Zero-hour and other flexible contracts have allowed employers to respond to changing demand for a long time. For small businesses in particular, casual and low-hour workers can provide valuable flexibility when workloads fluctuate. However, the rules of these contracts are set to change.
The Employments Right Act 2025 introduces new rights for qualifying workers on zero hours and similar contracts. This includes a right to be offered guaranteed hours and reasonable notice of shifts and payment adjustments where shifts are cancelled or changed at short notice. These reforms also will have implications for agency workers, although the rules can differ depending on the arrangement.
The government is currently consulting on how these rights will operate in practice. The changes are expected to take effect during 2027, with the exact implementation timings and some of the detailed requirements still to be confirmed. Therefore, for employers who rely on flexible staffing, now is a good time to review how these arrangements work in practice.
Are Zero-Hour Contracts Being Banned?
No, zero-hour contracts are not being banned. Instead, the reforms proposed are to address what has been described as “one-sided flexibility”, by giving qualifying workers more predictability over their working hours and shifts.
Under the new framework, qualifying workers on zero-hours contracts and certain low hours arrangements will have the right to be offered a guaranteed hours contract based on the hours they regularly work during a reference period.
The worker will not necessarily have to accept this offer. The purpose of this change is simply to give workers greater security where there working pattern is more consistent, instead of just moving them onto a fixed-hour contract.
The legislation also extends the framework beyond traditional zero-hours contracts. Regulations will determine which other contracts and workers fall within scope, including certain low-hours arrangements and agency workers.
What is Changing for Low-Hour Workers?
One of the biggest changes will be the new right to guaranteed hours. Currently, an employer may have a worker who is contractually available for very few or no guaranteed hours, but who regularly works significantly more than their contract provides. The new rules are designed to address this gap between the contract and the actual worker’s working pattern.
A qualifying worker will be able to receive an offer of guaranteed hours reflecting the hours they have worked during a defined reference period. The government has indicated that the reference period is expected to be 12 weeks, although this will be established through regulations following consultation.
These changes could affect businesses that use:
- Zero-hours contracts
- Casual or irregular hours arrangements
- Low-hours contracts
- Certain agency worker arrangements
What Are The New Rules on Shift Cancellations?
The reforms will also change how employers manage shifts. Under the new legislation, qualifying workers will have a right to reasonable notice of shifts they are required or requested to work. There will also be a right to reasonable notice when an employer cancels a shift or changes when it starts or ends, including certain reductions in hours.
Employers should be aware of an important financial element to this. Where a qualifying shift is cancelled or moved at short notice, the worker will generally be entitled to a payment. The amount and the details of the circumstances will be set out in the regulations. This means that businesses will also need to consider the financial consequences of changing shifts at short notice.
The definition of what ‘reasonable notice’ and ‘short notice’ is still being determined by government consultation. There will be specified time periods established in the regulations, while also allowing circumstances to be considered.
Some crucial factors to how businesses currently review shift allocation and change are:
- How far in advance rotas are issued
- How often shifts are cancelled or changed
- How are workers notified of these changes
- Whether these changes properly recorded
The government has also confirmed that the new rights will also apply to qualifying agency workers, with separate rules for these agency arrangements. Employers using agency staff should therefore review their arrangements with recruitment agencies and other labour providers.
What Does This Mean for Employers in Practice?
For businesses who rely on flexible workers, they may need to look at their workforce planning and shift management and how this is handled. It’s important to consider these elements now, not wait until the final regulations are in place.
Review Your Contracts
Start by identifying who works on a zero-hour, casual or low hour arrangement and check whether their contractual terms correctly reflect how they actually work. Contracts and written statements may need to be updated once the final requirements are known.
Review Working Hours
Look at the hours flexible workers have actually worked over recent months to identify any patterns and give you a better idea of which workers might suit a guaranteed hours offer.
Review Shift Planning
See how far ahead shifts are currently planned and if managers are having to last minute schedule to respond to changes. This might highlight the need to introduce earlier rota deadlines or create better processes for dealing with staffing issues.
Review Shift Management Systems
If shifts are currently arranged informally through messages, phone calls or conversations with individual managers, it may be difficult to see when notice was given or when a cancellation was made.
Agency Arrangements
Businesses using agency workers should review their agreements with labour providers and understand how the new obligations may apply.
Train Managers
Managers need to understand the legal and financial consequences to changing shifts at short notice. Providing guidance before the reforms come into force can help prevent any legal issues.
Businesses that rely on casual, zero-hours, low-hours or agency workers should use the time before implementation to understand their current arrangements and identify where changes may be needed. The government is still consulting on the detailed implementation of these reforms, so employers should continue to monitor developments as further regulations and guidance are published.
If you need any advice on your contracts, contact our employment law team today for expert guidance.
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Author
sarahrobinson@premier-legal.co.uk
Sarah Robinson is the Managing Partner and has specialised exclusively in employment law since qualifying as a solicitor in 1996.
Sarah has considerable experience of representing clients in many different industry sectors including insurance and financial services, corporate finance, technology, legal services, automotive, hotel and catering and media as well as the public sector.
Areas of particular interest include restrictive covenants, TUPE and advising in relation to discrimination.