Employment Rights Bill to End ‘Exploitative’ Zero Hour Contracts

Deputy Labour leader Angela Rayner meets with fathers at Broxburn Family and Community development centre in Livingston to talk about Labour's paternity offer, while on the general election campaign trail, in Scotland, on June 15, 2024. Andy Buchanan/PA

The government has announced details of its new plans for workers’ rights, including an end to zero-hour contracts and fire and rehire practices, as well as changes to the terms for sick pay and flexible working.

Ministers unveiled the Employment Rights Bill on Thursday, which includes 28 employment reforms such as ending “exploitative” zero-hours contracts. Employers will now have to offer zero-hours workers, as well as those on low-hours contracts, a guaranteed hours contract if they work regular hours over a defined period.

“Unscrupulous” fire and rehire practices will be ended, with the government saying it was “shutting down the loopholes that allow bullying fire and rehire and fire and replace to continue.”

This measure will be strengthened by the introduction of protections for employees from unfair dismal from day-one on the job, removing the existing two-year qualifying period.

Flexible Working the ‘Default’

Access to statutory sick pay will become universal, with it being available from the first day of absence rather than the fourth, with the lower-earnings limit being removed so that it will be available to all employees.

The bill also introduces entitlement to paternity leave and unpaid parental leave from day-one, as well as statutory entitlement to bereavement leave.

Flexible working will be made the “default for all, unless the employer can prove it’s unreasonable,” which the government says will “help make the workplace more compatible with people’s lives.”

Gender Pay Gap

Large employers will also be required by law to create action plans to address “gender pay gaps,” as well as supporting employees through their menopause. There will also be more protections against dismissing pregnant women and mothers.

The government said that it will form a new Fair Work Agency, which will bring together the various bodies and agencies that enforce employment rights such as holiday pay.

Deputy Prime Minister Angela Rayner said that the current employment laws are out of date and are “failing business and workers alike.”

Rayner said, “Our plans to make work pay will deliver security in work as the foundation for boosting productivity and growing our economy to make working people better off and realise our potential.”

“This government is delivering the biggest upgrade to rights at work for a generation, boosting pay and productivity with employment laws fit for a modern economy. We’re turning the page on an economy riven with insecurity, ravaged by dire productivity and blighted by low pay,” the deputy prime minister said.

Pay Discrimination

Of the 28 separate changes in the bill, most are not expected to be implemented before the autumn of 2026.

Other measures which the Labour Party had campaigned on during the election but which are not included in this bill will become part of the government’s “Next Steps” document for future discussion and consultation.

These measures will include the much-publicised right to switch off, with is aimed at stopping bosses from contacting staff outside of work hours, except in exceptional circumstances.

Another measure to be included in the Next Steps will be what the government calls an end to “pay discrimination,” by expanding the Equality (Race and Disparity) Bill “to make it mandatory for large employers to report their ethnicity and disability pay gap.”

Scrapping ‘Anti-Union’ Law

The government has also introduced a number of pro-union policies, including scrapping the previous government’s “anti-Union” Minimum Service Levels (Strikes) Act, which was passed by the Conservatives to allow minimum levels of service during strikes in key sectors like health care and transport.

Unions have welcomed the measures, with TUC general secretary Paul Nowak saying, “While there is still detail to be worked through, this Bill signals a seismic shift away from the Tories’ low pay, low rights, low productivity economy.”

Business groups have also welcomed the bill, with the Confederation of British Industry’s CEO Rain Newton-Smith praising the government for engaging with business and unions.

However, the Federation of Small Businesses criticised the plans, saying, “This legislation is a rushed job, clumsy, chaotic and poorly planned–dropping 28 new measures onto small business employers all at once leaves them scrambling to make sense of it all.”

The launching of the Employment Rights Bill comes after the new Labour government has been offering a series of pay increases to public sector staff, after some unions have been engaging in industrial and strike action.

In September, the British Medical Association accepted the government’s offer of a pay deal for junior doctors worth 22.3 percent over two years, bringing to an end the long-running dispute which saw them strike 11 times since 2023.

Other sectors of the health care service have been offered pay deals. Earlier this week, NHS workers in England belonging to the GMB union voted to accept the government’s 5.5 percent pay offer. However last month, nurses belonging to the Royal College of Nursing voted to reject a similar 5.5 percent deal.

PA Media contributed to this report.