Labour’s Zero-Hours Ban Faces Backlash from Hospitality Leaders Over Economic Impact Concerns

Labour has been cautioned that its plan to restrict zero-hours contracts could lead to economically damaging "unintended consequences" for businesses, particularly in the hospitality and leisure sectors.

Labour has been cautioned that its plan to restrict zero-hours contracts could lead to economically damaging “unintended consequences” for businesses, particularly in the hospitality and leisure sectors.

Industry leaders warn that the proposed ban may impose unnecessary administrative burdens, complicating hiring processes and hindering business expansion efforts. Stephen Burns, CEO of Hollywood Bowl, which operates 10-pin bowling alleys, expressed concerns that the policy could deter staff attraction in businesses like his.

Burns stated, “I’m not a fan [of the policy]. Many businesses like ours are very seasonal and rely heavily on team members who prefer flexibility over forced hours they can’t commit to.”

Labour has pledged to eliminate “exploitative” zero-hour contracts as part of its workers’ rights agenda ahead of the upcoming election, branding it a “new deal for working people.” However, business leaders fear that such measures could make it more challenging to recruit staff in seasonal industries such as leisure, hospitality, and retail.

Discussions between business leaders, unions, and Labour representatives have been ongoing in recent months to address this policy, one of Labour’s key pledges on workers’ rights, ahead of the general election in July.

Burns elaborated, “Currently, it’s easy for someone to start working; we ask them their preferred hours and build our rotas accordingly. The flexibility of having many people on the books during peak periods is lost with fixed contracts, creating a substantial additional workload.”

Approximately 1.1 million people in Britain are on zero-hours contracts, according to The Work Foundation at Lancaster University, representing roughly 3.4% of the workforce. Proponents argue that these contracts offer flexibility, allowing individuals to choose their working hours. Critics, however, contend that they provide “insecure” employment.

Labour’s plan does not aim to completely outlaw zero-hours contracts but will allow companies to offer employees the option to remain on such contracts to ensure seasonal workers are not adversely affected. However, this approach has drawn criticism from union leaders, who argue that it may still enable abuse by unscrupulous employers.

Kate Nicholls, CEO of UK Hospitality, representing pubs, restaurants, and nightclubs, emphasised, “The key will be ensuring the policy’s details are correct. No one wants to impose burdens on businesses that undermine good employment practices.”

Mohammad Jamei, Director of Economic Policy at the Confederation of British Industry (CBI), added, “Any proposed changes to employment laws must be balanced against the potential loss of opportunities. Businesses need to be able to take risks to open new premises and grow without excessive concerns about significant changes in employment law.”

Jamei noted that the National Living Wage increase effective from April has already led to reduced investments due to higher labour costs. “This has posed a challenge for many businesses in undertaking capital investment on plants and machinery, despite the introduction of full expensing from November last year,” he said.

The CBI has called for a new remit for the Low Pay Commission to ensure that minimum wage requirements do not hinder business investment.

A Labour spokesperson responded, “Businesses will still be able to hire seasonally, and workers can remain on variable contracts if that suits them best – but we won’t tolerate one-sided flexibility. Labour will make work pay by banning exploitative zero-hours contracts and giving workers the right to a contract reflecting the hours they regularly work.”