Zero-hours contracts
Despite how the changes are being portrayed in the media, zero-hour contracts are not banned under the ERA 2025. A zero-hours contract is in effect a casual work arrangement, which can be legitimate. However, there has been widespread abuse of these arrangements in many sectors limiting the employment rights of many vulnerable, often low paid, workers. The ERA seeks to address this in the new provisions.
The Act creates a right to guaranteed hours after a set period of continuous work over a reference period. During the passage of the Bill the government successfully resisted attempts by the House of Lords to limit the right to be offered guaranteed hours to a right for a zero-hours worker to “request” guaranteed hours. The duty to offer a ‘guaranteed hours contract’ (GHC) remains. The GHC must reflect the hours a qualifying zero-hours worker regularly worked over the reference period. In the case of workers on low hours, they will have the right to be offered a GHC where the number of hours they work exceeds the number set out in their contract over a defined reference period.
Following a further consultation process, regulations will set out the length of the initial and subsequent reference periods and the minimum hours that apply for low-hours workers. The government also agreed a concession that they must have regard to the specific needs of industries requiring seasonal workers in the further consultation.
An amendment to the provisions during the passage of the Bill made it clear that the duty to offer guaranteed hours applies to agency workers, strengthening the provisions further. However, a late amendment allows for regulations to be introduced that provide for exceptions to the duty to offer guaranteed hours where this might have a “significant adverse effect” on employers who are dealing with “exceptional circumstances”. Again, the detail of this will likely become clear in the Regulations.
An employer can opt out of the provisions altogether if they enter into a collective agreement with the Union, provided the terms of any collective agreement are incorporated into individual contracts of employment. This provides an ideal opportunity for Unions to approach employers to negotiate a system of guaranteed hours which bests suits the needs of their members according to the sector in which they work (e.g., retail or care).
The provisions are due to come into force, following consultation and further regulations, during 2027.
Visit our main Employment Rights Act Hub for further information.