Retailers consider agency workers amid zero-hour contract overhaul in UK

The UK government has estimated that reforms to zero hours and similar contracts could cost employers between 350 million pounds and 2.9 billion pounds a year, with retailers among the sectors expected to feel the greatest impact.

The analysis, published to support a consultation on the reforms, explores proposals that would give eligible workers a right to guaranteed hours, reasonable notice of shifts and payments when shifts are cancelled, moved or curtailed at short notice.

The government says the measures are intended to address “one-sided flexibility”, counteracting the risk of unpredictable hours and income that workers may face. Retail was cited as a sector likely to be impacted due to its reliance on variable demand and flexible staffing models.

Under the government’s central scenario, the reforms would cost businesses around 1.1 billion pounds a year. Of this, 270 million pounds would come from guaranteed hours, 640 million pounds from reasonable notice requirements and 160 million pounds from payments for shifts cancelled, moved or curtailed at short notice.

The government stresses that the figures depend on the final policy, with costs subject to change in line with the rules.

Retailers could turn to agency workers for flexible resources

RSM UK’s latest Workforce research suggests retailers are already considering how they will respond. It found that 88 percent of retailers are making changes to their use of zero hours contracts, while 28 percent plan to offer guaranteed hours, 21 percent will stop using zero hours contracts and 16 percent will reduce their use.

Almost half of retailers (48 percent) said they will look to agency workers to provide flexible resources. RSM said, however, that this may not remove their obligations under the new rules, with the right to guaranteed hours still potentially applying to agency workers in certain circumstances.

In a statement, Charlie Barnes, head of employment legal services at RSM UK, said: “The new legislation is leading retailers to essentially stop using zero hours contracts by either offering guaranteed hours, reducing the use or not using them at all.”

Barnes noted that the complexity of the rules could increase administration and costs, while pushing retailers towards alternative ways of filling labour gaps. He added, however, that potential exemptions for seasonal workers or particular events outlined in the consultation would be “welcome news for retailers”.

Jacqui Baker, partner and head of retail at RSM UK, said that the changes could also reduce opportunities for people who value flexible casual work, particularly young people. She said retail, leisure and hospitality businesses already facing higher employment and business costs would “bear the heaviest burden”.

Scale of costs raises questions over value of reforms

Responding to the analysis, Helen Dickinson, chief executive of the BRC, said the scale of the costs raises “serious questions” over whether the reforms will deliver value for workers.

She said retailers would also face “hundreds of millions of pounds” in additional costs to update HR and payroll systems, while arguing that the measures come as retailers are already dealing with 6.5 billion pounds of higher employment costs from increased National Insurance Contributions and the National Living Wage.

Dickinson warned that adding further costs while youth unemployment is rising could damage young people’s job prospects, and called on the government to tackle insecure work “without punishing responsible businesses” or reducing access to flexible jobs.