Earlier this year (January 2025), soon after the draft Employment Rights Bill was first published, we explained the Bill’s complex and, in places, controversial provisions regarding zero-hours contracts and guaranteed hours. Read our insight.
Since then, the ERB has been subject to close scrutiny and debate in Parliament and this resulted in some government amendments on 07 July, including to the Bill’s ‘guaranteed hours’ provisions. Most recently, the House of Lords Report Stage took place over four sittings on 14, 16, 21 and 23 July, where, unexpectedly, the House of Lords passed further, non-government, amendments to key areas of the draft Bill, again including the ‘guaranteed hours’ provisions.
Context of the House of Lords amendments to the overall progress of the Bill
The House of Lords amendments will be considered by the House of Commons after the summer recess. However, these are a different animal to the government’s own amendments. The government’s Commons majority effectively means that that House is likely to wave through all government amendments and reject amendments from the House of Lords that are not aligned with the government’s policy goals.
In such circumstances where the Commons rejects House of Lords amendments, a process known as ‘ping pong’ ensues: the House of Commons will return the Bill to the Lords, which will then need to either concede to the Commons’ / government’s will or, less likely, insist that its amendments are given further consideration by the Commons. This continues until an accord is reached on all aspects of proposed amendment and, finally, the Bill is passed, ready for Royal Assent.
Filling in the guaranteed hours gaps
The right to guaranteed hours in the draft Bill applies to Zero-Hours workers and ‘low hours’ workers whose guaranteed hours fall below a minimum threshold. The government chose not to define ‘low hours’ in the Bill, stating that this detail, along with many others, would be clarified in future secondary legislation.
However, the House of Lords has pre-empted this, proposing an amendment that specifies that ‘low hours’ should mean a contractual entitlement to ‘eight hours a week or fewer’. This is a particularly important insertion, as the point at which the ‘low hours’ threshold is set is crucial to how the new right will work and how empowering, or otherwise, it will be for workers.
Similarly, the ERB provides that a worker is entitled to payment where a shift is cancelled or curtailed at ‘short notice’ but does not define what this means. The House of Lords has grasped the nettle and suggested that ‘short notice’ should mean less than 48 hours before the shift is due to start.
This should be distinguished from the related ERB right to receive ‘reasonable notice’ of shifts. Again, ‘reasonable notice’ is not defined in the draft Bill, but this ‘gap’ has not been addressed by the House of Lords.
A ‘right to request’?
The ERB, as drafted by the government, placed the onus on the employer to offer the new guaranteed hours contract to the employee. The employee could either accept the offer or refuse it and remain on their existing contract. This was positioned as a ‘rolling right’, requiring the employer to continually monitor working hours and make a new guaranteed hours offer periodically (probably every 12 weeks, although this is subject to confirmation).
There was no option for a worker to ‘opt-out’ of the process by confirming their satisfaction with a zero-hours arrangement or their lack of interest in increasing their guaranteed contractual ‘low hours’. The employer was required to continue to make offers, even if the worker refused each time. This prompted concern from business groups that the provisions were excessively onerous for employers.
The House of Lords has taken action on this feedback, remarkably passing an amendment to reshape the obligation to offer guaranteed hours as a ‘right to request’ guaranteed hours, shifting the onus onto workers to pursue the right if they wish, and significantly reducing the administrative burden on employers. Under the amendment, where a request is made, an employer must grant it.
During a debate on this issue Lord Goddard, who proposed the amendment, argued that while workers should be protected from precarious or insecure working conditions, ‘this should not come at the expense of sectors where flexibility is essential, and many workers are content with those arrangements’. Hospitality, retail, tourism and theatre were given as examples. However, the government / Commons is thought to be unlikely to agree to such a significant change to a flagship policy; see further below.
Scope for exceptions clarified – a bit
The government has made amendments relating to the Secretary of State’s power (under the original Bill) to introduce, via further regulations, exceptions to an employer’s obligation to offer guaranteed hours to a zero-hours/low hours worker.
Essentially, the amendments mean that, when making any future exceptions, the Secretary of State will have to take into account a non-exhaustive list of factors including the benefit to workers of receiving a guaranteed hours offer; and, on the other hand, the potential adverse effect of the obligation to make such an offer on employers facing ‘exceptional circumstances’.
There is no definition or explanation put forward of what ‘exceptional circumstances' might mean, or what making an exception in these circumstances might look like and it is hoped this will receive attention when the Bill returns to the House of Commons.
Agency workers
Broadly, the ERB provides that where an offer of guaranteed hours is made to an agency worker, the relationship will change from agency worker/hirer to employee/employer. The terms and conditions of that offer must, taken as whole, be no less favourable than those the agency worker had when working under the supervision/direction of the hirer prior to the offer. This is to prevent the agency worker’s terms and conditions deteriorating when they take on guaranteed hours.
However, it is not unusual for agency workers to be paid at a higher rate than direct hires, which gives rise to a potential for pay anomalies and disparities. Recognising these potential issues, the government introduced amendments so that the ERB now contains four alternate ‘conditions’ which are essentially alternative methods of identifying the level of pay the employer would be required to offer.
The new framework is a very complicated read but means an employer must offer pay at a level that is no less favourable than the pay it offers to comparable direct hires. This may result in a reduction in pay for the individual agency worker but protects employers from being ‘locked in’ to agency rates, and guards against workforce pay disparities developing over time.
Where there are several comparators with different pay levels, the employer will have to justify its decision in writing if it offers pay at one of the lower comparator rates.
Next steps: ping pong issues for guaranteed hours
The amended ERB will now go back to the House of Commons for consideration by MPs, where the House of Commons Third Reading of the Bill is scheduled for 3 September 2025.
After this, the period of ‘ping-pong’ will take place for any House of Lords amendments to be ironed out and the text of the Bill to be finalised.
As a prime example, the change from an obligation to offer guaranteed hours to a ‘right to request’ does not have government backing and arguably changes the fundamental character of the provision, pushing responsibility back to workers (who may have limited understanding of the options available). Any such perceived dilution of this flagship right is unlikely to be palatable to the government and, therefore, by extension is likely to be rejected and ‘pinged’ back to the House of Lords.
Despite their provenance, even some of the government’s own amendments are likely to meet with stiff scrutiny and even resistance in the House of Commons and will require further refinement or clarification if they are to become workable law.
Next steps: further consultation on guaranteed hours
Some limited consultation on ‘guaranteed hours’ has already taken place, focussing on the discrete issue of how the right to guaranteed hours will apply to agency workers. However, according to the recently published Implementation Roadmap there will be further consultation on these aspects in Autumn 2025, with the provisions not anticipated to come into force before 2027.
With this consultation pending, the government is also very unlikely to accept the various ‘definitions’ proposed by the House of Lords (see ‘Filling in the gaps’ above) without seeking stakeholders’ views first. However, the Lords’ amendments, even if not accepted, will provide a useful jumping off point for debate.
Previous insights in our ERB Series
Employment Rights Bill Series: Amendments to the Fire and Re-hire provisions (Legal Director, Ross Hutchison) 22 July 2025
Employment Rights Bill series | July amendments: NDA changes and more (Principal Associate, Louise Singh) 13 July 2025
Employment Right Bill Series: Implementation Roadmap – a long and winding road (Partner, Mark Landon and Principal Associate, Suzanne Nulty) 8 July 2025
Employment Right Bill Series: House of Lords Stages completed (Principal Associate, Suzanne Nulty) 26 June 2025
Employment Rights Bill Series: The House of Lords Stages so far (Principal Associate, Suzanne Nulty) 6 June 2025
Employment Rights Bill Series: Employment Rights Bill moves from Commons to Lords (Principal Associate, Suzanne Nulty) 25 March 2025
Employment Rights Bill Series continued (Principal Associate, Suzanne Nulty) 7 March 2025
Employment Rights Bill Series: Zero Hours Contracts and Guaranteed Hours: A Zero-Sum policy? (Principal Associate, Louise Singh) 27 January 2025
Employment Rights Bill Series: Small but significant changes to the statutory sick pay system (Principal Associate, Ashley Powis) 13 December 2024
Employment Rights Bill Series: First set of proposed amendments: what it means and what to expect (Principal Associate, Suzanne Nulty) 6 December 2024
Employment Rights Bill Series: Further rules on fair tipping (Principal Associate, Ashley Powis) 3 December 2024
Employment Rights Bill Series: Dismissal and Re-engagement - Tying the Hands of employers? (Legal Director, Ross Hutchison) 22 November 2024
Employment Rights Bill Series: The Fair Work Agency (Principal Associate, Suzanne Nulty) 15 November 2024
Employment Rights Bill Series: The Pendulum Swings on Industrial Relation (Partner Andrew Forrest and Principal Associate, Louise Singh) 8 November 2024
Employment Rights Bill Series: Day 1 right to claim unfair dismissal (Principal Associate, Suzanne Nulty and Associate, Lauren Barchet) 25 October 2024
Employment Right Bill Series – Flexible Working “Further Flexion” (Principal Associate, Suzanne Nulty) 21 October 2024
The Employment Rights Bill Series: 2024 – What’s in, What’s out, and What’s next (Principal Associates, Louise Singh and Suzanne Nulty) 11 October 2024
If you have any questions or concerns about any aspect of the Employment Rights Bill, please do not hesitate to get in touch with our Employment law Solicitors.
