Ministers urged to press ahead with ban on zero-hours contracts

Ministers should press ahead with a ban on zero-hours contracts, campaigners say, despite claims by business leaders that it would deter hiring and lock out more young people from the labour market.

Child Poverty Action Group (CPAG) and the union umbrella organisation the TUC were among eight signatories to a letter to the department of business and trade, calling on the government to “ignore the noise” from businesses, which want zero-hours contracts to remain.

Last year, the Employment Rights Act gained royal assent, but many of the detailed provisions were left blank, allowing ministers to phase in implementation over a period of years.

Peter Kyle, the business secretary, has overseen a delay in the launch of a planned consultation on zero-hours contracts that was due to begin in January. It is understood the department will ask for submissions before the end of the summer, before implementing new rules next year.

Business leaders are concerned that delays in the consultation process will not give them time to adjust their workplace practices, if new rules are agreed.

In the absence of a formal consultation process, the British Retail Consortium and UK Hospitality, the lobby group for restaurants and hotels, have written to Kyle saying reduced flexibility in work contracts will lead to fewer jobs.

A new report by the Institute of Directors showed 86% of business leaders believe the Employment Rights Act will have a negative impact on UK economic growth, up from 72% a year ago.

On Tuesday, Lord Wolfson, chair of the retailer Next, said that while he was in favour of eliminating zero-hours contracts in most sectors, the new rules would prove costly for retailers “because the risk is you then have to contract for those hours forever”.

More than a million people in the UK are working on a zero-hours contract basis, in areas from hospitality and warehouses to the NHS. Hundreds of thousands of them have worked for the same employer for years, the TUC says.

A report by the former health secretary Alan Milburn, due on Thursday, is expected to accuse the government of failing to meet the needs of young people out of work, education and training, putting further pressure on Kyle to show new employment laws will support job creation.

Paul Nowak, TUC general secretary, said many workers do not know how much they will earn each week, “and lack of security over hours makes it hard for workers to plan their lives, budget and look after their children”. Many are unable to get mortgages and other forms of cheap credit when employers can reduce their hours to zero.

Novak added that insecure work “also makes it harder for workers to challenge unacceptable behaviour by bosses because of concerns about whether they will be penalised by not being allocated hours in future”.

Alison Garnham, chief executive of CPAG, said: “All too often working parents find themselves without enough to make ends meet – as their hours are cut at a moment’s notice or they pay for childcare only to find their shifts are cancelled.

“These new rights could be a key tool in the fight against child poverty, giving parents the secure hours and notice of shifts they need. As part of its moral mission to reduce child poverty, now is the time for government to implement these rights fully and effectively.”

The TUC said the right to a regular-hours contract would not affect holiday jobs as it “is set to be based on a reference period over several months which will even out peaks and troughs”.

Other signatories to the letter include the women’s rights group the Fawcett Society, the employment thinktank the Work Foundation, and the campaigning organisations 38 Degrees and the Young Women’s Trust.

The business department was asked for comment.