Proposed reforms to zero-hours contracts, spearheaded by Labour's Cabinet minister Angela Rayner, could impose annual costs of up to £2.9 billion on businesses, according to an official impact assessment. These changes, intended to provide greater security for workers, are facing criticism for potentially hindering flexibility and harming industries like hospitality.
The reforms, championed by Rayner, would grant new rights to workers on zero-hours contracts, which currently do not specify a minimum number of guaranteed hours. Under the proposed changes, companies could be required to offer staff a guaranteed number of hours reflecting their current working patterns. Additionally, businesses would need to provide reasonable notice for shifts and compensate workers for shifts that are cancelled or altered at short notice.
An official impact assessment, revealed by the government, indicated that the reforms "could make it harder for employers to respond to changes in demand." The direct costs to employers, encompassing guaranteed hours, notice periods, and cancellation compensation, are estimated to reach £2.9 billion per year. The assessment also highlighted that sectors such as hospitality and retail would likely bear the most significant impact.
Critics, including Patrick Dardis, former CEO of Young's Pubs, argue that these reforms fail to acknowledge the unpredictable nature of businesses like pubs. Dardis points to factors such as sporting event outcomes, weather, and bank holidays as elements that significantly influence customer traffic and staffing needs. He contends that forcing publicans to guarantee hours would necessitate paying staff to be idle, impacting an industry already operating on thin profit margins.
Furthermore, Dardis suggests that the flexibility offered by zero-hours contracts is beneficial for various groups, including students seeking holiday work and parents with young children who cannot commit to fixed schedules. He argues that these contracts provide valuable opportunities for young people to gain initial work experience, at a time when youth unemployment is reportedly at its highest in over a decade. Implementing more red tape, he believes, could discourage employers from offering such jobs.
These proposed changes come amidst a challenging period for the pub industry, which has faced impacts from the COVID-19 pandemic, inflation, and rising utility bills. Pubs have been closing at a rate of nearly two per day, according to some reports. While the government has pledged a cut to business rates for pubs, the potential impact of the zero-hours contract reforms is viewed by some as a more significant threat to the sector's viability.
The consultation on whether the policy should apply to those working up to 40 hours per week was set to close soon. Labour claims to have consulted widely on the policy, but critics suggest that insufficient consideration has been given to the needs of both workers seeking flexible employment and employers facing operational uncertainties.