worker on a zero-or low hour contract would like to stay on this type of contract, they can request to do so
• where a guaranteed hours offer is made, the individual will be able to negotiate this
• where an offer is accepted, the individual will be able to start working under this new contract the following day (unless otherwise agreed)
• where there is no response to the guaranteed hours offer, the worker will be presumed to have rejected the offer
• the employer cannot alter terms and conditions as part of the offer
• if the worker resigns or is dismissed during the reference or offer period, the offer will be withdrawn
• wWorkers cannot be subject to a detriment because they have accepted or rejected any guaranteed hours offer

However, much of the detail of how these new rights will work in practice is still to be confirmed in supplementing regulations.

What can employers be doing now? 

It is critical that employers continue to monitor the progress of the Employment Rights Bill, and any further amendments made to it as it passes through Parliament. In addition, active participation in any government consultations on the detail of these new rights is also encouraged, to ensure the changes are implemented effectively.

In the meantime, employers should begin to audit their workforces to identify how many workers and agency workers are engaged in the business. This will help employers to anticipate the impact that these new rights could have on their business and what changes might need to be made to workforce structure in response.