The UK government’s proposed Employment Rights Bill is drawing criticism from employers and industry groups, particularly in the retail and hospitality sectors. During the first committee debate in the House of Lords this week, concerns were raised over provisions relating to zero hours and low hours contracts.
Under the current draft of the bill, employers would be required to offer guaranteed minimum hours to workers based on a 12-week average, a move intended to end one-sided flexibility and provide workers with greater predictability.
The government argues the bill will ensure better planning and financial security for those on unpredictable contracts. However, many businesses say the proposed measures would create significant operational and financial burdens, particularly for sectors that depend on flexible staffing models such as seasonal, casual or part-time labour.
A survey by the British Retail Consortium found that 70% of HR directors from major retail firms expect the bill to negatively impact their operations. Their main concern is the proposed right to guaranteed hours, which many argue would limit their ability to respond to fluctuating demand.
Amendments have been proposed in the House of Lords to address these issues. Suggestions include extending the reference period beyond 12 weeks and providing a clearer definition of what constitutes a ‘low hours contract’.
Impact on Hiring and Flexibility
Charlie Barnes, head of employment legal services at RSM UK, stated that while the government’s decision not to ban flexible contracts altogether is welcomed, the current draft of the bill still presents serious challenges. Barnes warned that the proposed legislation would likely reduce hiring activity as employers seek to manage rising costs and administrative demands.
He said, “While the government has taken a sensible step in not banning flexible contracts completely, there are still grave concerns from the hospitality and retail sectors already struggling with national insurance and wage cost increases. If the bill is implemented in its current form, the general consensus is that this will lead to a reduction in hiring as employers look to offset increased administration costs and take a more cautious approach on recruitment.”
Barnes added that the flexibility of casual work is important to many workers, and the risk is that fewer such opportunities will be available if the proposed rules go ahead. He said employers trying to comply may find themselves required to offer hours they cannot justify based on actual business needs.
“The harsh reality is that this could even lead to less opportunities for those who value or rely on the flexible nature of casual work. Unfortunately, those employers trying to do the right thing will find themselves burdened with increased administration, and an obligation to provide work for a set number of hours, even where the need isn’t there. This will ultimately drive up prices and push employers to consider other ways to plug labour gaps, eg. offering more overtime to existing workers, or turning to automation and new technologies where possible, rather than hiring more people.”
Uncertainty and Administrative Burden
Barnes also highlighted the lack of clarity in the current draft of the bill, warning that ambiguity in definitions and application will only increase the pressure on employment tribunals and business owners alike. He called for a more flexible and clearly defined approach that balances protection for vulnerable workers with practical implementation.
“Businesses fully support the need to protect vulnerable workers from exploitation, but are looking for a more flexible approach to the rules and more certainty on how they will apply in practice. The legislation as drafted leaves much open to interpretation, which is no good for anyone, and will instead add to an already unsustainable workload for employment tribunals. As it stands, retail, leisure and hospitality employers already struggling in the current economic environment, following April cost rises and the impact of tariffs, will bear the heaviest burden.”
Further debate and clarification on the bill are expected in the coming weeks, as businesses, legislators and trade bodies continue to assess the potential impact on flexible working models and future workforce planning.
