Britain’s overhaul of zero-hours contracts could end up doing the opposite of what ministers intended, the country’s leading HR organization has warned, with employers likely to become more reliant on self-employed contractors and fixed-time arrangements if the new rules prove too difficult to manage.
Responding to the Government’s debate on changes to the zero-hours contract, a central plank of the Employment Rights Bill which has just cleared its final parliamentary hurdle, the Chartered Institute of Personnel and Development (CIPD) has warned that complex compliance demands could ultimately push more workers into the loosest and most insecure forms of employment.
Ben Willmott, head of public policy at the CIPD, said that while the agency supports the policy of protecting workers from unilateral change, the practical details of the changes will make or break their success.
“Well-regulated zero-hours contracts offer welcome flexibility for employers and people who want to work but can’t commit to fixed hours, including students, carers and those with health conditions,” Wilmott said.
He stressed that the reference period used to calculate the minimum guaranteed hours owed to a worker of zero hours will be an important battleground. “A longer reference period will be easier for employers to manage, but even so, the new measures are likely to be more complex and challenging to comply with, especially for smaller firms or those with fluctuating demand.”
According to the Government’s own report on zero hours contracts, the reference window is expected to be set at around 12 weeks, although the figure remains under consultation. Employers’ groups have long pushed for seasonal peaks and troughs to highlight sectors such as hospitality, retail and care.
Aside from the question of guaranteed hours, Willmott pointed to a second compliance landmine: the requirement to give employees reasonable advance notice about shifts.
“This is only one headache for employers,” he said. “The challenge of providing advanced advanced notification may also prove difficult and require caveats to allow for issues such as sickness absence.”
This concern is in line with wider business concerns that the legislation, although well-intentioned, has been written with limited attention to the operational realities of running a small or medium-sized company – a concern that has caused a third of employers to postpone recruitment plans according to new CIPD research.
However, Wilmott’s sharpest warning was reserved for the law of unintended consequences. If the final rules don’t seem to work, he said, employers will simply ignore them.
“If the final rules are too difficult to administer, employers will simply find other ways to achieve labor flexibility. They may rely more on self-employed contractors and fixed-term contracts, for example, which may result in more employment rather than less insecurity.”
That effect can be especially harmful for young people, who have been one of the biggest beneficiaries of part-time programs. Such contracts have long allowed students and young workers to balance paid work in terms of studies, training or care work.
“This will also harm the opportunities of young people who benefit especially from the contract programs without working hours because it enables them to balance work while studying,” Wilmott added.
The CIPD is among a growing group of business voices, detailed in Business Matters’ Guide to the new Employment Rights Bill, calling on ministers to use a consultative process to ease problems rather than rush to implement them. With the stage now set to 2027, Whitehall has time to listen. Whether it does so will determine whether the changes become a milestone in fair practice, or a cautionary tale of policy that has achieved precisely the opposite of its intended purpose.
