In our last employment legislation update blog, we took a deep dive into the Employment Rights Bill, paying particular attention to the new laws concerning unfair dismissal, fire and rehire practices and collective redundancies.
Obviously, these are not the only things set to change in 2026, and it’s essential for businesses to know what laws are likely to impact them, in order to prepare.
If you want to know more about how the Bill could impact your business, keep reading.
Limiting the use of zero hours and low hours contracts
The Employment Rights Bill will limit the use of zero hours and low hours contracts as part of the government’s commitment to ensuring that all jobs provide “a baseline of security and predictability so workers can better plan their lives and finances”.
The government has said that there should also be greater clarity and advance notice of working patterns, which will help workers by making it easier to organise transport and childcare, and to meet other family commitments and caring responsibilities.
The provisions in the new employment legislation do not specifically ban the use of zero hours and low hours contracts, but will provide a duty on employers to provide such workers with a guaranteed number of hours, and otherwise make using the contracts less attractive for employers.
The new employment legislations are complicated but will operate something like this:
- Employers will have to offer workers a guaranteed hours contract that reflects the hours qualifying workers have regularly worked over a reference period. The length of the reference period will be specified in regulations and subject to consultation, but the government suggested in its Next Steps paper that, in its view, it should be 12 weeks.
- An employer’s duty to make an offer of guaranteed hours to a qualifying worker will apply after the end of every reference period.
- To be a qualifying worker who will be entitled to be offered guaranteed hours, workers must have a current guarantee of hours less than a certain number that will be set out in regulations. In other words, they must currently be on a zero or low hours contract.
- The duty to make an offer of guaranteed hours after each reference period will keep applying until the worker no longer satisfies the definition of being a qualifying worker, which will be when their contract guarantees more than the minimum number of hours to be set by regulations. In other words, the duty will continue until the worker is no longer regarded as being engaged under a zero hours or low hours contract.
To explain how this is likely to work in practice:
- Assume the regulations say a qualifying worker is someone who has a guarantee of less than 20 hours work a week and assume the reference period for assessing guaranteed hours is 12 weeks.
- Assume an employer takes on a worker on a zero hours contract offering no guaranteed hours of work, or perhaps a low number of guaranteed hours (eg 5 hours a week).
- In the 12 week reference period after the worker commences work, the worker actually ends up working an average of 10 hours per week.
- The employer will then be required to offer the worker a guarantee of 10 hours work per week going forward.
- If over the next 12 week reference period their hours do not change, then they will still be entitled to the same number of guaranteed hours.
- But say, their hours increase to 15 hours a week over the next reference period, then this will become the new number of guaranteed hours they must be offered.
This process will continue indefinitely, but if in a 12 week reference period the employee’s hours exceed an average of 20 hours per week (if this is the number of hours which ends up being stated in regulations), then the employee will have to be guaranteed this number of hours going forward. After this point, there will no longer be an obligation to assess their hours over further reference periods or change their number of guaranteed hours, because they will no longer be considered to be on a zero hours or low hours contract.
There will however, be a minimum threshold of hours (again to be decided by regulations) that must be worked for the guaranteed hours obligations to come into effect. For example, if this minimum threshold is set at three hours a week, then an employee who works less than this number of hours over the reference period will not be entitled to any offer of guaranteed hours.
The UK law makes it clear that it is open to a worker whether to accept the offer of guaranteed hours or not. If they want to remain on zero hours or low hours contracts, they will be able to do so. It will also permit fixed-term contracts to be used as an alternative to providing ongoing guaranteed hours of work in certain circumstances, for example, where it was reasonable to hire a worker for a defined period to complete a particular task.
The ongoing obligation to assess hours worked over a rolling 12 week period will be onerous for employers and the obligation to offer guaranteed hours will potentially stifle productivity and flexibility.
It is also not clear how the new rules will affect employers of seasonal workers who have hired a worker to cover a busy period, but won’t want to provide them with the same amount of work outside of the busy time. This is something that may be addressed as part of the consultation process.
Duty to provide reasonable notice of shifts
Another key change in the Employment Rights Bill which has not previously received much attention is the new requirement on employers to give a worker reasonable notice of a shift that the employer requests a worker to work. To remain compliant in the UK, employers must specify:
- The date of the shift
- The start time
- The number of hours to be worked.
Employers will also have to give reasonable notice of changes or cancellations of shifts. Workers will be entitled to compensation if their shift is cancelled or changed at short notice.
Much of the detail of these provisions, including what is considered reasonable notice and what level of compensation should be paid, will be set out in regulations after a period of consultation.
Many businesses rely on the ability to change and cancel shifts based on demand, and the reduced flexibility and added costs for businesses if they have to change a shift is likely to be challenging for industries such as hospitality and retail. It will become more important for businesses to accurately assess demand ahead of time.
Sexual harassment
Further to recent amendments to the employment legislation relating to sexual harassment which are already in force, the Employment Rights Bill proposes to strengthen employers’ obligations even further by requiring employers to take “all reasonable steps” to prevent sexual harassment of their employees, rather than just “reasonable” steps.
Employers will also be under a duty to take “all reasonable steps” to prevent third-party sexual harassment.
Although the Equality and Human Rights Commission (EHRC) takes the view that the existing law covers preventing sexual harassment from customers, clients and other third parties, and that they can take enforcement action for breaches, there is no current ability for an employee to bring an action against their employer for failing to prevent sexual harassment by a third party, or for the employer to pay compensation for this under the Equality Act.
That will change under the new employment legislation, which will give employees a right to make a claim against their employer, and receive compensation, if they are sexually harassed by a third party at work.
Wrapping Up
Employment legislation is always going to be confusing and complicated, but the risks of non-compliance are too great to bury your head in the sand. If you want to learn more about the Employment Rights Bill, our final blog of this series will cover:
- Equality action plans
- Dismissal during pregnancy or during or after statutory family leave
- Day one rights to family leave
- Flexible working
- Statutory sick pay from day-one; scrapping lower earnings threshold
For more support, talk to one of our HR Advisory specialists.
