Replacing zero hours contracts with contracts that provide flexibility and protect workers rights

Zero hours contracts are casual agreements between employers and workers where the employer is not obliged to offer work, with the worker therefore being uncertain of having an opportunity to work. While they provide flexibility, they can also lead to uncertainty and instability for workers both financially and personally.

The Department is considering introducing specific legislation to limit or restrict the use of zero hours contracts and other practices that are detrimental to workers without guaranteed hours.

Views are sought on:

• whether there should be an outright ban on zero hours contracts, or if they should be permitted in certain circumstances such as casual work, emergency situations, or short-term relief work for routine absences;
• whether eligible workers should be able to transition from zero hours contracts to banded hours contracts, if applicable;
• whether eligible workers should be able to request a more stable or predictable contract;
• whether the qualifying period to be able to make these requests should be 12 weeks, 26 weeks, or 12 months;
• whether employers should be required to give reasonable notice of work;
• whether legislative change is necessary or whether guidance or a code of practice would be effective in promoting good practice;
• whether employers should be obliged to pay compensation to workers when they are expected to work but do not receive it and whether this should apply to other categories of workers; and
• whether there should be a ban on exclusivity clauses in zero hours contracts (these clauses restrict workers from taking on work with other employers) and/or for those whose contracts do not guarantee income above the Lower Earnings Limit.

Understanding employment status and addressing bogus self-employment

There are three main types of employment status for determining employment rights and protections: employees, workers and self-employed. We have written about employment status here.

Issues relevant to the employment status categories include ‘bogus self-employment’ where a person is contracted to work on a self-employed basis but is actually a worker; the rise of digital platform working, which matches up the supply and demand of work through a platform (e.g. Uber); and many other countries outside the UK only having ‘employees’ or ‘self-employed’ as part of their status.

There are no specific proposals in the consultation regarding employment status, but views and evidence are sought to inform policy in this area. The consultation document asserts that if it is enacted, it would provide greater certainty for workers about the nature of the terms and conditions of their employment and help them understand their employment status.

In GB, Labour wants – eventually – to abolish the UK’s current three-tier system for employment status. It wants a simple framework where people are either workers or self-employed, abolishing the current distinction between ‘employees’ and ‘workers’. Labour accepts that this can’t happen quickly and that it needs further consultation. Further information is available here.

Changes to legislation on dismissal and re-engagement (fire and re-hire)

Dismissal and re-engagement (fire and re-hire) refers to a practice where an employer seeks to alter an individual’s terms and conditions of employment by first dismissing or ‘firing’ them, then rehiring them, on altered, usually less favourable terms. There have been a number of high-profile examples of the use of this practice in recent years, such as P&O, which have given rise to calls for action to be taken in terms of regulation.

Views are sought on three options:

• do nothing, seeking views on whether legislation is necessary;
• introduce a statutory code of practice setting out guidelines relevant to these practices;
• introduce new legislation to allow remedies at industrial tribunals for victims of dismissal and re-engagement practices. This may include a direct prohibition on employers taking steps construed to be dismissal and re-engagement.

A new Code of Practice on fire and rehire applies in GB, which we wrote about here.

Redundancy – personal liability changes in the offence of failure to notify

Employers are legally required to notify the Department for the Economy of proposed redundancies exceeding 20 or more employees. The timeframe of the notification period can vary depending upon the number of proposed redundancies. An employer that fails to give proper notice is committing an offence which is liable to a fine not exceeding level 5 on the standard scale. This is a maximum of £5000 in NI.

Unlike GB, there is currently only employer liability for this offence in NI. In GB, office holders can be held criminally responsible for failing to fulfil obligations to give notice of redundancies, which is subject to an unlimited fine.

Views are sought on whether the introduction of personal liability in the offence of failure to notify would be an incentive for office holders to comply with the Departmental notification process and engender a greater awareness of responsibility in this area.

Legislation introduced to ensure a written statement of particulars provided for all workers

Currently, employees are entitled to receive a written statement of employment rights within two months of starting their job. This statement must cover basic terms of employment such as pay rates, working hours, and holiday entitlements. Workers are excluded from this entitlement, which means they may not be fully informed of their rights. Furthermore, the current requirements do not cover all key terms and conditions of employment.

Views are sought on:

• whether written statements should be provided to all workers;
• whether this should be a "day one" right, meaning it would be provided on or before the employment start date;
• whether written statements should include more information. While these changes would not apply retrospectively, current workers would be entitled to request a written statement including the additional information, which should be provided within one month of the request.

If this proposal is introduced, the additional information that would be provided on or before the employment start date includes the days of the week required to work; details on variable working hours and how the variation is determined; any paid leave (excluding holiday pay) entitlements; details of all remuneration and benefits above base pay; information on probationary periods and related conditions; and any training entitlement provided by the employer (including mandatory training or if it must be paid for by the individual).

As currently, certain additional information could be made available in documents such as staff handbooks.

In GB, all workers and employees are to receive a written statement of particulars of employment on the first day of a new job.

Agency workers - Swedish derogation

There is currently a provision in the Agency Workers Regulations (Northern Ireland) 2011 which risks agency workers’ rights to pay parity with other workers at the same place of work after a qualifying period of twelve weeks. This provision was removed in GB in 2020. It creates an issue where some agency workers may not receive the same pay as workers that have been directly employed by a business, after completing the twelve-week qualifying period.

By exploiting this provision, it is asserted that some operators in this sector:

• pay agency workers at an inferior rate to those doing this same job at the same company, indefinitely; or
• structure the scheduling of workers’ assignments so they never qualify to receive pay between assignments.

Views are sought on removing this provision and revoking regulations 10 and 11 of the Agency Workers Regulations (Northern Ireland) 2011.

Key Information Document for agency workers

The Employment Agency Inspectorate (EAI) of the Department for the Economy is responsible for the regulation of the private recruitment sector to ensure proper conduct is maintained and protects work seekers and employers using such agencies and businesses.

In GB, a Key Information Document, providing a work seeker with key points on pay related information is a requirement, whereas in NI it is not. The majority of breaches identified by the EAI are discrepancies in how workers and agencies interpret their terms.

Views are sought on whether NI should require Key Information Documents that would include:

• the name of the contractor;
• the type of contract that is being set up;
• the name of the company who is employing the worker;
• the rate of pay that the worker will receive;
• payment dates and intervals;
• all statutory deductions such as taxes and national insurance;
• all non-statutory deductions such as private health care, pension or student loans;
• all additional benefits that the worker shall be receiving; and
• holiday entitlement.

Employment Agency Inspectorate information sharing

In GB, the Employment Agency Standards Inspectorate (ESAI) can share information with the EAI, relevant Secretaries of State and other relevant regulatory bodies.

Views are sought on whether the law should change in NI to allow for open information sharing gateways to the EAI with appropriate regulators with the EAI designing more proportionate and transparent enforcement actions.

EAI Enforcement Powers: Labour Market Enforcement Undertakings & Labour Market Enforcement Orders

The EAI currently has the power to access and inspect recruitment agency records. If infringements are found, the EAI can prescribe actions for the agency to bring them back into compliance. This approach usually works, but when agencies persistently fail to resolve infringements, the enforcement options for the EAI are limited.

The EAI can either work with the agency to encourage compliance or apply to an industrial tribunal for a prohibition order. If infringements continue, the EAI can make an application to the tribunal, which can ban an individual from operating a recruitment agency for up to 10 years or until the conditions of the prohibition order are fulfilled.

Views are sought on the potential introduction of Labour Market Enforcement Undertakings (LMEUs) and Labour Market Enforcement Orders (LMEOs). LMEUs and LMEOs would allow recruitment agencies to continue operating while fulfilling conditions imposed by the EAI. The nature of the conditions would depend on the infringement.

These enforcement options are already in force in GB and, although not frequently required, are stated as being useful tools when working with non-compliant agencies.

Fair and transparent allocation of tips, gratuities and service charges

This part of the consultation addresses the fair allocation and distribution of tips, gratuities, and service charges received or controlled by employers (tips).

In 2009, GB amended the National Minimum Wage Regulations to ensure that tips paid through an employer's payroll do not count towards the national minimum wage. This change was accompanied by a voluntary Code of Best Practice aimed at promoting transparency by businesses.

Both GB and the Republic of Ireland (ROI) have recently enacted legislation requiring employers to ensure that tips they receive are passed on to workers. We wrote about the GB change here. However, in NI, there is no legal requirement for employers to distribute tips to their workers.

The Department proposes introducing legislation requiring employers to fully and fairly pass on tips to their workers in a transparent manner. A Code of Practice may also be considered to guide employers on how to meet their obligations.

Views are sought on two options:

• do nothing, maintaining the position that tips controlled by the employer may not be disbursed in full to workers; or
• introduce legislation to oblige employers to pass on tips in full in a fair and transparent manner. This would involve employers having tipping policies, keeping records and making them accessible. Workers would also need a way to seek redress.

These proposals would not apply to cash tips that are not under the control or influence of the employer.

Changes to payslips

Currently, employers are only legally obliged to provide itemised pay statements (commonly known as payslips or wage slips) to employees. Employers are not obliged to provide payslips to workers, such as contractors and freelancers. This makes it difficult for them to know if they have been paid correctly.

Also, employees or workers whose pay varies because of time worked do not have the right to receive information on the number of paid hours worked in an itemised pay statement. Again, this makes it difficult for them to know if they have been paid correctly.

Views are sought on:

• extending the right to a pay statement to workers; and
• requiring an itemised pay statement to include information about the number of paid hours worked by the employee/worker in situations where their pay varies based on the time worked.

In GB, all workers have a right to receive an itemised pay statement.

Potential changes to the holiday pay calculation reference period

An employee or worker is entitled to receive 5.6 weeks paid holidays in each leave year, consisting of four weeks leave based on EU law and 1.6 additional weeks provided under domestic law. For many workers, the amount of pay received for their holiday depends on their hours worked and how they are paid. Pay received during leave should reflect what the worker would have earned if they were working, e.g., this is expected for workers who receive fixed pay. This becomes more complicated for workers with irregular hours and variable pay, who do not receive the same amount in each pay period.

In NI, the current position for workers with variable pay is that employers typically look back at the worker's previous 12 weeks’ pay (known as the holiday pay reference period) to calculate their pay for a week’s leave. This method can be burdensome for employers and may result in incorrect entitlements which do not reflect an employee’s normal pay, especially for workers with seasonal or irregular hours.

The consultation asserts that using a 52-week reference period, instead of a 12-week one, is recognised as a more robust and fair approach.

Views are sought on extending the holiday pay reference period for workers with variable hours from 12 weeks to 52 weeks, which would bring NI in line with the corresponding reference period used in GB.

Employers and workers input on record keeping requirements

Employers must keep records of staff working hours to comply with the Working Time Regulations. This includes ensuring employees do not exceed the 48-hour weekly maximum (unless they have an opt-out) and adhering to limits for night working and restricted hours for young workers. However, there is no requirement to record daily or weekly rest breaks or the number of actual hours worked each day.

In 2019, the European Court of Justice ruled in CCOO v Deutsche Bank that European member states must require employers to have a system in place to measure the daily working time of all workers. This case created uncertainty regarding the level of detail employers must keep to comply with the Working Time Regulations.

In GB, legislation applies confirming that employers do not need to keep detailed records of workers' daily working hours if they can demonstrate adequate compliance with the Working Time Regulations through other means. We wrote about this here.

The consultation asserts that the main issue with the current arrangements is a lack of clarity regarding the specific records employers should maintain. Additionally, the consultation asserts that the impact of a more rigorous record-keeping regime on businesses, particularly small or micro businesses in NI, is unclear.

The Department has not taken a decision on this issue. However, views are sought from employers and workers on:

• their experience with record-keeping activities in the workplace;
• instances where a lack of record-keeping has resulted in disputes over hours worked or pay; and
• whether government action is necessary.

Input on effectiveness of workers’ right to disconnect

The widespread use of smartphones and digital devices has made it possible for individuals to be constantly accessible, creating pressure to always be “on call” in some workplaces.

The NI Working Time Regulations currently set out rules regarding limits on weekly working time, rest entitlements, and annual leave.

In April 2021, the ROI Government introduced a Code of Practice on the right to disconnect, which we wrote about here.

Views are sought on the effectiveness of existing NI legislation in promoting a healthy work/life balance.

In GB, Labour says it will bring in the ‘right to switch off’, giving workers and employers the opportunity to develop workplace policies or contractual terms. Details are unclear but Labour’s New Deal mentions ROI and Belgium as possible models. This was not, however, mentioned in the King’s Speech on 17 July 2024.

Increasing workplace access rights of trade unions

Currently trade union officials have only a limited statutory right to access workplaces, for example to attend discipline/grievance meetings when requested by an employee. There are no specific rights to access workplaces (absent bargaining imposed by the Industrial Court as part of a recognition agreement, agreement with the employer, or during recognition applications) for purposes such as the operation of a trade union in the workplace or to discuss recruitment/membership with non-union members. Views are sought on how workplace access rights should be increased. For example, in New Zealand, there is an automatic right of access to support a trade union member with an employment-related matter and during working hours, to promote membership and ensure employment law compliance.

Views are also sought on whether/what exemptions should be put in place for micro business (9 or fewer employees) and/or small businesses (10-49 employees) given their prevalence in NI.

The stated aim is to increase the role of trade unions, particularly in low paying sectors, and is likely to be a significant concern for some employers, particularly if reforms extend to non-unionised workplaces where trade unions do not currently enjoy any rights of access.

This consultation document makes no mention of allowing unions to communicate electronically directly with employees, as has been called for by unions in GB.

Collective bargaining: recognition

Views are sought on reducing the threshold for trade unions to seek formal recognition from 21 to 10 employees. Although reforms would make it easier for trade unions to secure recognition, the practical impact will depend on the extent to which unions have the resources/interest to pursue recognition at smaller businesses.

Collective bargaining: introduction of collective sectoral bargaining

Currently, no meaningful collective sectoral bargaining exists in the private sector in NI. No specific proposals have been set out. However, views are sought on whether collective sectoral bargaining should be introduced, to potentially address setting minimum sectoral standards on matters such as pay and working hours and to reduce movement of staff between employers; and in which sectors this might be effective.

Balloting & notice

Views are sought on reducing the period of notice required to be given to employers of ballots on industrial action from seven days to five days, and whether the current system of providing notice of industrial action is fit for purpose.

Electronic balloting

Currently ballots on industrial action must be issued and returned by post, which can be costly and mean the voting process can be lengthy. The consultation proposes to accommodate electronic balloting and is seeking views on the related operational and practical considerations, and the requirement for an independent scrutineer. Reforms are intended to acknowledge information technology advancements and encourage greater participation in voting processes.

Protections for representatives, and for and employees taking part in industrial action

No specific proposals have been set out, however, views are sought on whether the current legislative protections for trade union officials and the 12-week protected period for those taking part in industrial action, are sufficient, and what impact any increase in protection might have. Reforms may lead to increased trade union representation and membership amongst employees.

Facilitating productive workplace relationships

The introduction of a Code of Practice is proposed to establish an agreed set of principles and expected behaviours to foster more productive working relationships between employer representatives and trade union officials. Views are sought on the benefits of a New Zealand style code, encouraging employers and employee representatives to work with each other and communicate in a manner which recognises the common interest in increasing productivity and business profitability, without undermining a bargaining process or misleading/deceiving one another. Views are also sought on potential consequences if a party is found to have acted in breach of the agreed code.

Information and consultation: definitions

Views are sought on amending the Information and Consultation of Employees Regulations (Northern Ireland) 2005 (ICE Regulations) to reflect the modern-day workplace and ensure their application to smaller establishments/satellite offices within larger organisations.

Information and consultation: thresholds

The ICE Regulations provide for employers to inform employees on a regular basis about the employer’s economic situation, employment prospects and decisions likely to lead to changes in work organisation. Views are sought on proposals to reduce the threshold for initiating the rights conferred by the ICE Regulations from 10% of employees to 2%. There are no current proposals to change the 15-employee minimum requirement for a valid request, but views are also being sought on this issue, particularly in view of the prevalence of micro-businesses in NI and whether a reduction in these thresholds would better reflect the make-up of the NI economy.

Transfer of Undertakings (Protection of Employment) Regulations

Currently, neither the micro-business exemption to the information and consultation aspect of TUPE in GB, nor more recent reforms to permit employers to inform and consult directly with employees if they have fewer than 50 employees or are transferring fewer than 10 employees, apply in NI.

In addition, consultation is underway in GB to consider whether the definition of “employee” should be amended to confirm that TUPE applies to employees only (not workers). This consultation also proposes removing the obligation to split employment contracts between multiple employers where a service is transferred to more than one new business. Views are sought on whether similar changes are required in NI, although no specific proposals have been set out.

Public interest disclosure (whistleblowing): annual duty to report

Views are sought on whether “prescribed persons” (usually organisations with an oversight role) should be required to produce a publicly available annual report setting out:

• the number of disclosures received
• the number of those disclosures on which the relevant prescribed person decided to take further action
• a summary of:
  a) the action that the relevant prescribed person has taken
  b) how workers’ disclosures have impacted on the relevant prescribed person’s ability to perform their functions and meet their objectives
  c) an explanation of the functions and objectives of the relevant prescribed person

The consultation states that such reporting mechanism would allow for greater scrutiny and transparency of prescribed persons and the processes for handling whistleblowing disclosures and that this transparency will assist in developing best practice standards of complaint handling and deliver consistency in approach and organisational accountability.

Flexible working

Views are sought on removing the current 26-week qualifying period before a flexible working request can be made, making this a day one right available to both new and existing employees; allowing an employee to make two flexible working requests in any 12-month period (the current entitlement being one such request); and removing the requirement for the employee to explain, as part of the statutory request, what effect the change would have on the employer and how that might be dealt with.

Similar rights were introduced in GB in April 2024, which we wrote about here.

We have also seen a number of employers with employees in both jurisdictions (GB and NI) adopt the flexible working changes implemented in GB for their NI employees as a matter of best practice. As it is anticipated that the GB changes will be replicated in NI, these employers have provided the corresponding rights to their NI employees in advance of any legislative process.

Carer’s leave

Views are sought on creating a right for eligible employees to take up to one week of unpaid leave per year to provide care for a family member or other dependant who has a long term or otherwise significant care need. Dependant for this purpose would broadly mirror the definition in emergency dependants’ leave. In short, this is any person that reasonably relies on an employee to provide or arrange care. It would include a spouse, civil partner, child, parent or someone living in the same household as the employee (excluding lodgers or tenants). Care can be for illness/injury requiring care for more than three months, a disability or issues relating to old age. Care can be taken on whole or half days.

The right to carer’s leave was introduced in GB in April 2024, which we wrote about here. In the event corresponding legislation is introduced in NI, employers will need to consider updates to policies but also “self-certification” arrangements and record-keeping to track the use of this leave.

Views are also sought on whether this should be a paid right in NI, which is not the position in GB.

Neonatal care leave and pay

Views are sought on allowing eligible working parents of newborn babies who enter neonatal care within 28 days of birth and who receive at least seven days’ continuous neonatal care to receive one week of leave and/or pay for each week the child remains in neonatal care up to a maximum of 12 weeks. This is proposed to be a day-one right.

This leave is expected to be added on to other family leave entitlements.

Pay is expected to be the same rate and paid subject to the same conditions as statutory maternity, paternity and shared parental pay.

Neonatal leave and pay has been introduced in GB, with regulations introducing the right expected to come into effect in April 2025. We wrote about this here.

Protection from redundancy – pregnancy and family leave

Views are being sought on new rights to redundancy protection for pregnant employees and returners from family leave.

Under current law, employees on maternity leave, shared parental leave or adoption leave have enhanced protection from redundancy through a right to be offered a suitable alternative vacancy, if one is available, before being made redundant.

It is proposed this right will be extended to cover:

• pregnant employees (from the point the employer is informed of the pregnancy); and
• employees returning from maternity/adoption leave (and at least six weeks’ shared parental leave) with protection lasting for 18 months from the date of birth/adoption.

Note that this is not protection against selection for redundancy in the first place – it only relates to the offer of suitable alternative vacancies.

Extended redundancy protection was introduced in GB in April 2024, which we wrote here. This was also discussed on our Podcast series “The Agenda – Episode 4”.

Paternity leave

Views are being sought around how and when statutory paternity leave can be taken.

It is proposed that fathers/partners will be able to take paternity leave at any point in the first year after birth/adoption and will be able to split it into two blocks of one week or a single block of two weeks. Under the current rules, paternity leave must be taken in a single block within the first eight weeks.

28 days’ notice will be required for dates of each leave period (but notice of entitlement must still be given 15 weeks before birth).

Paternity leave is proposed as a day one right.

New paternity leave rules were introduced in GB in April 2024, which we wrote about here.