Labour has been warned that its controversial crackdown on zero-hour contracts could eradicate seasonal work and put even 20-hour contracts under threat.

The government has said it could class 20-hour weeks as a low-hour contract and force firms to offer permanent terms after as little as 12 weeks of work.

Retail and hospitality firms have urged the government to make sure its guaranteed hours rules do not threaten the flexible work which they say offers vital pathways into employment for young people.

This comes as a former health secretary warns that the UK’s youth joblessness crisis is hurtling the country towards an “economic catastrophe”.

Labour’s guaranteed hours rules would give qualifying workers the right to demand a permanent contract if they are on zero-hour or low-hour terms.

The government’s consultation on the new rules, published on Tuesday, says that it wants this low-hour limit to be set somewhere between eight and 20 hours per week.

Seasonal hiring at risk

Labour claims that companies “having a competitive advantage by offering poor terms and conditions of employment is bad for business, bad for workers and bad for growth”.

But one industry source said classing a 20-hour work week as a low-hour contract would be “disproportionate” and could force employers to repeatedly offer permanent contracts to hundreds of workers.

The government is set to define a set number of weeks for which a person will have to work a low-hour contract before they qualify for a permanent role. 

Retailers have warned that a reference period any lower than 26 weeks could threaten their ability to hire seasonal workers during busy periods like Christmas. 

The government has said its preference is for the reference period to be 12 weeks, or three months.

Andrew Griffith MP, Shadow Secretary of State for Business and Trade, said: “This consultation risks ending the role of seasonal and temporary workers in the labour market. Faced with more costs and employment red tape, many employers will simply offer fewer flexible roles.

“Once again, young people will be hit hardest at exactly the same time the Government says it wants to cut the shocking number of young people not in education, employment or training under their watch. 

Proposals ‘overstep the mark’

Tina McKenzie, policy chair of the Federation of Small Businesses, said the terms of the government’s consultation “blur the lines between insecure work and the day-to-day flexibility many employers value.”

The new terms of reference “move these reforms well beyond their original purpose and raise a fundamental question about where the Government intends to draw the line,” she said.

“Many employers […] will be asking whether a policy designed to tackle a specific issue is now at risk of sweeping in millions of workers it was never intended to cover,” she added.

The British Retail Consortium (BRC), a trade body which represents over 200 major retailers, urged the government to avoid deterring “good employers” from hiring.

Helen Dickinson, the organisation’s chief executive, said: “With over a million young people out of work or education, [the] government cannot afford to get this wrong. 

“Retail is a lifeline into work for hundreds of thousands of young people each year. But if [the] government piles on cost and risk, many of those entry-level jobs won’t be there in future.” 

Retail, hospitality and leisure bosses have piled pressure on Labour in recent days to reverse the hike to employer national insurance contributions which they say made it harder than ever to hire young people.

Labour ‘risks spiking youth unemployment’

Ben Wilmott, head of public policy at the Chartered Institute of Personnel and Development, said the government must commit to “meaningful consultation” on the proposals.

“If the final regulations are too difficult to manage, employers will simply find other ways to achieve workforce flexibility,” he said.

The BRC has previously warned that the zero-hour crackdown could block young people’s paths into employment by outlawing the flexible, entry-level roles they rely on.

Business secretary Peter Kyle and employment rights minister Kate Dearden, announcing the consultation, claimed they “are not banning zero hours contracts as we do not want to take away flexibility for these groups”.

“We have a moral duty to end practices which hurt both workers and employers by undermining the trust our economy needs to succeed,” they said.

A government spokesperson said: “Reducing uncertainty over hours and pay will boost living standards for millions of workers, benefit businesses and support economic growth.

“Those offered guaranteed hours will be able to turn them down and remain on their current arrangement if they wish, and employers and workers can express their views on what the impact of different options could be by responding to the consultation.”