Zero-hour contract ban proposals require businesses to rethink workforce strategies

However, the proposals will have an enormous impact on sectors across the UK including the higher education and technology and digital markets sectors.

A blanket ban on the use of zero-hour contracts would require businesses to rethink their workforce strategies – for instance, in situations where short-term contract work or specific expertise is needed on an as and when basis. While a blanket ban seems unlikely given the latest government comments on this, change will still have significant impact.

Zero-hour contracts in the higher education sector

Latest published statistics from Higher Education Staff Statistics (HESA), from 2022-23, indicate that 3,915 staff in the UK were on zero-hour contracts. Despite this number reducing from 4,420 in the previous academic year, calls for the ‘de-casualisation’ of the workforce continue.

The University College Union (UCU) has for a number of years been campaigning to end zero-hour contacts. Many universities have engaged in discussions with UCU and looked at where these types of contracts are used and the reasons behind their use.

Outside the ‘standard’ academic roles, universities employ or engage individuals to undertake varying types of academic work where flexibility is required and where there is a fluctuation in demand – whether that is to deliver specialist teaching on certain modules; or in supervision or examiner roles – usually renumerated on an hourly paid basis.

Universities are also reliant on large numbers of professional services and facilities staff, and zero-hour contracts are often used when it comes to hospitality and catering which fluctuate in demand dependent upon events throughout the year.

Zero-hour contracts in the tech sector

Workforce flexibility is also important across the technology and digital markets (TDM) sector. In the technology sector zero-hour contracts are used for temporary roles, project-based work, and freelancers. They allow flexibility for tech companies to scale up or down based on project needs and can give access to specialised skills without long-term commitments. The sector typically depends on agile and remote workforces to scale up for project-based work and to adapt to market changes.

The proposed changes to zero-hour contracts will likely require companies within this sector to rethink their workforce strategies and possibly hire more full-time employees, which in turn will increase their operational costs.

Many technology companies use ‘bench management’ to fill critical roles or to meet sudden demand. The new proposals relating to predictability of work may result in companies finding it more challenging to maintain a bench of readily available talent.

From a global competition perspective, this may create a more competitive space as companies within the sector are bidding for both global work and talent. These stricter rules may adversely impact UK-based companies operating in the global market, especially if competing with international companies who are not subject to such rules.

The use of zero-hour contracts typically allows tech companies to drive innovation solutions by allowing them to take calculated risks and adapt quickly. Limiting or banning the use of these contracts will likely impact innovative solutions with reduced workforce flexibility potentially slowing the pace of innovation sector wide.

Impact on Predictable Terms Act for Workers?

Many higher education institutions and businesses within the tech sector have of course already been preparing for the Workers (Predictable Terms and Conditions) Act 2023 (21 pages / 685 KB) which received Royal Assent in September 2023. While it was expected to come into force in September 2024, implementing regulations are still required, and the final version of the draft Acas Code of Practice on handling requests for a predictable working pattern is also still awaited. If it does come into force, it will allow zero-hour workers to request, up to two times in any year, a more predictable work pattern in terms of the days and times they work.

It is, however, in essence a right to request a predictable working pattern rather than a right to have a predictable working pattern. The employer must consider it in a way akin to how it might consider flexible working requests and has the right to turn the request down. Our best guess is that the new Labour government will opt to go further as it has stated it will include this issue within the Employment Rights Bill.

It is therefore important for factors impacting the higher education, tech, and various other sectors to be considered before a blanket ban on zero-hour contracts is given the go ahead.

Co-written by Joe McMorrow of Pinsent Masons.