Zero hours changes ‘a big issue’ for UK’s construction sector, warns lawyer

The construction industry is raising concerns about a government’s plan to replace zero-hours contracts with guaranteed hours. Under the proposed Employment Rights Bill, employers would need to offer guaranteed-hour contracts to zero-hours workers after a typical 12-week period. Industry leaders are warning this could drive up costs in a sector reliant on flexible labour for project demands and seasonal peaks. We’ll hear from a sector expert advising employers on this issue.

It was in September when, as Sky News reported at the time, Deputy Prime Minister Angela Rayner and Business Secretary Jonathan Reynolds informed business leaders and unions in a private meeting that new legislation could oblige employers to offer zero-hours staff a regular contract with guaranteed hours after 12 weeks. That change has been confirmed with its appearance in the Employment Rights Bill.

Business groups, including the CBI who were at the meeting, have also expressed concerns about the potential impact of the changes on sectors like construction which rely heavily on flexible staffing. They point out that limiting zero-hours contracts could impact job growth, investment, and productivity if not carefully managed and they advocate a more balanced approach that considers the nuanced needs of both workers and businesses. They warn the government to weigh carefully the ‘unintended consequences’ on business operations and the potential for increased costs. In particular, they highlight the potential for an increased administrative burden as firms adjust their staffing models and manage compensation for cancelled or rescheduled shifts. The say ‘firms will face a significant challenge in balancing the industry’s inherent need for agility to manage variable project demands and client needs.’

So how big a deal is this for the sector? Earlier I spoke to Stuart Neilson who joined me by video-link from Glasgow:  

Stuart Neilson: “I think it is a big issue. I think the problem from what I've seen of the legislation at the moment, and remember we've got the primary legislation and then there is a lot of the detail that's going to follow in regulations which we don't have yet so we don't quite know the full picture, but what we do know at the moment is that, in essence, what the government are proposing is a system whereby those who are what we currently call ‘zero hours employees’, and also employees who might be on low hours - again we don't know what they mean by that but it could be people who are maybe on under 10 hours a week, 12 hours a week, we just don't know. If you're a zero hours employee, or a low hours employee, there will be an ability, or a requirement on the employer, to offer you, effectively, a guaranteed number of hours after a 12-week period. Again, we think it's 12 weeks, it could be a different reference period based on the number of hours you've actually worked in that period. So what you effectively build in is you build a ratchet in whereby people will get some guaranteed level of hours, but it only goes up and it only goes in one direction. So I think our concern is where's the flexibility in the ability to ramp down in that type of situation. Again, we don't know the full details, we don't know if there will be some mechanism whereby there might be some flexibility built in. I think there's some talk of flexibility in relation to seasonal workers, but I'm not sure that within the infrastructure sector you would really have people who would qualify as seasonal workers. I think that's more aimed at things like farming, for example, or the tourist or hospitality sector. So it is a problem. I think one potential solution might be that there will be a greater use of agency workers going forwards. Again, the government have suggested they're going to be looking at whether they regulate agency workers in a similar way. I personally think that's going to be quite a difficult thing for them to achieve, so whether they actually do that or not I don't know, but I think that this certainly poses a particular challenge for the infrastructure sector, as you say, in the ability to not just ramp up, but ramp down.”

As it’s one of the biggest changes in the Employment Rights Bill for construction, Stuart and his team are already advising clients on coping strategies, such as reviewing staffing models, adjusting project planning, and potentially increasing agency worker use. If you need support, contact Stuart - his details are on screen - or reach out to your usual Pinsent Masons adviser.