Labour’s ‘new deal for workers’ will not fully ban zero-hours contracts | Labour

Labor has faced criticism over plans for a loophole that would allow staff to work on zero-hours contracts, despite the party vowing to ban them entirely.

Keir Starmer’s party is preparing to announce details of its pledge to overhaul workers’ rights if it comes to power – a central part of its early plans for government but the subject of fierce lobbying by business.

Labor has repeatedly promised to ban zero-hours contracts, under which an employer is not obliged to provide a minimum number of working hours. But as part of the revised plans, although employers will be required to offer a contract based on regularly worked hours, workers can choose to remain on zero hours.

The move raised fears of a power imbalance that employers could use to pressure workers into accepting uncertainty around pay and working hours.

The IWGB union, which represents gig economy workers, said it feared anything short of a total ban on the practice would leave room for exploitation.

“Workers are often forced to accept poor conditions and precarious contracts across sectors due to desperation and the extreme power imbalance between employers and employees in the UK,” said union general secretary Henry Chango Lopez. “That power imbalance will persist under these new proposals.”

Labor “a new deal for working people” was first announced by Starmer’s replacement, Angela Rayner. But Starmer and his chief of staff, Sue Gray, have come under internal pressure to back away from a commitment to begin legislating for him within 100 days – including from some senior party figures – to allow more time for consultation on the various and complex definitions of employment status.

The Unite union said Labor must “expressly recommit to what it has already promised”, including legislation within 100 days of coming into force.

A Labor spokesman said: “We see this as a central part of the election campaign and what we hope to do when we go into government. Green Paper Updates [published in 2022] are agreed by the National Policy Forum. This is what we will adhere to and implement in government.

“If you choose to continue with a zero-hours contract, you can do so. That’s right [employees will have] to have that contract and it cannot be abused… The Act will set out the minimum standards that are expected and that will be applied in the same way that all employment law is applied.’

Other unions and the TUC are ready to accept the current iteration of the new deal, which Starmer has promised will not be “watered down”.

But officials said they would not tolerate further weakening of the proposals, which some business groups are lobbying for. The TUC’s Paul Novak said the new deal was urgently needed, adding: “We expect Labor to deliver it with a jobs bill in the first 100 days.”

Unison, the UK’s biggest trade union, said only “exploitative bosses have anything to fear” from the changes. “Consolidation of the promised measures is fine, but no dilution of the content will be,” a spokesman said.

Labor is understood to be finalizing a dossier on the implementation of the new deal, combining the initial proposals in the green paper and the changes agreed at the National Policy Forum (NPF), including zero hour. Affiliated unions have signed up to the proposals, with the exception of Unite, which abstained in the NPF vote.

Sharon Graham, the general secretary of Unite, said: “If Labor does not commit explicitly to what it has already promised, which is that the new deal for workers will be fully implemented within the first 100 days of the mandate, then there will be a red line be crossed.

“Labour’s pledge to provide a direct right of access for unions and a very simplified route to recognition, and therefore the right to negotiate, is the litmus test for Unite. This is a non-negotiable political issue.”

Labor sources defended the changes and said “zero hours” were difficult to define in law. “It’s about how you deliver on the core commitment to address these exploitative practices so that it works in practice and protects against loopholes,” one official said.

Another party source said they recognized there could be “risks” associated with unscrupulous employers, but said the legislation would also address that concern by creating a new single enforcement agency, which would mean it would not be only “rights on paper”.

The party also plans to hold further consultations on the legislation that will be needed for its most ambitious plan, to create a “single status” for the worker.

Under the current proposals, the need to serve a qualifying period before receiving basic entitlements such as sick pay, parental leave and protection against unfair dismissal will no longer apply.

However, Labor is expected to make clear that performance trial periods will continue to apply even as workers are given first-day entitlements to sick pay and parental leave. The party will also admit that seasonal workers will be a “different category” when it comes to reforms.

The party held a flurry of meetings with business groups about the proposals, but the clarifications could revive criticism from the left that the party is softening some of its more radical policies, months on reneged on its pledge to spend £28 billion a year on green investment.

But other union officials said they believed the party had fended off some of the more aggressive attempts by some business groups to weaken the proposals. “We really see this as providing an effective ban.” [on zero hours]” said one employee.

Starmer told delegates at the Usdaw trade union conference on Tuesday that he was not watering down any of his proposals. “We are about to begin the greatest equalization of workers’ rights this country has seen in a generation,” he told the conference. “This is what our New Deal for working people will achieve.”

Asked if the plans were being watered down, he said no, adding: “We have the bill, it’s ready to go and I look forward to the moment when Angela Rayner stands at the despatch box to introduce the New Deal legislation that this movement is desperate for needed and fought for so many years.”

Both Starmer and the shadow chancellor, Rachel Reeves, have been the subject of intense lobbying efforts by business groups, including the CBI, on some of the policies.

Former New Labor cabinet minister Peter Mandelson is among those who have pushed for a rethink on many of the proposals, saying at a dinner last year that the party must not give up the flexibility of the labor market in a time of technological change.

The details come after a series of meetings between senior Labor figures and the ‘B5’ panel of business trade groups – the CBI, British Chambers of Commerce, Make UK, the Federation of Small Businesses and the Institute of Directors – as part of the party’s preparations for government.

A senior source at one of the employers’ groups said: “We are not trying to change the essence of what they want to do. We’re just trying to say that if you do this, let’s work through the consequences together, so you go in together with your eyes open.