As part of our series of updates exploring the implications of the Employment Rights Bill (the Bill), we explore what the government proposes in terms of changes to zero hour contracts and sick pay.
| Current position | Position under the Bill |
| Workers on zero hour contracts: – do not have statutory minimum guaranteed working hours; – do not have a statutory right to receive reasonable notice of changes to shifts or working time; and – do not have a statutory right to receive compensation for cancelled or curtailed shifts. Although, in theory, contracts may provide these rights, the majority will not. | The government proposes to introduce a statutory right for workers on zero hours or low hours contracts to: – be offered a “guaranteed hours” contract that reflects the worker’s normal hours, based on a 12-week reference period; – be given reasonable notice of changes to shifts or working time; and – be paid compensation for cancelled or curtailed shifts on short notice. If an employer reschedules shifts without reasonable notice, the worker could bring an employment tribunal claim. The tribunal would be tasked with assessing whether the notice given was “reasonable”. The government proposes to use regulations to specify what should be presumed as “reasonable” and will set out factors tribunals should consider when determining this issue. On 21 October 2024, the government launched its initial consultation to gather responses on how businesses, trade unions and other bodies believe the measures can be best applied to agency workers. The consultation also seeks feedback on how the government can mitigate inadvertent ramifications of the Bill. This consultation will close on 2 December 2024, with further consultation to take place in the future. The position of zero hour contracts under the Bill will be supplemented by secondary legislation once the Bill comes into force. The government has said it recognises that zero hours contracts can work well for some people, so those who are offered guaranteed hours will be able to remain on zero hours contracts if they wish. These proposals form part of the government’s wider plans to address one-sided flexibility in the workplace and to ensure that jobs provide a baseline of security and predictability for workers. |
| Statutory Sick Pay (SSP) is paid when an employee is sick for more than three days in a row (including non-working days). SSP is not payable for the first three days of sickness. SSP is only available to employees who earn at least £123 per week (the current Lower Earnings Limit or LEL). | The government proposes to remove the three-day waiting period, so SSP will be payable from the first day of absence. The government proposes to remove the Lower Earnings Limit qualification for SSP. The government states, in the Next Steps to Make Work Pay paper, that it will consult on what the percentage replacement rate for those earning below the current flat rate of SSP should be. Once decided, it will bring this change forward through an amendment to the Bill. That consultation, Strengthening Statutory Sick Pay, has now launched and will remain open until 4 December 2024. The government also proposes to include SSP within the remit of a new enforcement body called the “Fair Work Agency”. The government’s SSP proposals form part of its wider plan for fair pay, aiming to promote workers feeling secure and supported in their jobs, especially those on low incomes. |
The Bill is set to come into force no earlier than 2026, with consultations taking place throughout the remainder of 2024 and 2025. Employers should use this time to prepare for increased costs and different practices that will need to be applied as a result of the Bill’s changes to zero hour contracts and statutory sick pay. For example, employers can assess both whether they can arrange shifts to minimise short notice changes and the budgeting impact of not being able to do so, as well as of increased SSP payments. Employers should also participate in the consultation processes to ensure that their views can shape the progression of the Bill. You can read our overview of all the key measures in the Bill here:
https://www.dentons.com/en/insights/articles/2024/october/11/employment-rights-bill-at-a-glance
Please get in contact with the team if you wish to discuss anything arising from this post.
