Retailers have warned that planned changes to zero-hours contracts could add billions of pounds to employment costs and put flexible jobs at risk.
The reforms, contained within the Employment Rights Act, will give workers on zero or low-hours contracts the right to guaranteed hours based on the amount they regularly work. Employees will also be entitled to reasonable notice of shifts and compensation when shifts are cancelled or changed at short notice.
The government is currently consulting on which workers should fall within the new guaranteed-hours regime, with thresholds ranging from eight to 48 contracted hours per week under consideration. Its preferred range is between eight and 20 hours.
The changes could have significant implications for retailers, which rely heavily on part-time, weekend and seasonal employees to respond to changing demand, particularly during Christmas and other peak trading periods.
Government analysis estimates the reforms could cost employers between £350 million and £2.9 billion annually, with a central estimate of around £1.1 billion.
The British Retail Consortium (BRC) has called for ministers to reconsider how the rules are implemented, arguing that an overly broad definition of low-hours employment could inadvertently reduce opportunities for students, younger workers and others who actively choose flexible working patterns.
Helen Dickinson, Chief Executive of the BRC, said: “These costs could not come at a worse time.”
According to the BRC, the retail industry has already absorbed a £6.5 billion increase in employment costs over the past two years following rises in employer National Insurance contributions and the National Living Wage.
The organisation estimates retailers could also face hundreds of millions of pounds in additional costs to update HR and payroll systems to comply with the new requirements.
Dickinson added: “Adding further costs when youth unemployment is soaring risks being a hammer blow to young people’s job prospects, at precisely the time businesses across the country need to be creating more opportunities.”
Another concern for retailers is how guaranteed hours will be calculated. The BRC has warned that using a short reference period could result in businesses having to offer permanent hours based on temporary increases in staffing during busy trading periods.
Business groups are therefore pushing for a lower hours threshold, arguing this would allow the legislation to target workers facing genuine insecurity without removing flexible roles from those who want them.
The government maintains that the changes are necessary to tackle “one-sided flexibility” and provide workers with greater certainty over their hours and income.
The consultation on the detail of the reforms closes today (25 August), with the final rules yet to be decided.
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