The Zero Hours Provisions of the Employment Rights Act: Diversionary Tactics?

In 2015, the first regulation of zero-hours contracts in the UK sought to address a virtually non-existent problem – namely, exclusivity clauses – in an attempt to divert attention away from the real problems associated with zero-hours contracts, and their broader, institutional causes.

The new regulations on zero hours contracts/arrangements contained within the Employment Rights Act 2025 at least purport to respond to some of the real problems  associated with such contracts/arrangements. Not only do they fail to respond meaningfully to these problems, however, they do so at the expense of – and arguably for the explicit purpose of – obscuring the necessity for the wider institutional changes that would be required to address the causes of these problems.

A History Lesson

It should not be forgotten that, prior to the 1970s, workers were generally guaranteed a minimum income regardless of how much work they actually performed, and this meant that employers had little incentive not to make work available on a regular basis. This was a function of a social security system, which provided workers with a reasonable income even if they did not work, widespread collective bargaining, which facilitated the spread of full-time, salaried employment, and the Wages Councils, which guaranteed to workers a minimum remuneration regardless of how much work was performed. Things changed, however, with the dismantling of the wages council system, the overhaul of the social security system, and the undermining of the economic and political power of the trade unions by privatisation, the abandonment of Keynesian demand management and full employment and the introduction of new legislative restrictions on industrial action. In this changed environment, the economic incentive that previously existed for employers to make work available to workers on a continuous basis had been removed, for it was now the case that employers needed only to pay for the amount of work that workers actually performed. Labour market competition had been intensified to such an extent, moreover, that employers did not have to fear that by failing to employ workers on a continuous or full-time basis, they may be at risk of a shortage of manpower.  Particularly as living standards were depressed, and new groups—students, and women—were drawn into the labour market, employers were able to use casual working arrangements to shift costs and risks onto workers, while minimising the costs, to them, of employing workers. What was once an arrangement that operated at the margins of the labour market, as a supplement to employers’ core workforce, thereby became a favoured arrangement among many employers for whom they not only provide considerable flexibility, but also, a useful risk-shifting device, placing the risks and costs of labour power’s reproduction onto the shoulders of individual workers and wider society.

In order to function in this way, however, employers needed to be confident that those workers hired under these arrangements would not be able to access the costly and administratively burdensome employment rights available to regular, full-time workers. Fortunately for them, as casual workers began coming before the courts with increasing frequency, the courts readily developed the law in order to deny them access to such rights: developing the doctrine of mutuality of obligation, which made it difficult for zero hours workers to establish employment status and/or continuity of employment, while limiting the extent to which they could take advantage of statutory provisions designed to allow continuity to be established outside the contract, ensuring that even where employment status was established, most important employment rights were still out of reach.

When Labour under Jeremy Corbyn committed to banning zero-hours contracts as part of the 20 point plan in 2017, they took this institutional context directly into account. Thus, the ban on zero-hours contracts was to function alongside proposals to socialise the costs of higher education, by scrapping tuition fees; to expand the scope of publicly funded child-care; to increase significantly public investment in health care; introducing an additional tax on the incomes of the highest earners, and to significantly improve the scope of trade union freedoms.

When the ban on zero-hours contracts was adopted by Keir Starmer, and integrated within Labour’s Plan to Make Work Pay, however, these wider institutional changes were largely abandoned. Instead, the commitment became embedded in a neoliberal narrative that frames the causes of the problems associated with zero hours contracts/arrangements as if they arise from their structural features, making targeted regulation appear as the appropriate solution.

The Employment Rights Act 2025 and Zero-Hours Workers

There are two aspects of the ERA that are most relevant to zero-hours workers. First, those provisions which make some (not all) important employment rights available from day-one, thereby minimising the difficulties faced by zero-hours workers when it comes to demonstrating continuity of service. Second, the three new rights introduced to address the problems of uncertainty and unpredictability associated with zero-hours arrangements, specifically: the right to a guaranteed hours offer, the right to notice in relation to shifts and shift cancellations, and the right to compensation in relation to cancelled shifts. These three new rights are conferred upon ‘qualifying workers’ (including, by virtue of Schedule A1, agency workers), which are defined as workers hired pursuant to a contract whereby the employer does not agree to make a minimum amount of work available; those persons hired pursuant to an arrangement by which the workers does not agree to accept a minimum amount of work nor the employer to make available any work; and low-hours workers, those whose contracts guarantee a small number of hours of work (a group included to prevent employers evading the provisions by simply agreeing to say 1-2 hours of work per week). However, despite promising to introduce a new single unified worker status, the Government is yet to take any steps in this respect, so exactly who will count as a qualifying worker remains uncertain.

The Right to a Guaranteed Hours Offer

The right to a guaranteed hours offer is a right, after the expiry of a reference period (12 weeks), for qualifying workers to be made an offer of a contract guaranteeing the hours worked in the previous reference period. In order to count as a guaranteed hours offer, the offer must set out how many hours work the worker will be offered, as well as terms and conditions relating to when the offered number of hours are to be provided and worked. A separate provision empowers the Secretary of State to introduce regulations requiring that the offer reflect the days and times when the reference period hours were (and are to be) worked. If this power is not exercised, however, the ERA is explicit that employers need not specify the days or times when workers will be required to work. Thus, to count as a guaranteed hours offer it seems to be sufficient for an employer to simply specify that, for example, 200 hours will be required in a 12 week period, and these will be spread evenly throughout the 12 weeks, or will be worked exclusively in the last 8 weeks of the reference period.

There is no obligation on workers to accept the offer, and a failure to accept within the reference period will be taken as a rejection of that offer. The obligation to make a guaranteed hours offer continues to arise on the expiry of subsequent reference periods, such that, if the hours actually worked exceed those in the guaranteed hours arrangement, a fresh offer would have to be made, and an opportunity provided to the worker to agree to a new ‘higher’ number of hours.

Rights to Notice and Compensation

The inclusion, in the ERA, of the two other new rights for zero-hours workers, namely, rights to reasonable notice of shifts and shift cancellation, and to compensation in the event of the latter, suggests that there is no intention that the Secretary of State will introduce regulations requiring guaranteed hours offers to reflect the dates and times actually worked in the reference period. If there was, these provisions would be relevant only in those cases where a guaranteed hours offer had been rejected, or in those cases exempt from the guaranteed hours offer provisions, namely, in cases where work is genuinely intended to be temporary. Having said this, the ERA includes a power for the Secretary of State to make provision by regulation for the duty to make a guaranteed hours offer not to apply in relation to a given reference period, or for an offer made to have been treated as if it were withdrawn, in other specified circumstances. In exercising this power, he is required to have regard to the benefit of being made an offer to workers, and ‘the desirability of preventing [the guaranteed hours provisions] from having significant adverse effect on employers dealing with exceptional circumstances’. One can readily see how the latter factor might be abused to allow for relatively far-reaching exemptions from the guaranteed hours provisions during periods of economic difficulty. In such circumstances, the provisions relating to notice and compensation may well prove much more important, because the number of workers benefitting from guaranteed hours will be far fewer.

Genuine Improvement, or Diversionary Tactic?

A major limitation of the new provisions is that they rely on individualised enforcement via employment tribunals. Given that ‘qualifying workers’ will often be in a position of extreme dependence, the likelihood of them challenging a failure by an employer to make or comply with a guaranteed hours offer, or to comply with the notice and compensation requirements, is minimal.

Beyond this, one must also be sceptical about how well these provisions will really address even those problems of uncertainty and predictability that have been acknowledged by the Government.

First, on the issue of uncertainty, for those workers who accept a guaranteed hours offer, their entitlement to employment rights will be much easier to establish, because employers are unlikely to be able to argue that the arrangement lacks the mutuality of obligation required to establish either employment status or continuity of employment. This does represent a potential improvement, but it comes with a potential down-side: if/when a worker rejects a guaranteed hours offer, the courts may take this this as positive evidence of a lack of mutuality, leaving the worker even worse off than previously – even though many workers simply will not be in a position to accept a guaranteed hours offer because, with no obligation on employers to state when the guaranteed hours will need to be worked, they may not be able to guarantee that they will be able to work the shifts when offered.

Second, on the issue of predictability, even if a guaranteed hours offer is accepted, if workers do not know in advance when the hours will be worked, they will still struggle to accommodate additional or supplementary employment sufficient to cover their costs of living. Likewise, even if workers receive a few days’ notice of shifts and shift changes, this is still unlikely to enable them to plan child-care and transportation  etc. in a cost-effective way, the ‘reasonable compensation’ provided for cancelled shifts notwithstanding.

The real issue here is that the provisions do not – and do not even purport to – guarantee workers a reasonable working schedule, never mind sufficient work to earn a reasonable income. The basic premise underpinning the provisions is still that workers’ working schedules – both how much and when they will work – are to be driven by the needs of business. The effect of the guaranteed hours provisions is to allow employers 12 weeks to determine their labour needs, before committing only to a minimum number of hours. The law regulating zero hours contracts in the Netherlands and New Zealand provide a useful contrast here. In both these countries, the starting assumption is that zero hours arrangements are unlawful. Their use is allowed only in exceptional circumstances, and in those circumstances, employers must specify in advance both the minimum amount of work that will be required, when it will be required, and the degree to which either might vary. While there exist various mechanisms for building in a degree of flexibility into working arrangements, in these countries, the need for workers to have a predictable, and reasonable working schedule, takes priority over the needs of the business for ‘flexibility’.

Despite the Government’s express commitment to making work pay, moreover, it is notable that there is nothing in the ERA that requires employers to make available an adequate amount of work, in order to enable workers to earn a reasonable living. While the Government has recently amended the remit of the Low Pay Commission to include an obligation to have regard to the costs of living when setting the minimum wage rate, this is to be read alongside its obligation to have regard to competitiveness and employment levels, and is in any event rendered relatively meaningless in practice given that workers are only required to be paid the minimum wage for the time they actually work. It should not be forgotten in this context that by increasing the time-demands associated with engaging in wage-work, and increasing the costs, to workers, of making arrangements necessary for workers to be able to work, zero-hours contracts/arrangements operate as a means through which employers can devalue the wage, by increasing the subsistence costs of workers – a situation that the notice and compensation requirements will ameliorate only to a very modest extent.

Nor should we deceive ourselves into thinking these are purely socio-economic problems: if working arrangements impose such excessive time demands on workers, (whether because they are forced to combine multiple jobs and/or to devote considerable time to planning around the employers’ shifting needs), that they have little time left over for anything more than necessary rest-recuperation, they will struggle to participate meaningfully in the democratic life of society. A failure to deal adequately with the issues associated with zero hours contracts simply exacerbates a situation in which workers lack the power to meaningfully shape the rules that affect their lives, hollowing out our democracy, and making sure that those interests that already dominate, will continue to do so in the future.

Conclusion

The Government would have us believe that the problems associated with zero hours contracts/arrangements have now been addressed. This narrative must, however, be resisted. While some of the most vulnerable workers may see modest benefit from some aspects of the zero hours provisions, if we are not careful, the most significant implications of these reforms will be to close off scope for more meaningful debate about the various other policy options that can, and arguably should, be deployed, to better address not just the harmful effects of, but also the causes of, insufficient and insecure employment –  of which zero hours arrangements are just one of the most prevalent expressions.

An extended version of this blog has been published by the Industrial Law Journal.