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.

In the consultation the Department sought views on reforming zero hours contracts through a variety of measures.

What has been proposed? 

In its response document, the Department acknowledges the benefit and flexibility of zero hours contract for certain groups of workers including students, working carers etc, but intends making a number of ‘proportionate’ changes to end exploitative practices including:

• The option to move to a ‘banded hours’ contract for workers consistently working zero/low hours, which more accurately reflects regular working patterns of such workers.
• A qualifying period to apply for banded hours contracts (likely 26 weeks but to be determined) and employers can decline a request only in limited circumstances (such details also to be determined).
• A requirement for employers to inform zero and low hours workers of the right to banded hours in written employment particulars when employment commences.
• The right for zero and low hours workers to ‘reasonable notice of shift patterns’ – more detail to come following stakeholder engagement.
• The right to compensation where employers cancel or curtail shifts at short notice – more detail to follow.
• Banning exclusivity clauses on contracts below the Lower Earnings Limit (currently £125 per week)
• Powers to extend the right to banded hours contracts to other contracts (other than zero or low hours) in the future.

A lot of the detail on how these new rights will work still needs to be thrashed out through stakeholder engagement, but the Department is taking a hybrid approach to tackling this issue. 

Banded hours contracts have been in place in the Republic of Ireland (ROI) for some time and were also proposed in Northern Ireland via a draft bill in 2022, which was not passed.

The Department has chosen not to take the GB approach to ‘guaranteed hours’ in its recent Employment Rights Bill (see here for more information on this), but the new right to ‘reasonable notice of shifts’, and compensation for late cancellation, is an area of convergence with GB. We wrote about reasonable notice for shift workers here.

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.

What has been proposed?

There were  no specific proposals in the consultation regarding employment status, but views and evidence were sought to inform policy.

The consultation response document now confirms that no changes to the existing framework will be made at this time, given the complexities of the issues and interaction with tax law (which is not devolved).The Department intends to work with the British Government on developing a simpler framework and help provide clarity and guidance on employment status for individuals and employers.

In GB, the Labour government has indicated plans to move to a two-tier system, removing the distinction between ‘employees’ and ‘workers’ but will be subject to consultation later in 2025, at the earliest. 

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.

What has been proposed?

Views were sought on  several options, and the Department has confirmed it will:

• Make it automatically unfair to dismiss and employees to alter terms of their contract, where they do not agree
• Make a limited exception where an employer can show it acted in response to immediate financial difficulty and could not have reasonably avoided the need to vary the contract

A new Code of Practice on fire and rehire currently applies in GB but the practice remains lawful, albeit high-risk. The new Employment Rights Bill makes proposals very similar to those set out by the Department and creates alignment on this issue.  

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.. 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. 

What has been proposed?

The Department will introduce the offense of personal liability in relation to employer obligations under the redundancy notification framework and will consult with the DoJ to increase the maximum fine.

The Department will also replicate any relevant provisions in GB’s Employment Rights Bill aimed at extending collective redundancy protections to those working at sea.

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.

What has been proposed?

Following consultation on expanding this right, employers will be required to provide a written statement of employment to both employees and workers on or before the first day of employment, a change from the current requirement of within two months from the first day of employment

The information required in the statement will be expanded to include pay, working hours and paid leave and information on a worker’s right to join a trade union. 

Existing employees and workers will also be able to request statements.

The Department will also consider how best written statements can be adapted to inform zero hours contract workers of their new right to switch to a banded hours contract.

In GB, all workers and employees are already entitled 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.

What has been proposed?

To ensure agency workers are treated fairly, the Department will introduce legislation to abolish ‘pay between assignment’ contracts (the ‘Swedish Derogation’) which can risk agency workers being paid less than their permanent counterparts, even after completing the twelve-week qualifying period.

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. 

What has been proposed?

To improve understanding of the terms of work on offer, the Department intends to make it a legal requirement for recruitment agencies to produce a Key Information Document for work seekers

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. 

What has been proposed?

The Department plans to legislate for information sharing between the EAI and relevant regulators under specific conditions. This aims to help the EAI design fairer and more transparent enforcement actions, improving collaboration with affected recruitment agencies.

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.

What has been proposed?

The Department will legislate to enhance the enforcement powers of the EAI via the introduction of Labour Market Enforcement Undertakings and Labour Market  Enforcement Orders.

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

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.

What has been proposed?

Following consultation on this issue, legislation will be introduced so that:

• Employers must ensure that payments for services under their control or significant influence (i.e. not cash tips) are fairly and transparently distributed to workers, excluding legal deductions.
• Employers will be required to maintain records of received and distributed payments, and workers have the right to access these records upon request.

The Department also aims to introduce a statutory Code of Practice to establish principles of fairness and transparency.

Changes to payslips

Currently, employers are only legally obliged to provide itemised pay statements (commonly known as payslips or wage slips) to employees but not 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.

What has been proposed?

In the interests of pay transparency, the Department intends to legislate to ensure that:

•  All workers will be given the right to an itemised pay statement. 
• An itemised pay statement must contain information on the number of paid hours worked by an employee or worker, in situations where pay varies by time worked.

In GB, all workers already 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.

What has been proposed

To help those who work irregular hours or whose pay varies across the year, the Department intends to legislate to change the holiday pay reference period from 12 to 52 weeks. This 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 ‘Good Jobs’ consultation sought views on experience with record keeping and instances of where this has resulted in disputes to confirm whether government action in this area would be necessary.

What has been proposed?

The Department has decided that it will not legislate to increase employers' record-keeping requirements, which will remain as outlined in The Working Time Regulations (Northern Ireland) 2016, and will not take action to replicate the provisions in GB.

To support compliance, with the Working Time Regulations, the Department will collaborate with the Labour Relations Agency to create guidance for employers and workers, clearly explaining the record-keeping requirements.

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 were sought in the consultation on the effectiveness of existing NI legislation in promoting a healthy work/life balance, and whether further regulation was needed.

What has been proposed?

The Department intends to work with social partners to agree a statutory Code of Practice for the Right to Disconnect and how it should apply here.

It considers this to be a step towards striking a balance between protecting employees and supporting economic development.

In GB, despite suggestions of a ‘right to switch off’ Code of Practice, this was left out of the recent Employment Rights Bill and seems unlikely to be progressed further at this point.

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 were sought on how workplace access rights should be increased.

What has been proposed?

Trade unions will have the right to request access to workplaces, including digital access (which was not mentioned in the original consultation). While it is intended that employers would not be able to unreasonably withhold access to workplaces from trade union officials, such access will not be 
automatic and will require adherence to certain provisions such as only entering during reasonable times and in compliance with health and safety and security arrangements on site.

Views were also sought in the consultation on whether 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 but this was not mentioned in the consultation outcome.

Access for trade unions in GB is also expanding under the Employment Rights Bill – see further here.

Collective bargaining: recognition

What has been proposed?

The threshold of the number of employees before a union claim for recognition by an employer can be made for trade unions will be reduced from 21 to 10 employees to ensure a greater number of workers in smaller businesses in NI will have the opportunity to access a trade union.

Recognition for trade unions in GB is also changing under the Employment Rights Bill – see further here.

Collective bargaining: introduction of collective sectoral bargaining

Currently, no meaningful collective sectoral bargaining exists in the private sector in NI.   

 Views were sought on whether collective sectoral bargaining should be introduced in NI.

What has been proposed?

There are no solid plans to implement sectoral bargaining at this stage, rather, the Department is planning to engage further with key stakeholders and the LRA to consider how a collective bargaining framework could operate more widely in NI, with the aim of working towards the target of a collective  bargaining coverage rate of 80% as stipulated under the EU Adequate Minimum Wage Directive (it is currently 20% in the private sector).
Sectoral bargaining will be introduced in GB under the Employment Rights Bill under ‘Fair Pay Agreements’ in adult social care. See more here. 

Balloting & notice

Views were  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.

What has been proposed?

To balance the needs of businesses with the right for workers to take industrial action, the notice period for industrial action will remain at seven days. The Department will however consider what reasonable changes to the administration of the balloting process can be made to reduce bureaucracy for unions and employers

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. 

What has been proposed?

The Department intends to legislate to permit the use of e-balloting systems for trade unions as an alternative to postal ballots.. 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

What has been proposed?

No major changes are being made to protections for trade union representatives, but a Code of Practice will be introduced setting out a minimum set of expected behaviours as to how parties should engage with each other. This might include behaviours by union officials, and a possible mechanism for complaint about union officials to unions, which was a subject raised in the consultation by employers.

Protection will be extended for employees taking part in industrial action by abolishing the 12-week time limit on protection against dismissal for such employees.

Protections for trade union reps and members are also being enhanced in GB under the Employment Rights Bill – see further here. 

Facilitating productive workplace relationships

There is currently no guide or set of principles which establishes a common set of expected behaviours between employers and trade union officials that can help secure respectful and effective workplace relationships, with a focus on positive outcomes.

What has been proposed?

In the interests of supporting respectful and effective workplaces, the Department will produce, in consultation with local stakeholders and the Labour Relations Agency, a Code of Practice on facilitating workplace relationships.

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. 

What has been proposed?

Following consultation, under the Information and Consultation of Employees Regulations 2005, the threshold for employees in larger businesses to request information will be reduced to 2% of employees and at least 10 people (a change from 10% and 15 people), with provisions to include employees in smaller offices of larger organisations. This may lead to an increase in the use of the ICE Regulations by unions.

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 were sought on whether similar changes are required in NI, although no specific proposals were set out in the consultation 

What has been proposed?

The Department has determined that, due to the complexities involved, further engagement on this issue would be important before any decisions regarding legislative changes are made, and as such, does not intend to make any changes to the TUPE regulations at this time. 

The Department states it is aware of further consultation planned in Britain on their TUPE regulations and will maintain a watching brief on any planned changes and will continue to engage with stakeholders on this issue.

Public interest disclosure (whistleblowing): annual duty to report

Workers who are aware of, or suspect, wrongdoing in their workplace, but who feel they cannot make a disclosure to their employer, can instead go to a ‘prescribed person’ - an independent and external body. However, the Department for the Economy has no information on the processes used by these bodies when handling disclosures, or on the matters being raised.

What has been proposed?

To better establish if prescribed persons (usually organisations with an oversight role) are fulfilling their responsibilities, and to capture information on disclosure trends, the Department will require prescribed persons to produce annual reports on disclosures made.

Exemptions will apply for certain office holders who have no regulatory powers to investigate such as Members of Parliament and the Assembly.

Flexible working

What has been proposed?

The Department intends to make flexible working more accessible through the following changes:

• Flexible working requests can be made from the first day of employment (removing the 26-week qualifying period)
• Two requests (up from one) can be made within a 12-month period, with the second request permitted after the first is resolved or withdrawn.
• Employers must act reasonably when refusing such requests, although the statutory grounds for refusal remain unchanged.
• Employees will no longer be required to state the potential impact of their request.

Similar rights were introduced in GB in 2024 which we wrote about here and we have already seen employers with employees in both jurisdictions (GB and NI) adopt the changes implemented in GB for their NI employees as a matter of best practice. These developments in NI will further streamline these processes.

Flexible working rights will be strengthened further in GB through the Employment Rights Bill which will require any refusal of a flexible working request to be reasonable, but the eight business reasons will remain the same. 

Carer’s leave

What has been proposed?

The Department will introduce a new carer’s leave on the same terms as is currently operating in GB, (see more here) namely:

• An employee with caring responsibilities will be entitled to one week of unpaid carer's leave every 12 months to care for a family member or dependant with a long-term care need
• Employees must provide notice to their employer unless in an emergency
• The notice period will be the earlier of twice the number of days of leave requested, or three days in advance of leave
• Employees taking carer's leave will have similar employment protections to other types of statutory leave (maternity, shared parental etc)

This is currently penned as unpaid leave, which will be disappointing to employees with caring responsibilities. However, the Department has made clear that this is ultimately intended as a paid right although this can only happen if the Executive can fund this itself, or if GB converts its own carer’s leave into a paid right and funding flows from there.

The British government has confirmed it will conduct a full review of the parental leave system as well as reviewing the benefits of introducing paid carers’ leave. The Department states its intention to lobby Westminster to introduce this as a statutory entitlement and independent research on the potential costs of paid leave has been commissioned.

The right to carer’s leave was introduced in GB in April 2024, which we wrote about here.

Neonatal care leave and pay

What has been proposed?

The Department will give eligible working parents a new statutory right to time off when a newborn requires neonatal care, the main provisions will be:

• The right will apply from the first day of employment
• Available to parents of babies admitted to neonatal care in the first 28 days following birth, and who spend at least 7 continuous days in care
• A week of neonatal care leave (and pay if applicable) for each week the child is in care up to a maximum of 12 weeks
• To qualify for neonatal care pay, employees must be employed for 26 weeks and earn at least the Lower Earnings Limit (£125 per week at present)
• Pay will be at the statutory rate (currently £187.18) of 90% of average earnings (whichever is lower)
• Reasonable notice will need to be given to employers and some evidence of entitlement – guidance on this will follow.

Similar neonatal leave and pay rights came into force in GB last month, and employers are still getting to grips with how this new right operates in practice. We have further information about this here.

Protection from redundancy – pregnancy and family leave

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

What has been proposed?

The Department intends to extend this protection from redundancy to:

• 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/stillbirth/adoption.

This will significantly increase the number of employees with ‘protected status’ and with priority entitlement to suitable alternative employment in a redundancy scenario but would align rights of employees in NI and GB, which would also simplify redundancy processes for employers across both jurisdictions. See further on how this currently applies in GB here.

It is worth noting that the Employment Rights Bill in GB also gives the government powers to extend these protections to other dismissals and to other forms of family leave. The Department also now states its intention to incorporate such enhanced rights to ensure parity with GB in this area. The Department will engage further with stakeholders before determining the specific level of protection that should available here, and any changes will be subject to additional impact assessments.

Paternity leave

What has been proposed?

Paternity leave will be extended so that new fathers can take leave:

• from the first day of employment (removing 26-week qualification period)
• as two separate blocks of one week, or a single block of two weeks 
• at any time within the first 52 weeks of birth/adoption (rather than the current 56 days). 

Notice requirements will also be reduced to 28 days for each period of leave (down from 15 weeks) and the Department will also legislate to make it possible to increase the duration of paternity leave in the future. 

In GB, the Employment Rights Bill will also remove the 26-week qualification period, and employees will be able to take paternity leave and pay in addition to shared parental leave and pay. 

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