Employment Rights Act 2025: zero hours contracts 

On 2 June 2026, the Government published a new consultation on implementing the provisions in the Employment Rights Act 2025 relating to zero and low hours contracts: Make Work Pay: ending one-sided flexibility – reforms of zero hours and similar contracts. 

These provisions in the ERA 2025 are intended to address what the Government regards as “exploitative” zero hours contracts, and to redress the imbalance of what it terms “one-sided flexibility”. Note that the protections will also apply to workers on contracts that are “similar” to zero-hours contracts, below a certain hours threshold, as well as to agency workers.  

The Government recognises that some workers, such as students and people with caring responsibilities, need and value the flexibility of a zero hours contract. It is seeking to introduce a “baseline level of security” rather than banning such contracts. 

Secondary legislation is required to bring these provisions into force and to set out the details of how they will work in practice. Draft regulations will be produced following the outcome of the consultation. The implementation date is expected to be in 2027, but the exact date has not yet been confirmed. 

The new protections being introduced under the ERA are as follows. 

1. Guaranteed hours contract: a duty on employers to offer qualifying workers a ‘guaranteed hours contract’, to reflect the hours those workers (including agency workers) have worked over a defined reference period.  

2. Reasonable notice: a duty on employers to provide reasonable notice of shifts to qualifying workers. 

3. Compensation: a right for workers to receive compensation if their shift is cancelled, moved or curtailed at short notice. 

Agency workers were brought within the scope of these protections during the passage of the Employment Rights Bill through parliament, meaning that they will potentially have the right to be offered guaranteed hours by the hirer if they meet the eligibility criteria. The rules will apply slightly differently to agency workers, due to the more complex tri-partite arrangement between the hirer, the agency and the worker. 

Further information is available on the Government’s zero-hours contracts factsheet.  

1. Guaranteed hours contract 

To be eligible for being offered a guaranteed hours contract, a worker must either be on a zero-hours contract or have contracted hours below a defined threshold. Options being considered in the consultation range from a threshold of between eight hours and 48 hours per week. The Government has indicated that its preference will be for a threshold of between eight and 20 hours per week.  

Reference period 

If the worker works above this threshold over a defined reference period, and meets the regularity requirement (below), they will qualify for the right to be offered a guaranteed hours contract. The reference period is likely to be 12 weeks, although the Government is also seeking views on whether this period should instead be 26 or 52 weeks. 

The Government is considering two options for determining whether the regularity requirement has been met during the reference period: (1) working during a minimum number of weeks during the reference period (e.g. at least 8 out of 12 weeks), or (2) working both a minimum number of weeks and a minimum number of hours in excess of contracted hours.  

Guaranteed hours offer 

The consultation also asks whether the guaranteed hours offer – the total hours offered -should be based on the mean or median average hours worked over a reference period. It does not, however, deal directly with the question of the pattern of working hours that should be offered to the worker.   

Limited term contracts 

There will be no obligation to make an offer to a worker on a limited-term contract if it is both shorter than the reference period and the limited term is ‘reasonable’ (i.e. if the worker is performing a specific task or is needed for a specific event, or another temporary need). This would apply to seasonal workers, provided the contract is no more than 12 weeks. The Government is also seeking other examples of temporary needs that are not related to a specific task or event. 

Subsequent reference periods 

The consultation paper also considers the question of how subsequent reference periods would work. It suggests that after the initial 12-week reference period, the subsequent reference period – after which workers must be made a guaranteed hours offer if they meet the eligibility criteria – could be set at 12 weeks, 26 weeks, 52 weeks or some other period. It also asks whether there should be a break between the reference periods, rather than a new reference period following immediately after the previous one. 

Exemptions 

The Government is consulting on the very limited circumstances when employers will be exempt from the duty to make a guaranteed hours offer, for example, when an employer’s premises are flooded, and the employer is unable to trade during the reference period. It will also exempt certain groups of workers, such as those who have more than one contract with the same employer.  

Source: Ending one-sided flexibility: reforms of zero hours and similar contracts (page 16) 

2. Reasonable notice 

Eligible workers (on zero or a limited hours contract) will have the right to be given ‘reasonable’ notice of shifts, if they work below a defined hours threshold. For those directly engaged, options under consideration are a minimum of one to four weeks’ notice, or ‘other’.  

For agency workers, there is also the option of five days or less as a minimum period of notice, and certain hirers will be exempt from the duty to provide reasonable notice (e.g. a vulnerable individual receiving care from agency workers). 

3. Compensation  

The consultation is seeking views on what amounts to ‘short notice’ entitling workers to receive a payment for shifts cancelled, moved or curtailed. This notice period will be no more than seven days. The Government is also considering whether a separate ‘very short notice’ period should attract a higher payment. 

Compensation will be based on either a percentage of expected earnings or the National Minimum/Living Wage, with proposed options ranging from 10% to 80% of expected earnings, and 30% to 80% for very short notice.  

The Government is also seeking views on whether there should be any exceptions from the right to short notice payments. 

Enforcement of zero hours rights 

Enforcement of these new rights will be available in the employment tribunals, including the right to claim automatic unfair dismissal if the dismissal relates to the right to be offered guaranteed hours, and protection from unlawful detriment.  

The Government also suggests that the right to short notice payments will be enforceable by the new Fair Work Agency (FWA). The consultation proposes that employers in breach would be issued with notices of underpayment, requiring payment of arrears to workers plus a penalty of 50% of the arrears payable to the Government, up to a maximum of £5,000 per worker. 

The Birketts view 

These reforms mark a fundamental shift in how employers will need to manage their zero and low hours workforces in the future. Employers will need systems to track hours worked over defined reference periods, identify which (and when) workers qualify for a guaranteed hours offer, and be ready to issue legally compliant offers at the correct time.  

Long-term reliance on zero and low hours workers (including agency workers) is likely to become much harder to sustain. The legislation effectively requires employers to ‘crystallise’ working patterns over time into guaranteed hours. The key question for many businesses will be whether their current use of zero-hours contracts is genuinely short-term or sporadic, or whether it reflects an underlying staffing need that will now have to be formalised. 

It is clear from the consultation paper that there are still lots of finer details of the reforms yet to be decided, meaning that the practical impact for many employers is hard to determine at this stage. For example, a lower minimum hours threshold and shorter reference period will bring far more workers into scope, and significantly increase the administrative burden (and costs) for employers. This may be something that the Government will want to avoid, particularly in view of significant economic pressures affecting businesses typically engaging high numbers of zero or low-hours workers, such as hospitality and retail. 

Although the date for implementation is not yet confirmed, employers should begin to assess whether their current use of zero and low hours workers (including agency workers) may fall within scope and model how changes to workforce scheduling and contracting arrangements could mitigate the risks, depending on the final policy decisions. 

The consultation closes on 25 August 2026, following which the Government will consider the responses before producing draft implementing regulations.