Consultation on banded hours contracts and enhanced rights for zero-hour workers in Northern Ireland

Proposed legislation called the Employment (Zero Hours Workers and Banded Weekly Working Hours) Bill (the Bill) is currently at an early legislative stage in the Northern Ireland Assembly. The Bill includes a number of proposed provisions to regulate the use of zero-hours contracts (ZHCs), with the stated aim of creating a less precarious working environment for zero-hours workers (ZHWs), while allowing for a responsive and agile workforce.

If introduced, the Bill will end the use of exclusivity clauses, bringing Northern Ireland into line with the rest of the United Kingdom. While the Bill draws on the findings of the Taylor Review on modern working practices, it proposes a “banded hours” system, as currently used in the Republic of Ireland. Information about the Bill and the online survey for consultation responses is available here.

The Bill

The Bill sets out several key provisions to regulate the use of ZHCs including:

• Exclusivity clauses (terms in a ZHC which seek to prevent the ZHW from taking on other work) being made unenforceable with ZHWs being protected from detriment and dismissal if they breach an unenforceable exclusivity clause (dismissal in such a case being automatically unfair, requiring no qualifying period of service);

• An entitlement to three hours’ pay where a ZHW is called into work but is given less than one hour of work to complete; an

• The ability for ZHWs to request placement in a band of weekly working hours, based on their actual hours worked.

Who will these changes affect?

The Bill covers employees and workers who are engaged on a ZHC (a contract where this no guarantee that the employee or worker will be given any work) but not someone engaged on a non-contractual arrangement. In practice, this means that the Bill does not apply to someone classified as self-employed, or an independent contractor.

When would ZHWs receive a call-out payment?

The Bill deals with situations where a ZHW is called into work but is given either no work, or given less than one hour’s work, to complete.

On each such occasion, a ZHW would be entitled to a minimum call-out payment of three hours’ pay, except where:

• The worker was not given any work due to exceptional circumstances or an emergency (for example, an accident), which could not have been avoided despite the exercise of due care by the employer; or

• The worker would have been unable to work (for example due to illness) when called in.

Failure to make a payment without an exception would allow a ZHW to bring a complaint for unlawful deduction from wages in the Industrial Tribunals.

How can a ZHW request banded hours?

Under the Bill, ZHWs would be entitled to request placement in a band of weekly working hours if their weekly hours, as set out in their contract, do not reflect the number of hours they have worked during the reference period. The reference period is stated as the ‘period of three months after the commencement of the worker’s contract with the employer and immediately before the worker makes a request’. Put more simply, the consultation document refers to the band being calculated by reference to the average weekly working hours over the previous three months.

The Bill places a requirement on employers to review whether workers may be entitled to banded weekly working hours every three months and inform them of this in writing.

However, the Bill would not require employers to offer work in circumstances where the worker was not expected to work, or the employer’s regular business would not be carried out.

Once a request is made, the employer would have four weeks to either refuse the request or place the employee in a band (on the basis of the average number of hours worked by that worker per week during the reference period).

Requests can be made at any time, including where a previous request has been refused, or where it was accepted and the request is for placement on a different band.

What are the bands?

The Bill sets out proposed bands ranging from A to H. Once a worker is placed in a band, they must be given hours of work each week which fall within that band.

Can an employer refuse a request?

The Bill sets out several grounds on which an employer can refuse a request for placement in a band of weekly hours:

• Where there is insufficient evidence to support the claim in relation to the hours worked in the reference period;

• Where there have been significant adverse changes to the business carried on by the employer during or after the reference period;

• Where there are exceptional circumstances or an emergency (for example, an accident), the consequences of which cannot be avoided despite the exercise of due care by the employer; and

• Where the average number of hours worked by that worker per week during the reference period was affected by a temporary situation that no longer exists.

Where a ZHW disputes the refusal, they can bring a complaint to the Industrial Tribunal within three months of the end of the four-week consideration period. Where a claimant is successful, the Tribunal must issue a declaration and require the employer to place the ZHW in the appropriate band.

Analysis

The Bill proposes several fundamental changes to how zero-hours contracts would operate in Northern Ireland and would significantly affect the zero-hours’ marketplace. While the Bill is at an early legislative stage and may change significantly, our initial observations are as follows:

• The prohibition of exclusivity clauses is largely uncontroversial and will likely be welcomed across both employer and employee groups. The change will likely be welcomed by HR practitioners as it rectifies a key divergence between employment law in Northern Ireland and Great Britain.

• The proposed banded hours system is a significant departure from the position in Great Britain, and instead would align Northern Ireland with the Republic of Ireland in this area.

• Call out payments and banded hours could be of major benefit to low-income workers who rely on precarious work, both in terms of their employment income and ability to assess eligibility for benefits.

• For employers, these proposals may lead to a more settled zero-hour workforce with more consistent skill and experience levels, and higher retention rates, encouraged by regularised hours and pay.

• However, the Bill may encourage some employers to deliberately manage the hours offered to their zero-hours workforce, to prevent individual workers from being entitled to placement in a band.

• The requirement to review workers’ entitlement to placement in a band every three months could become onerous for employers with a large bank of casual workers, especially in the events and hospitality sectors.

• The need to make call out payments should be quite limited, given the minimum requirement to offer only one hour of work; this is essentially an anti-abuse mechanism to encourage responsible business practices.