Retailers have warned that the government’s overhaul of zero-hours contracts risks adding billions to employment costs and reducing the flexible jobs relied on by shops and younger workers.
Business groups including the British Retail Consortium have urged ministers to rethink how the reforms are implemented, warning that the rules could remove employment opportunities rather than simply tackling exploitative working practices.
Under changes contained in the Employment Rights Act, workers on zero or low-hours contracts will gain the right to guaranteed hours based on the amount they regularly work, alongside reasonable notice of shifts and compensation when shifts are cancelled or changed at short notice.
The government is consulting on where to set the threshold for workers covered by the guaranteed-hours regime, with options ranging from eight to 48 contracted hours a week. Its preferred range is currently between eight and 20 hours.
The proposals could have a particularly significant impact on retail, where part-time, weekend and seasonal workers make up a substantial part of the workforce and staffing requirements can fluctuate sharply around Christmas, promotions and other peaks in demand.
Government analysis estimates the reforms could cost employers between £350m and £2.9bn each year, with a central estimate of around £1.1bn.
The BRC warned that the changes would pile further pressure on retailers after the industry absorbed what it said was a £6.5bn rise in employment costs over the past two years as a result of increases to employer National Insurance contributions and the National Living Wage.
BRC chief executive Helen Dickinson said: “These costs could not come at a worse time.”
She added that retailers would also face “hundreds of millions of pounds” of additional spending to update HR and payroll systems to comply with the new rules.
Dickinson warned: “Adding further costs when youth unemployment is soaring risks being a hammer blow to young people’s job prospects, at precisely the time businesses across the country need to be creating more opportunities.”
Retailers are particularly concerned that setting the definition of low-hours work too broadly could capture students and other employees who actively choose short or flexible weekly shifts.
The BRC has also warned that a short reference period for calculating guaranteed hours could fail to account for the highly seasonal nature of retail, leaving employers required to offer permanent hours based on temporary peaks in demand.
Business groups are pushing ministers to use a lower hours threshold to ensure the legislation is focused on workers facing genuine insecurity while preserving flexible roles for those who want them.
However, the government maintains that the measures are needed to end “one-sided flexibility” and give workers greater security over their income and working patterns. It argues improved wellbeing and staff engagement could also lead to productivity gains.
The consultation on the detail of the zero-hours reforms closes today (25 August), with the final shape of the rules still to be decided.
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