One million workers to benefit from zero-hours contract ‘ban’

The first changes will be felt from the Employment Rights Bill in April, with reforms becoming law over the next two years in stages.

Views on the reforms continue to be polarised, with some business owners, notably recruitment firms, arguing that they are unworkable. Others suggest that the reform will make the workplace a safer place for the majority of employees.

This week, analysis by a leading thinktank revealed that the bill will lead to greater protections for more than a million workers, particularly through new restrictions placed on zero-hours contracts and day-one unfair dismissal rights.

What does the report say?

The report says that 1.2 million workers would have been protected from “severe insecurity” in the workplace if the unfair dismissal measures had already been in place in 2023 with a six-month statutory probation period.

It comes from a thinktank called The Work Foundation at Lancaster University, which analysed data from 2023-24 using the UK Insecure Work Index.

It further states that the number of workers in secure jobs would have risen by 3.9 million to 17.8 million. In particular, 92.5% of zero-hour contract workers would have benefitted from the new right to guaranteed hours.

It also addressed a counter proposal – the 12-month statutory probation period – and said that this would leave 6.1 million workers in “severely insecure work”, with only 700,000 experiencing more secure work.

The report calls on the Government not to dilute reforms and also argues that if “even relatively small extensions to the length of the new statutory probation period” are made, there will be a huge impact.

The delays could “mean over a million fewer people benefit from secure work and, most worryingly, hundreds of thousands could remain stuck in severely insecure work,” the researchers write.

Protection for disadvantaged groups

The research also drilled down to look at the impact of these two reforms on disadvantaged groups.

The team says that severely insecure work would have been reduced by 8.3 percentage points for workers aged 16-24. Meanwhile, Black and Asian workers would have seen a reduction of 4.6 and 4.5 percentage points respectively.

Looking specifically at retail jobs, they state that an additional 150,000 retail workers would have experienced secure employment.

What do SMEs need to do?

There is pushback against the reforms. The changes to zero-hours contracts are facing the ire of recruitment companies, who argue they will lead to reduced hiring and more work being carried out by self-employed contractors.

For SMEs, there will be less flexibility and there will be a financial implication for changes to parental rights and sick leave. However, the financial impact of not complying will be far more onerous, as this could mean legal fees and staff leaving.

Business owners need to start reviewing their contracts, looking at their payroll and HR processes and, in particular, how they manage shift workers now as the first reforms will become law in just seven months.

It might also be wise to look ahead at the reforms set for 2026 and 2027 to determine how much work is needed there to be compliant.

While the reforms are sweeping, the benefits to staff, as this latest report suggests, are tangible; and this might help companies retain the best talent in a difficult economic climate.