Proposed reforms to zero-hours contracts by the Labour party, spearheaded by Cabinet minister Angela Rayner, could impose significant costs on businesses, an official impact assessment suggests. The reforms aim to provide new rights to workers on zero-hours contracts, including guaranteed hours reflecting current work patterns, reasonable notice for shifts, and compensation for cancelled or curtailed shifts. The estimated direct cost to employers for these changes is £2.9 billion per year.
Patrick Dardis, former chief executive of Young's Pubs, argues that these changes would be detrimental to industries like hospitality and retail, which already operate on thin profit margins and face unpredictable demand. He draws a parallel to the unpredictability of running a pub, comparing it to the outcome of a World Cup semi-final match, where unexpected events can drastically alter business. Dardis contends that forcing publicans to guarantee hours would mean paying workers to be idle during slow periods.
The proposals would require companies to offer staff a contract guaranteeing a minimum number of hours per week based on their current work patterns, with a consultation underway regarding whether this should apply to those working up to 40 hours per week. The consultation is set to close next week.
Dardis also highlights the benefits of zero-hours contracts for certain workers, such as students seeking holiday work or parents needing flexibility. He notes that these contracts can provide young people with their first experience of the working world and offer essential income for individuals with childcare responsibilities. He argues that increasing red tape and costs for employers could discourage them from hiring young people, contradicting stated priorities to get more youngsters into work.
The analysis indicates that sectors such as hospitality and retail would be disproportionately affected by the reforms. Dardis criticizes what he describes as Labour's "shameful war on British pubs," citing previous increases in business rates and National Insurance contributions under past Labour governments. He suggests that the current proposals, despite a pledged cut to business rates, will have a more damaging effect on the industry.
The former Young's CEO expresses concern that the reforms seem to prioritize union demands over the needs of workers seeking flexible employment and the employers who create jobs. He concludes that the policies risk undermining the viability of British pubs, which he considers vital to high streets.