Aleksandra Davidson examines the rise and fall of the zero hours contract, in view of the proposed Labour government reforms of employment law that have included a pledge to ban “exploitative” zero hours contracts.
What is a zero hours contract?
A zero hours contract doesn’t have a formal legal definition. However, it is understood to be a type of contract under which the individual has no guaranteed hours and agrees to be available for work on a flexible basis but is only paid for the work carried out.
Over 4 million people are in insecure jobs and over 1 million are on zero hours contracts.
How have zero hours contracts evolved?
Zero hours contracts rose to prominence in the late 1990s/ early 2000s. By 2013, there were calls for them to be banned after evidence emerged that a number of employers abused them. Sports Direct in particular gained some unwelcome publicity when it came to light that 90% of its workforce were on zero hours contracts.
In 2014 the government consulted on a proposed ban of “exclusivity” clauses in zero hours contracts, which prevented individuals from accepting shifts with more than one employer. The ban came into effect in May 2015. In December 2022, it was extended to apply to all low-income workers.
However, this has not eliminated the uncertainty inherent in this type of contract. In 2017, the “Good work: Taylor review of modern working practices” found that many workers on zero hours contracts had little control over when they worked and did not know when they would be offered work. It recommended that the government introduce a right to request a more predictable contract.
In September 2023, The Workers (Predictable Terms and Conditions) Act received Royal Assent; however, it was not due to come into force until September 2024 (and has not come into force yet). It’s expected to give a right to workers to apply for a change in their contract to obtain a more predictable working pattern. The new law was primarily targeted at zero hours contracts and other atypical work.
What has Labour promised?
In January 2024, Labour published a campaign document, in which it committed to banning zero hours contracts.
However, some business leaders raised concerns about Labour’s “full fat deal for workers” in that it could impose very significant costs on business at a time when many companies were already struggling with a difficult trading environment. As a result, Labour watered down some of its pledges, including in relation to zero hours contracts.
When Labour published its manifesto, it referred to a ban of “exploitative” zero hours contracts, rather than an outright ban.
After Labour won the election, it repeated this commitment in the King’s Speech. They have committed to:
banning exploitative zero-hour contracts, ensuring workers have a right to a contract that reflects the number of hours they regularly work and that all workers get reasonable notice of any changes in shift with proportionate compensation for any shifts cancelled or curtailed. This will end ‘one sided’ flexibility, ensuring all jobs provide a baseline level of security and predictability.
What could reform look like?
It is not clear what is meant by an “exploitative” zero hours contract, but it suggested that a non-exploitative contract would reflect the numbers of hours regularly worked and provide more financial certainty to the worker.
In December 2023, the researchers in the University of Warwick set out in their policy brief that where businesses have a regular and steady demand for labour, and workers do in fact work regular hours, zero hours contracts are “potentially exploitative”. It made a policy recommendation that workers should have a right to switch to a contract which reflects normal hours worked.
The policy brief also set out that extensive research has reported the impact of “on call” contracts with short/no notice cancellation of shifts which added to uncertainty and resulted in the occurrence of “unremunerated labour”, where individuals make themselves available for work but are not offered hours and the lost shifts generate further cost for them (e.g., travel and childcare). It made a policy recommendation that workers should have a right to “reasonable” amount of notice and full amount of notice in the event of shift cancellations.
Labour promised that the government would consult fully before passing any legislation that would include “banning exploitative zero hours contracts” (as well as their other major proposed reforms, such as ending fire and rehire; and introducing basic rights from day one to parental leave, sick pay, and protection from unfair dismissal).
What about the right to request more predictable working patterns?
It seems unlikely that the new Labour government would not bring The Workers (Predictable Terms and Conditions) Act into force. However, it may seek to deliver it in a reshaped form as part of the wider proposed reforms to zero hours contracts.