Changes to Zero Hours contract rules could notably impact the construction industry…
The full impact of the new UK government policies will likely begin to be felt after the summer parliamentary recess. However, the Labour Party Manifesto has already given us a glimpse of the areas that will receive early attention in the employment landscape.
For all workers, including self-employed, agency, and platform workers, the incoming government has highlighted several initiatives that will affect engagement methods and rights. These initiatives include:
- Introducing the right to predictable hours
- Establishing new 'day one' rights
- Transforming the National Minimum Wage into a 'genuine living wage'
- Cracking down on non-compliant 'umbrella employment' arrangements
- Increasing enforcement of Off-Payroll working (IR35) rules
- Building a stronger enforcement body*
* Labour Party Manifesto 2024: https://labour.org.uk/change/
Regarding predictable hours, over a million workers (3.1% of the UK workforce) were on Zero Hours Contracts in the first quarter of 2024, without guaranteed or predictable hours. Of these, 36.9% (335,000) were temporary workers. This is down from a peak of 3.7% (1.221 million) in the second quarter of 2023. While the details are still unclear, the new government seems determined to address this issue of unpredictability, and with primary legislation already in place, action is likely to be swift.
… of UK workforce were on Zero Hours contracts in Q1 2024 without guaranteed or predictable hours
“Labour will end ‘one-sided’ flexibility and ensure all jobs provide a baseline level of security and predictability, banning exploitative zero hours contracts and ensuring everyone has the right to have a contract that reflects the number of hours they regularly work, based in a 12-week reference period”
Labour Party Manifesto 2024
“The primary legislation on which this right is based is already law – it was enacted on 19 September 2023 under the (previous) government, albeit it is not expected to come into effect until October 2024. And so it will be relatively easy for (the) new government to bring it into force, with just a statutory instrument (issued under ministerial order) needed to clarify some key final details.”
“What may delay the introduction of this measure is the need to prepare guidance about the valid grounds for objecting, what the reference period will be, and finalising of anti-avoidance provisions dealing with techniques like "churn".
Osborne Clark*
In terms of the ramifications for key STEM sectors, 4.0% (41k) of those working within the Construction industry were on a Zero Hours Contract in Q1 2024 – a number that increased sharply in Q4 2023 and remained high in Q1 2024.
…of Construction industry STEM workers were on Zero Hours contracts in Q1 2024
Number of workers engaged on a Zero Hours Contract in the Construction industry (000s)
Source: Matchtech analysis of ONS data
Number of workers engaged on a Zero Hours Contract in the Information, Finance & Professional industries (000s)
Source: Matchtech analysis of ONS data
And, similarly, 4.0% (41k) of the workforce engaged by the Information, Finance & Professional sectors was also on a Zero Hours contract in Q1 2024, albeit numbers had declined from a near-term peak of 5.5% (67k) in Q2 2023.
…of Information, Finance & Professional sectors STEM workers on Zero Hours contracts in Q1 2024
Our recommendation
Whilst the use of Zero Hours contracts can be beneficial for both employers and workers, the new UK government is intent on reforming those that are ‘one sided’, where the degree of flexibility is firmly in favour of the employer.
For the seasonal and weather-dependent Construction industry, Zero Hours contracts have long-since been a key component of resourcing strategies. However, soon the industry will need to adapt to new regulations. After 12 weeks, workers may request predictable hours, and employers will need to prove they are not frequently replacing workers to avoid granting these.