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

Labour is facing criticism over plans for a loophole that would allow employees to work under zero-hours contracts, despite the party having pledged to ban them entirely.

Keir Starmer’s party is preparing to announce details of its promise to overhaul workers’ rights if it gets into power – a centrepiece of its early plans for government, but subject to fierce lobbying from businesses.

Labour has repeatedly promised to ban zero-hours contracts, under which an employer is not obliged to provide any minimum number of working hours. But as part of its revised plans, although employers would be required to offer a contract based on regular hours worked, workers could opt to stay on zero hours.

The move has triggered fears of a power imbalance that employers could exploit to pressure workers into accepting insecurity around pay and working hours.

The IWGB union, which represents gig economy workers, said they feared anything less than an outright ban on the practice would leave scope for exploitation.

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

Labour’s “new deal for working people” was first announced by Starmer’s deputy, Angela Rayner. But Starmer and his chief of staff, Sue Gray, have come under pressure internally to drop the commitment to begin legislating for it within 100 days – including from some senior party figures – in order to give more time to consult on the different and complex definitions of employment status.

The Unite union said Labour should “explicitly recommit to what they have already pledged”, including legislating within 100 days of power.

A Labour spokesperson said: “We see this as a central plank of the election campaign and what we hope to do when we get into government. The updates to the green paper [published in 2022] have been agreed by the National Policy Forum. That is what we will be sticking with and implementing in government.

“If you choose to carry on with a zero-hours contract, you can do so. It is a right [employees will have] to have that contract, and it would not be able to be abused … The law will set out the minimum standards that are expected and that will be enforced in the way all employment law is enforced.”

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

But officials said they would not tolerate any further weakening of the proposals, which some business groups have been lobbying for. The TUC’s Paul Nowak said the new deal was urgently needed, adding: “We expect Labour to deliver it with an employment bill in the first 100 days.”

Unison, the UK’s biggest trade union, said it was only “exploitative bosses that have anything to fear” from the changes. “Consolidating the promised measures is fine, but any watering-down of the contents won’t be,” a spokesperson said.

Labour is understood to be finalising a dossier for the implementation of the new deal, combining the original proposals in the green paper and the changes that were agreed at the National Policy Forum (NPF), including on zero hours. Affiliated trade unions have signed off the proposals, apart from Unite, which abstained at the NPF vote.

Sharon Graham, the general secretary of Unite, said: “If Labour do not explicitly recommit to what they have already pledged, namely that the new deal for workers will be delivered in full within the first 100 days of office, then a red line will be crossed.

“Labour’s vow to deliver a straightforward right of access for trade unions, and a much-simplified route to recognition and therefore the right to negotiate, is the litmus test for Unite. It’s a political non-negotiable.”

Labour sources defended the changes and said “zero hours” had been difficult to define in law. “This is about how you implement the headline commitment to tackle these exploitative practices so that it works in practice and guards against loopholes,” one official said.

Another party source said they recognised there could be “risks” involving unscrupulous employers, but said the legislation would also tackle that concern by creating a new single enforcement body which would mean these would not just be “paper rights”.

The party is also planning to do further consulting on the legislation that will be required for its most ambitious plan, to create a “single status” of worker.

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

However, Labour is expected to clarify that probationary periods for performance will still apply, even where workers are given day-one rights to sick pay and parental leave. The party will also acknowledge that seasonal workers will be a “different category” when it comes to the reforms.

The party has held a flurry of meetings with business groups over the proposals, but the clarifications could revive criticism from the left that the party is watering down some of its more radical policies, months after it dropped its promise to spend £28bn a year on green investment.

However, other trade union officials said they believed the party had seen off some of the more aggressive attempts by some business groups to weaken the proposals. “We do see this as a delivering an effective ban [on zero hours],” one official said.

Starmer told delegates at the Usdaw trade union’s conference on Tuesday that he was not weakening any of his proposals. “We will embark on the biggest levelling up of worker rights this country has seen for a generation,” he told the conference. “That’s what our new deal for working people will achieve.”

Asked if the plans were being watered down, he said “no” and added: “We’ve got the draft legislation, it’s ready to go, and I look forward to that moment when Angela Rayner stands at the dispatch box to introduce the legislation on the new deal that this movement so desperately needed and fought for for so many years.”

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

The former New Labour cabinet minister Peter Mandelson is among those who had been urging a rethink of many of the proposals, telling a dinner last year that the party should not abandon flexibility in the labour market at a time of technological change.

The details come after a series of meetings between senior Labour figures and the “B5” panel of business trade groups – the CBI, the 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.

One senior source from one of the employers’ groups said: “We’re not trying to change the grain of what they want to do. We’re just trying to say, if you do this, let’s work through the consequences together so you go in collectively eyes open.”