Guaranteed hours for zero-hour, low-hour & agency workers

New duty to offer a guaranteed hours contract

New rules will apply to employers with certain (qualifying) workers (including employees) and agency workers. It requires employers to offer them a guaranteed hours contract that reflects the hours they regularly worked during a certain period of time (the reference period).

The length of the reference period will be consulted on by the government and then set in new regulations, but the government suggests it should be 12 weeks.

The duty to offer a guaranteed hours contract will continue until the qualifying worker/agency worker moves to a guaranteed hours contract, or is no longer a qualifying worker. It can only be contracted out of in a collective agreement.

The new rules won't ban the use of zero-hour or low-hour contracts completely, but is likely reduce their use.

This section discusses the rules applying to qualifying workers (including employees) and not qualifying agency workers. The same or similar rules will apply to them, if they satisfy certain conditions.

Qualifying workers

A qualifying worker is someone who, during the reference period:

• Works under a zero-hours contract, a zero-hours arrangement or a low-hours contract (see below for definitions of these). This will include existing contracts that guarantee working hours over a period of time but don't state when they will be worked (e.g. annualised hour contracts that set the hours to be worked in a year, but not when work will be given).
• Worked for a certain number of hours (the reference period hours). This will be set in new regulations. For workers on a low-hours contract, the reference period hours must be more than the minimum hours given in their contract.
• Was not an excluded worker. This definition will be specified in new regulations.

Note:

• A zero-hours contract is a contract where work is done only if and when an employer makes it available.
• A zero-hours arrangement is where work is done only if and when an employer makes it available. The employer is not required to make any work available and the individual is not required to accept any work that's offered. The arrangement can be contractual or non-contractual.
• A low-hours contract is a contract (or more than one contract taken together) with a set minimum number of hours. The maximum number of hours in a low-hours contract will be consulted on by the government and then set in out in new regulations. The employer will be required to make work available to a worker on a low-hours contract during the reference period.

The guaranteed hours contract

Employers can offer workers a new contract or an amended version of their current contract.

Each offer must be validly made. This generally means it must reflect the hours worked in the reference period.

More precise information will either be set out in new regulations or by an approved amendment to the Employment Rights Act, which may:

• Set out the days of the week and times worked during the reference period or a working pattern of days and times worked during it.
• Set out how to determine whether an offer reflects the number of hours worked during a reference period, and (potentially) when those hours should be worked.
• Relate to the number of hours to be provided and worked (this won't necessarily be particular days of the week, or particular times on those days, or a particular working pattern of days or times of day).

The following rules will apply when offering a contract:

• Making changes to the terms of the current contract: This can only be done if, when the offer is made, the worker is still working under the contract, and they did not work for the employer under any other contract during the reference period. The change must only be made to the terms about their working time, and any necessary changes required by the new regulations on valid offers (see above).
• Offering a new contract: The terms should not (as a whole) be less favourable than the ones being replaced, though some limited exceptions will apply. The contract cannot be a fixed-term contract unless it would be reasonable to do so in limited situations, such if it's needed to perform a specific task or the occurrence of an event.

Claims for avoiding the duty to make a guaranteed hours offer

Workers can start an Employment Tribunal claim if an employer tries to avoid their obligation. This can include if they limit the number of hours offered to the worker (such as by terminating their contract or offering less working hours at the end of a reference period) or changing how work is made available to them.

Giving information about the right to guaranteed hours

Employers will be required to give certain information if a worker can be reasonably considered a qualifying worker. Details of the information that must be given will be specified in new regulations, but it must be given no later than 2 weeks of either:

• The worker's first day.
• The date the regulations requiring information to be given come into force (if they are already working for the employer).
• The date the employer reasonably considers that they will become a qualified worker.

They must also take reasonable steps to ensure that the qualifying workers continue to have access to the information after this, if they're still employed and they reasonably might become a qualifying worker.

Exceptions to the duty to make an offer

The duty to make a guaranteed hours offer will end if the qualifying worker's contract (or the arrangement they were working under) is terminated during any of the following 3 time periods:

• The reference period: The period where regular hours are worked that's used to determine the number of hours to be offered in a guaranteed hours contract. It will be determined by new regulations, but the government has recommended it should be 12 weeks.
• The offer period: This starts the day after the reference period ends and continues until the day an offer is made or the last day it should have been made (to be determined in new regulations).
• Response period: The period of time for the offer to be considered. It starts the day after an offer is made and will continue until a set day (to be determined in new regulations). If the contract is terminated during this period, the offer will be regarded as withdrawn.

Employers will have a vested interest in the decided response period - if it's short they may face time issues with managing required resources. A long response period may frustrate their ability to make timely decisions.

Terminating a contract

The contract can be terminated if any of the following circumstances:

• The worker's fixed-term contract comes to an end. This will apply only if it was reasonable for a fixed-term contract to be used, which can only be done in limited situations.
• The qualifying worker ends it, with or without notice. This includes resignations, but not if they resigned because the employer's conduct significantly breached their contract (making it a constructive dismissal).
• The employer ends the qualifying worker's contract, with or without notice. However, to be validly terminated, they must have done all the following:
• Ended the contract on the grounds of one or more of the potentially lawful reasons (see below).
• Acted reasonably when considering if it's a sufficient reason for terminating the contract in the circumstances. This includes taking into consideration the employer's size and available resources.

The potentially fair reasons of terminating a qualifying worker's contract are:

• Their capability or qualifications to do the work for which they were employed
• Their conduct
• Redundancy
• The fact that the employment could not continue without breaching a statutory provision
• Some other substantial reason justifying a dismissal

Note: These reasons usually apply to employees only, but for the purposes of this rule they will apply to workers as well.

Employer's notice of withdrawn offer

Employers will be required to give a notice to a worker if they regard a guaranteed hours offer to be withdrawn, or they consider that one of the exceptions to the duty to make a guaranteed hours offer apply (see below).

The notice must be given by the end of the offer period or response period, and state which provision is relied on. The government has the power to make regulations about how the notice must be given and when it will be treated as being received.

Other exceptions to the duty to make an offer

The government may set out other circumstances where employers will not have a duty to make an offer or where an offer can be regarded being withdrawn, for certain types of workplaces.

The exceptions are likely to be limited to specific circumstances, where the duty would otherwise have severe adverse impacts on an employer and will be based on the outcome of future consultations.

Accepting or rejecting an offer

A qualifying worker won't have to accept an offer, and can choose to remain on their existing zero hours or low hours contract. They should give a notice to their employer about whether they accept or reject the offer before the end of the response period (which starts the day after an offer is made, until a day to be determined in new regulations).

The government has the power to make regulations about how the notice must be given and when it will be treated as being received.

Failing to give any notice before the end of the response period, will automatically mean the offer is rejected.

The following rules will apply when accepting an offer:

• Making changes to the terms of the current zero-hours or low hours contract: The variation will take effect the day after the worker gave their acceptance notice. If their contract ended during the response period, the offer will remain available for them to accept, unless it was validly terminated (and therefore treated as being withdrawn). Otherwise, the worker will have a new contract on the same terms as the varied offer, which will start on the day after their acceptance notice is given.
• Offering a new contract: A new contract will start the day after the worker gave their acceptance notice and will replace any other contract the parties have. If the worker is an employee, this won't break their period of continuous service with the employer (for the purpose of qualifying for certain employment rights, such as a statutory redundancy payment).

Automatic unfair dismissal of employees

It will be automatically unfair to dismiss an employee (including redundancy) if the main reason is because:

• The employee has accepted or rejected a guaranteed hours offer made by the employer in compliance with their duty, or proposes to accept or reject it, or is treated as if they rejected it.
• The employee has started a claim for breaching the rules regarding the duty to a make a guaranteed hours or makes an allegation, in good faith, of a breach.
• The employee has started a claim as the employer incorrectly issued a notice withdrawing their guaranteed hours offer, or their claim is based on other grounds.
• The employer tries to avoid complying with their duty to offer guaranteed hours to the employee (during a particular period of time, to be set in new regulations).
• The employer believes the employee is entitled to a guaranteed hours offer.

Worker's right not to suffer a detriment

Workers (including employees) will be entitled to start a claim where they are subjected to a detriment (short of dismissal) by any act or failure to act by their employer because:

• Their employer believes that they are entitled to a guaranteed hours offer.
• The worker accepted or rejected a guaranteed hours offer made by their employer in compliance with their duty, or proposed to accept or reject it, or is treated as if they rejected it.
• The worker started a claim for breaching the rules regarding the duty to offer guaranteed hours.
• The worker alleged (in good faith) the existence of any circumstance that would establish a ground for starting such a claim (whether or not they referred to the possibility of actually making a claim or if the claim is based on good evidence or reasons).

Employment Tribunal claims

A qualifying worker can also start an Employment Tribunal claim if their employer:

• Fails to make a guaranteed hours offer by the end of the last day of the offer period. The claim must start within 6 months, starting with the day after the last day of the offer period.
• Makes an offer that doesn't comply with the requirements of a guaranteed hours offer (whether or not accepted by the worker). The claim must start within 6 months, starting with the day after when the offer was made.
• Tries to avoid the duty to offer guaranteed hours. The claim must start within 6 months, beginning with the day after the day when the offer was made or the day after what would have been the last day of the offer period.
• Fails to give them a notice when required (see above). The claim must start within 6 months, beginning with the day after the day the notice should have been given.
• Fails to comply with their duty to provide the required information about guaranteed hours rights during the initial information period. The claim must start within 6 months, beginning with the day after the last day of the initial information period, or the day on which the worker first becomes aware of the failure.

If a tribunal agrees with the claim, it can award compensation for any financial loss sustained, subject to a cap (which will be specified in new regulations).