Predictable Terms and Conditions Act

The Workers Predictable Terms and Conditions Act introduces new provisions in the Employment Rights Act 1996 that give certain workers, agency workers and employees a new statutory right to request a predictable working pattern. The Act is likely to have the greatest impact on industries where shift patterns vary as rotas change, and where work is very casual in nature. However, whether it will amount to much more than another “box ticking” exercise remains to be seen.

UPDATE 2 SEPTEMBER 2024
The Predictable Terms and Conditions Act received Royal Assent on 18 September 2023 and was expected to be implemented in September 2024. Labour promised in the Election Manifesto to end ‘one sided flexibility’ between employers and workers by ensuring that ‘all jobs provide a baseline level of security and predictability’ and for workers to ‘have the right to have a contract that reflects the number of hours they regularly work, based on a twelve-week reference period’. They have now said this legislation does not go far enough and whilst they could have used this Act to quickly make some of their intended changes and then strengthen the Act to fully comply with their proposals; they have instead chosen to repeal the Act and start again.

Read more about Labours Proposed Changes to Employment Law

Background To The Predictable Terms and Conditions Act

The Predictable Terms and Conditions Act addresses concerns raised by the 2017 Taylor Review and subsequent Good Work Plan regarding so-called “one-sided flexibility”, although it does not fully embrace the proposals that were made at that time. It builds on a 2015 ban on exclusivity clauses in zero-hours contracts, which left unaddressed a related concern about workers having to be on “standby” for shifts that may never come. The Good Work Plan proposed a right for workers to request a more predictable and stable contract after 26 weeks’ service, and a government consultation followed in 2019.

The government agreed to introduce legislation to achieve this and consulted on it in 2018 and it was included in the 2019 manifesto and formed part of the Employment Bill announced during the 2019 Queens Speach. Since the Employment Bill was first proposed there have been various consultations and government announcements. However, the bill failed to make it into the Queen’s Speech that was delivered by Prince Charles on 10 May 2022. The government consequently supported a number of private member’s bills to bring about some of the changes included in the 2019 manifesto and Employment Bill.

The Predictable Terms and Conditions Act

The Predictable Terms and Conditions Act introduces a new statutory right for certain workers to request a predictable work pattern. These will ‘sit’ within the flexible working provisions in the Employment Rights Act 1996 and contain similar steps to those employees use to request flexible working.

Eligibility

Under the Act, a worker may apply for a change to their terms and conditions of employment with the purpose of obtaining a more predictable working pattern if:

• They have been employed by the same employer (whether or not under the same contract) at some point during the month immediately leading into a “prescribed period”, which ends with the making of the application. The “prescribed period” will reflect the requirement for 26 weeks’ employment within the current flexible working regime;
• There is a lack of predictability as regards any part of their work pattern (the work pattern being the number of working hours, the days of the week and the times on those days when the worker works, and the length of the worker’s contract);
• The change relates to their work pattern – hours, days, fixed-term contract period or any other aspect that could be set out in further regulations; and
• Their purpose in applying for the change is to get a more predictable work pattern.

Given that the Act concerns workers with unpredictable working patterns, they will not have to have worked for their employer continuously during the 26 prescribed period.

An application must state that it is a request for a more predictable working pattern, and specify the change applied for and the date on which it is proposed it should take effect.

The Act does not contain other earlier government commitments to introduce a right to reasonable notice of working hours and compensation for shifts cancelled without reasonable notice.

Agency Workers

The Act contains a similar set of rights for agency workers:

• An agency worker may be able to apply to a temporary work agency for a more predictable working pattern where they have had a contract with the agency at some point in the month immediately before a ‘prescribed period’ (to be set out in regulations).
• If the agency worker has worked for a hirer in the same role continuously for 12 weeks (within a period which will be set out in regulations) they may also be able to apply to the hirer for a contract of employment, or another worker’s contract, which is more predictable than their current working pattern.

Restrictions

In line with amendments to the flexible working regime, qualifying workers will be able to make two applications in a rolling twelve month period in respect of a particular employer, work agency or hirer.

If the flexible working request would result in a more predictable contract, it is intended that this would also take up one of the two applications under the Workers (Predictable Terms and Conditions) Act. If it does not do so, the worker could make up to two flexible working requests and two separate requests under this Act. However, practically speaking, it might not be straightforward to determine whether a request meets the criteria for both a flexible working request and a request to “improve predictability”.

In both cases, the worker can ask to fix the minimum number of hours they work each week, the days they work and/or the period they are contracted to work. In this context, a fixed-term contract of 12 months or less will be treated as lacking predictability even if it already fixes the number of hours and/or days of week the worker is required to work. This means that fixed-term workers will be able to ask their employer to extend the length of their contracts.

TOP TIP

Many requests are likely to overlap the flexible working and predictable terms and conditions regimes. To avoid breaching these statutory rights allow a worker to make a total of four requests in a 12 month period, two under the flexible working regime and two under the predictable terms and conditions regimes.

What Is Meant By A ‘Lack Of Predictability’?

The Act contains no definition of “predictability” but appears to capture anyone whose hours or days vary in a way that provides them with an absence of certainty. For example, as well as casual workers with no certain hours, someone with an “annualised hours” contract that guarantees them a certain number of hours over a 12-month period would potentially be caught if the way in which they work those hours varies over time at the employer’s discretion. Similarly, someone whose hours are determined by a rota that varies unpredictably from week to week or month to month as directed by the employer would apparently also be in scope. By contrast, someone who works a shift pattern or to a rota that varies but in a way which is predictable – for example, they always work three weeks in a row on days, then a fourth week on nights, and that pattern repeats itself – would be outside. Other than that, it seems that a ‘lack of predictability’ will cover any worker whose hours or days vary in a way which provides them with uncertainty, such as:

• Casual / zero hours workers without a guaranteed number of hours;
• Annualised hours workers if the employer has discretion over the working pattern;
• Workers whose hours are determined by a shift pattern or rota, where that pattern / rota varies unpredictably.

Additionally, where a worker is on a fixed-term contract of less than 12 months, a worker may request that the term is extended so that the contract is longer than 12 months or becomes permanent. The view taken seems to be that a contract of less than 12 months is intrinsically less predictable in nature, but this may lead to an influx of requests where businesses rely upon relatively short fixed-term contracts.

The Predictable Terms and Conditions Act Framework

The request for a more predictable working pattern might relate to:

• Number of hours they work in a week,
• Days of the week on which they work,
• Start and finish times,
• Period for which they are contracted to work, or
• Other aspects of a pattern that may be prescribed by Regulations.

Once a worker has made an application setting out the terms they want and when they want them to start, their employer, agency or hirer has a month to reach a decision. Any appeal has to be dealt with within that month which means that employers will have to act quickly. In contrast to the flexible working regime the timescale is only one month and there is no ability to agree an extension to the timescale of one month.

Employers Responsibilities

Employers will have to:

• Consider the request, and
• Hold a first and subsequent meeting with the worker including an appeal stage.

Rejecting An Application

An application may only be rejected for specific reasons, which are currently:

1. The burden of additional costs;
2. Detrimental effect on ability to meet customer demand;
3. Insufficiency of work during the periods the worker proposes to work;
4. Detrimental impact on the recruitment of staff;
5. Detrimental impact on other aspects of the employer’s business; or
6. Planned structural changes.

If the worker’s contract terminates during the one month ‘decision period’ there are then some additional acceptable grounds for refusing a request such as the employee has resigned or has been dismissed for a ‘qualifying reason’ which means one of the five potentially fair reasons set out in s98 of the Employment Rights Act. The employer must also act reasonably.

Recruitment agencies can reject applications on the same grounds (other than redundancy). And, the hirer can reject the application if the agency worker has refused to continue to work for it (other than where the employer has fundamentally breached their contract) or it has asked the agency to stop supplying the worker to them for legitimate reasons.

Accepting An Application

If the application is accepted, the employer must provide the worker with a new contract reflecting the agreed change to their working pattern within two weeks of accepting the request.

Remedies

Workers will be able to complain to an employment tribunal if their employer fails to follow the framework, does not handle the request in a reasonable manner, wrongly treats the request as withdrawn, dismisses or treats the worker poorly because of their request, or rejects the application on the basis of incorrect facts. If successful, the employer could be ordered to reconsider the request or the employee could be awarded compensation.

The amount of compensation will be set by regulations and could be limited to 8 weeks’ pay as it is under the flexible working regime. It remains to be seen how effective a remedy this is likely to be: claims for breach of the flexible working procedural requirements are rare, and the real power that flexible working applications have is the possibility of an indirect discrimination claim if they are refused. There is no such obvious angle of attack where a request is refused under predictable terms and conditions regime.

In Practice

The new right will have the most impact in sectors where the use of casual workers and changeable shift patterns / rotas is widespread, and on businesses using short fixed-term contracts or agency workers. It is likely to lead to an increased focus on how best to manage these type of working arrangements.

Casual workers on a rota with others with ‘too few’ hours, might make requests at the same time as their colleagues. Any difference in treatment would have a potential discrimination angle. Giving one worker more hours because they are considered more of an asset to the business could give rise to arguments that this decision has been made due to a protected characteristic. Would an employer minded to increase one worker’s hours, not others, have to go through a process akin to scoring in a redundancy exercise in order to justify its decision, if challenged?

The Act only provides for the right to ask for a more predictable working pattern, not a right to a predictable working pattern. However, organisations which engage individuals on unpredictable working patterns will need to establish policies and procedures to deal with requests. They should also be aware that, if employment status isn’t clear, an individual might claim worker status while making an application for a more predictable working arrangement.

What Other Changes Are On The Governments Agenda?

The Act departed from some of the key proposals originally tabled in the 2019 government consultation on measures to address one-sided flexibility. These included a right to reasonable notice of work schedules and compensation for shift cancellations without reasonable notice. Similar measures already apply to EU workforces pursuant to the EU Directive on transparent and predictable working conditions, which had to be implemented by August 2022. Meanwhile, the Labour Party have stated that they would ban zero hours contracts altogether. Employers with atypical workers will need to keep a close eye on developments.

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