How many hours do you have to work before you are no longer on a ‘low hours’ contract?

The question is crucial to the right to guaranteed hours contained in the Employment Rights Bill currently at the Committee Stage in the House of Commons. As I have previously set out, this is a complicated right under which a worker who works in excess of their guaranteed hours over a reference period is entitled to be offered a contract reflecting the hours that they have worked. This right continues to apply to them – with subsequent reference periods resulting in further offers of guaranteed hours – for as long as the worker qualifies for the right. 

But who qualifies? The Bill says that those employed on a zero-hours contract qualify (a concept already defined in the Employment Rights Act) but also any worker who, over the reference period, is entitled to be offered a number of hours of work ‘not exceeding a specified number of hours’ (page 2, line 30). 

The right to guaranteed hours set out in the Bill leaves many things to be specified by Regulations, but this is surely the most important of them. The Government has to decide how narrow or how wide this new right is going to be. 

For example, if the threshold was set at three hours per week then the right would not amount to much. Most employers would simply guarantee workers three hours of work and would not have to give the matter any further thought.  If the threshold were to be set at 20 hours per week then that would be a completely different matter. Most part-time workers would be in scope and employers would have to monitor any additional hours they worked very carefully – offering them guaranteed hours whenever their working pattern met whatever criteria as to number and regularity that the Government eventually comes up with. This will operate as a ratcheting mechanism, increasing the workers guaranteed hours over time until they reach the threshold.

So depending on where the Government sets that threshold, the right to guaranteed hours could either be a token right of no real significance, or the most fundamental shift in the regulation of working time since the Factories Acts of the nineteenth century. I for one am quite curious as to where on that spectrum the Government will eventually land. 

The issue was debated in the Commons Committee stage on 3 December. In response to a probing amendment from the opposition suggesting a 2-hour threshold, the Minister Justin Madders referred to the retail sector and said:  

People who work in that sector can be on guaranteed hours of 16 hours a week but still face insecurity. Equally, a lot of the people that we are trying to help here have no guaranteed hours at all. There is an argument that anyone below full-time hours—again, there is a debate about what that means—could be within scope. (Column 198)

He stressed that this was all a matter for consultation, but it seems that at this stage at least the Government does not intend the right to guaranteed hours to provide a token entitlement to a minimum number of hours work per week. The threshold is likely to be set at a significant number.

That raises a further issue that the Government will need to consider. Regulations will set out the criteria to be met in order to trigger an offer of guaranteed hours. This will not, I assume, simply be an average of the hours they have worked in the reference period. The right is aimed at workers who regularly work in excess of their guaranteed hours. It would be completely unworkable if one busy week involving 40 additional hours of work required the employer to increase the guaranteed weekly hours as a result. Rather, the criteria set out by Government will deal not just with the number of hours worked but also the regularity with which they are worked. For example, they could provide that the worker must work more than five hours above their contracted hours in at least seven weeks out of the twelve-week reference period. 

But how can the Government prevent this from merely setting a limit on the number of hours an employer will offer a worker? Whatever threshold is set, wouldn’t this incentivise the employer to say ‘uh-oh, this employee is getting close to the limit, we’d better avoid offering any additional work until the next reference period starts’? Will the new right have the perverse effect of limiting the work offered to those on insecure work? 

It may be that Government would regard employers being deterred from offering additional hours to some employees as a fair price to pay for the general increase in the security and predictability of work that the new right would bring. There are always trade-offs.  But it does look as though current Government thinking is that the right to guaranteed hours is going to be a significant new provision that goes well beyond merely tackling ‘exploitative’ zero-hours contracts. If that is so, then its impact will be complex and hard to predict.