New rules welcomed by the administration, but not everyone is thrilled
A prohibition on zero-hours contracts by a Labour administration may cost firms as much as £3bn a year The party has promised in its manifesto to eliminate “exploitative” zero-hours contracts. But officials admitted on Wednesday that the reforms will “increase administrative costs and reduce flexibility for employers”.
Labour government papers revealed on Wednesday put the “direct cost” to employers of the measures at £2.9bn a year. The Government said the reforms will “support growth thru improved worker wellbeing”, but conceded they “could make it harder for employers to respond to changes in demand”, thereby affecting corporate production.
The amendments were confirmed by the previous Sir Keir Starmer administration, but new Prime Minister Andy Burnham is now ready to implement them.
“And although those who like the flexibility of a zero hours contract will still be able to take one, exploitative arrangements where employers take all the flexibility and workers bear all the risk will be outlawed.”
Workers entitled will also be entitled to reasonable notice of their shifts and to remuneration if their shifts are cancelled, changed or truncated at short notice.
This will stop workers travelling in for shifts or organising childcare for children and relatives only to have a shift cancelled at the last minute with no pay.
Shadow business secretary Andrew Griffith said the measures were ‘unworkable’. “With youth unemployment rising, and businesses being hammered with record taxes, [Andy] Burnham needs to turn around Angela Rayner’s union-led, ‘back to the 1970s’ plans urgently,” he added.
The “eyewatering cost of these reforms” was the “final straw” after more than £5billion in extra employment costs in the last two years, Kate Nicholls, head of UKHospitality, said, with more than 100,000 hospitality jobs gone already.
Helen Dickinson, chief executive of the British Retail Consortium, said the released estimates “only tell part of the story as retailers will have to fork out hundreds of millions of pounds to update their HR and payroll systems”.
Kate Shoesmith, from the British Chamber of Commerce, said: “The additional cost to business of the proposed changes to zero hours contracts will be a further hammer blow for many firms battling to keep their heads above water. She added: “We are already in a youth unemployment problem now is not the time to make it more expensive for firms to take on.
A government official said: “We are absolutely committed to ending exploitative zero hours contracts, where workers take all the financial risk of unpredictable hours, shifts and earnings. “These reforms will give workers in every postcode greater income security and predictability of hours and while no final decisions have been made, we’re consulting to get the detail right and ensure this works in the real world,” they continued.