The right to guaranteed hours is the mechanism the Government has chosen to ‘ban’ zero hours contracts. It takes up 11 densely worded pages in the Employment Rights Bill inserting a new Chapter into Part 2A of the Employment Rights Act 1996. It is not an easy read. One reason for this is that after you have slogged through it you emerge little the wiser. All of the crucial details are left to be ‘specified’ by future Regulations. As a result it is impossible to tell how significant this new right will be and how far it goes towards ‘banning’ zero hours contracts. 

All we can see in these eleven pages of text is the overall structure and framework of the new right. What follows is an explanation of how I understand that structure. I think I have understood it, but it is quite possible that I have missed something important or got confused somewhere along the way. I’m happy to be corrected, but slightly sorry for anyone with enough time on their hands to correct me. 

So here goes. 

Qualifying workers

In essence, these new provisions will oblige employers to offer contracts with guaranteed hours to ‘qualifying workers’ whose working pattern over an as yet to be specified reference period reaches an as yet to be specified threshold. Qualifying workers include zero hours workers – hourly paid workers for whom there are no guaranteed hours –  or workers whose guaranteed hours fall below a level set by the Secretary of State in Regulations. 

The number of hours at which that threshold is set will obviously be crucial. The Next Steps document says the right will apply to workers with a ‘low’ number of guaranteed hours but does not give any indication of what ‘low’ means. Does it mean just two or three hours? If so, then this new right will not be very significant. Does it mean sixteen hours or even more? If so, then employers will have to constantly review the hours that they are offering workers to see if they need to translate that working pattern into a contractual offer. 

The new right is based on a reference period that will be set out in Regulations. The Next Steps document talks about a 12-week reference period and this has been an established part of Labour’s policy since the beginning. However, the Bill itself does not set the reference period. I don’t think this reflects second thoughts on the part of the Government so much as a desire to reserve the option of adjusting the reference period over time depending on how the new right operates in practice. For now, I think it is safe to work on the basis that the reference period will be set at 12 weeks. 

An Offer of Guaranteed Hours

A worker will qualify for an offer of guaranteed hours if over the course of the reference period they work a number of hours which is in excess of the minimum number of hours under their contract and do so with a level of regularity that will be set out in Regulations. 

So, for example, the Regulations could apply to workers whose contract guarantees no more than 8 hours a week and an offer of guaranteed hours could be required if over the 12 week period the worker works in excess of 8 hours in at least 6 of those 12 weeks. Or, of course the Regulations might say something completely different.

Where the duty is triggered the employer must make an offer to the worker either of a new contract or of a variation to their existing contract. The offer must ‘reflect’ the total number of hours worked in the reference period.  So if the worker worked 240 hours over the 12 week reference period then the offer would have to ‘reflect that’. Exactly what that means, you will be astonished to learn, is something that will be set out in Regulations. 

Once the offer has been made and assuming it is accepted then the cycle begins again. If the worker still qualifies because of the ‘low’ number of hours that are guaranteed then there will be another reference period and another potential obligation to offer a contract to reflect hours worked in excess of the new guaranteed minimum. This continues – essentially a ratcheting effect – until the worker no longer qualifies because their guaranteed hours are no longer ‘low’. 

We then get some quite complicated (!) provisions preventing the employer from offering the varied or new contract for a limited term unless it is reasonable to make the offer on that basis. There is also the power to make Regulations specifying when the offer needs to be made, what form it should take and what other information the employer needs to give to the worker.

The offer that is made should not be less favourable to the worker in relation to terms other than hours and time of work. For example, the employer couldn’t make an offer that guaranteed the worker a certain number of hours but reduced the hourly rate of pay.  The exception is that if it is a ‘proportionate means of achieving a legitimate aim’, the offer may include less favourable individual terms provided that it is ‘overall’ no less favourable than the terms on which the worker worked during the reference period. 

The employer’s duty to make an offer ends if the worker resigns (or terminates the working arrangement if they are not an employee) or if the employer reasonably terminates the contract / arrangement for a  qualifying reason. That is then defined in the same terms as the ‘potentially fair’ reasons for dismissal that we are used to in unfair dismissal cases (conduct, capability, redundancy etc). If the termination happens after the offer but before the offer is accepted (the ‘response period’) then it is treated as having been withdrawn.

Accepting the Offer

A feature of the right to guaranteed hours is that it operates as an obligation on the employer to make an offer which then has to be accepted by the employee. This contrasts with the rather more straightforward approach in the Fixed Term Employees Regulations under which the contract simply becomes permanent once the relevant conditions are met. 

Because of this approach we have to have a provision (about a page and a half) dealing with the worker accepting or rejecting the offer during the ‘response period’. In a startling move, the duration of the response period is left to Regulations to determine. The Bill then goes into detail about what happens if the contract or arrangement ends before the end of the response period – it seems that the offer still stands unless the employer has fairly terminated the contract / arrangement.

The last part of these provisions are pretty standard – giving the worker the right to bring a Tribunal claim if the employer is in breach of its obligations with the Tribunal being able to make a declaration and order compensation if the claim succeeds. 

And that’s all there is to it.

Will this Work?

The overall shape of the new right seems to make sense. But it is hugely complex and it will be quite a challenge to translate the legislation into guidance that employers – particularly small businesses – will be able to follow. 

There are also some gaps. How, for example, does the Government set the various thresholds that will need to be specified without giving employers a target to aim at? If the Regulations say an offer must be made if the worker works more than 8 hours in at least six weeks of the reference period (for example) then what is to stop the employer from ensuring that the hours offered are never quite as regular as that? Will the new right create an incentive for employers to restrict working hours or ensure that workers never develop a regular pattern of work? 

I also don’t see how the new right will cope with seasonal work or other surges in activity. If someone is recruited in October and the next 12 weeks are really busy with lots of work offered, will the employer really have to offer a contract guaranteeing consistent hours after the Christmas rush is over? Perhaps the limited permitted use of fixed-term contracts could help here, but I don’t quite see how that could work in practice. 

These issues might be addressed as the Bill progresses, but there is a danger that the Government will wave away concerns by promising that they will be dealt with in the subsequent Regulations.

And that of course is my central objection. I don’t criticise the Government for not yet knowing how this new right can be made to work. That’s OK. The idea of banning zero hours contracts may have been Labour Party policy for almost a decade, but they have never before had to translate that political goal into a workable legislative framework. It is early days. If they hadn’t made the absurd commitment to introduce legislation inside the first 100 days then they could simply have announced that they would begin a formal consultation in the autumn on how to achieve their aim with a view to legislating sometime in 2025. That would be the sensible way to implement a policy that is complex and difficult and needs to be thought through carefully.

As it is, in order to meet a meaningless 100-day target they will force Parliament to spend months slogging through empty provisions before eventually launching a consultation on the parts of the policy that really matter. The results will then be presented to Parliament in the form of Regulations that will receive next to no legislative scrutiny and which cannot be amended. This is not a recipe for good lawmaking. It would be better if the Government just scrapped the measures currently in the Bill and undertook to legislate separately once they have consulted fully and have a clearer idea of what their actual policy will be.