UK’s leading HR advisor network says the changes that are intended to support workers risk deepening the jobs crisis and creating further financial pressures for SMEs. The network believes the plans are entirely one-sided and penalise rather than support small businesses; thereby stifling growth and risking further redundancies.

Plans to reform zero hours contracts by providing workers with guaranteed hours are both complex and potentially costly to small and medium sized businesses, according to the UK’s leading HR advisor network.

The HR Dept, whose 300 HR advisors support more than 6,000 SMEs throughout the UK, does welcome the Government’s commitment to improving conditions for the 1.2 million people* currently on zero hours contracts. But the network has serious concerns over the practical implications of the reforms for SMEs that it feels undermine the intended benefits.

According to The HR Dept, the proposals fail to adequately address the key issue of contractual certainty for workers because there is no consideration for the added costs associated with enforcing the changes through increased demand on management time, administration, additional resources, and system changes.

This, The HR Dept believes, could cause further distress for thousands of SMEs already under financial pressure who have genuine fluctuating worker demand, such as those in the hospitality, retail, transport, health and social care sectors.

Michaela Gartside, Director at The HR Dept, commented:

“There is a legitimate problem where people remain on insecure arrangements despite working genuinely regular, predictable and sustainable hours over a prolonged period. Rightly, the government is seeking to improve job security and predictability at work.

“But supporting that objective does not mean that the proposed automatic guaranteed-hours mechanism based on historic working patterns, is the most proportionate or effective way to address the problem.”

In June, the Government opened a consultation into reforming zero hours contracts, but anecdotal evidence from across The HR Dept’s client base of 6,000 SMEs shows that most were unaware it was taking place, and those who did found the 84-page document difficult to find and technically complex. This, say The HR Dept, has created a significant barrier to SMEs getting their voices heard.

“The consultation window has now closed, so we implore the Government to allow more time to properly engage the SME community – those who will be impacted the most by the reforms – before the implementation of any changes.

“If Government genuinely wants businesses to move away from inappropriate zero hours arrangements, it needs to help them understand why those arrangements exist and what viable alternatives are available.

“This is not simply a request to extend the timeline for change – it is about encouraging the Government to directly engage through trusted SME networks and ensure that all information concerning the planned changes is easily accessible, clearly understood, and complete with real world examples of how the changes might look in practice.”

The HR Dept recommends that the government:

 Reconsider the automatic guaranteed-hours mechanism and instead develop a robust right to request increased or more predictable contractual hours.

1. Require employers to genuinely consider requests and objectively justify refusal, with an effective route to challenge repeated unreasonable refusal where regular and predictable work continues.
2. Preserve genuine worker choice and actively promote alternative contractual arrangements, including longer periods over which guaranteed hours can be reconciled.
3. Use seven days as the normal expectation for reasonable shift notice, while retaining flexibility where shorter notice is objectively reasonable.
4. Apply cancellation compensation where a confirmed shift is cancelled, moved or curtailed less than 24 hours before it starts and the reason was reasonably within the employer’s control.
5. Leave the level of compensation to further consideration, including whether the principles underlying statutory guarantee pay could provide an appropriate proportionality benchmark.
6. Provide funded, practical SME support – including workforce planning, contractual alternatives, systems implementation and manager capability – while using technology and AI to help businesses interpret workforce data and identify appropriate contractual improvements, alongside a further period of meaningful, proactive SME engagement before finalising detailed regulations.

The HR Dept’s network of more than 300 advisors across the UK is lobbying their respective local MPs to ask for their support in giving SMEs the opportunity to voice their concerns over the planned reforms and work together with government to develop workable alternatives and support them to change.