Zero hours and low hours contracts

Individuals will have a right to a guaranteed hours contract that reflects the hours eligible employees regularly work over a reference period. Workers will also be entitled to reasonable notice ahead of any changes made to their working hours and compensation if their shift is cancelled or changed on short notice. Following an earlier consultation the Act also broadens these rights to cover agency workers.

ONGOING (anticipated date TBC in 2027)

• ERA: Expected in force 2027
• Consultation "Ending one-sided flexibility – reforms of zero hours and similar contracts": closes 25 August 2026.
   

Action

• These provisions are complex, and employers will need to consider carefully the detail arising out of the consultation and which will be set out in regulations. The consultation closes on 25 August 2026 and employers should consider whether to respond to help shape the detail of the regulations.
• Businesses should audit and assess their use of zero hours and low hours workers, including seasonal and temporary work, in light of this proposal and the further detail as and when it becomes available.
• Employers should also look at the way hours are tracked, shifts are scheduled and processes for cancelling, moving or curtailing shifts, to assist in identifying and managing changes that will need to be made once we have regulations.
• Managers should be trained on managing zero hours and low hours arrangements, including seasonal and temporary working arrangements, in light of the regulations once we have the detail.
• Employers should also ensure that managers understand that workers are protected from being subjected to a detriment or dismissed for exercising or seeking to exercise their new rights under these measures. Adverse treatment of a worker connected to a guaranteed hours offer, reasonable notice or short notice payment could expose the business to significant tribunal liability.

In detail

Right to guaranteed hours offer

Qualifying conditions

• Workers will qualify for a guaranteed hours offer where they are on a zero hours contract or arrangement, or their guaranteed hours are below a specified threshold and they work more than those hours. In both cases, their hours of work must meet the regularity requirements (see below).
• The consultation defines a zero hours arrangement as one where "the individual may work when offered but is not obliged to work when offered, and the employer is not obliged to offer work," and a zero hours contract as one where "the worker is obliged to work when work is offered, but the employer is not obliged to offer work." Employers should note that these definitions are used in a specific technical sense that may differ from the way these terms are commonly understood in practice.
• To determine whether a contract is a low hours arrangement, an hours threshold, below which the arrangement must fall, will be set in regulations. The government's preference is to set the threshold within the range of 8 to 20 hours per week, on the basis that options within this range are more likely to provide a favourable balance of costs and benefits. The full range of options consulted upon runs from 8 to 48 hours per week.
• The ERA allows ministers to make exemptions or exclusions in limited circumstances. The regulations may therefore define excluded categories of workers or exempt employers.

Reference period

The right to a guaranteed hours offer will be based on the hours worked by a qualifying worker during a reference period. The government's preference is for the initial reference period to be 12 weeks long, balancing the need for qualifying workers to be offered guaranteed hours reasonably soon after they start a role, and the need for a reference period long enough to establish the hours they regularly work. Alternative reference periods of 26 and 52 weeks are also being considered.

Regularity requirement

• For a worker to qualify for a guaranteed hours offer, the hours that they worked during the reference period must satisfy conditions set out in regulations around regularity. The intention is that only workers who work regularly for their employer will be entitled to this new right. The consultation proposes two broad approaches:
  • Option A: A weekly distribution requirement with the hours worked during the reference period distributed over a specified minimum number of calendar weeks out of the total length of the reference period. The weeks would not have to be consecutive.
  • Option B: A weekly distribution requirement (see Option A) and a total hours requirement under which the worker must meet a minimum number of hours in excess of the worker's total number of contracted hours. Qualifying under Option B would be more difficult as it would mean that workers could work a limited number of hours in excess of those they are already guaranteed, such as voluntary overtime, without qualifying for a guaranteed hours offer.
• Further detail on the approach ultimately adopted will be needed.

Making a guaranteed hours offer

• Where the arrangement satisfies the eligibility conditions, the employer must make a guaranteed hours offer reflecting the hours worked during the reference period, which the worker can accept or decline. If accepted, the contract must set out the number of hours the worker would need to work and the number of hours the employer would need to provide.
• The consultation proposes two methods for calculating guaranteed hours: either a mean average of hours worked over the applicable reference period, or a median average, which may be more representative of the hours a worker in fact regularly works. The consultation also asks whether employers should have an adjustment margin, which could be a fixed figure (for example, 2 hours) or a percentage of the hours generated by the calculation (for example, 10%). Employers would be able to add or subtract the margin from the offer, to account for minor calculation variations or to align with typical shift patterns. The margin would need to be small to ensure the offer reflects the hours worked during the reference period.
• A worker will be able to decline the guaranteed hours offer and remain on their existing contract or arrangement if they prefer. Workers who reject an offer, who do not qualify for one, or who work more than the hours in their previous guaranteed hours contract (and are still below the hours threshold) may qualify for an offer following subsequent reference periods. In that case, it will be the employer's responsibility to make that offer. Employers should be aware that declining an offer does not extinguish the employer's obligation to make further offers in subsequent reference periods.

Subsequent entitlement to a guaranteed hours offer

• After the initial reference period, the consultation looks at how the right will operate in respect of subsequent reference periods and when an employer will be required to issue a further guaranteed hours offer to qualifying workers. The consultation looks at the length of subsequent reference periods, considering options of 12, 26 and 52 weeks, and also whether they run on a rolling basis or include gaps, which will impact how often employers must reassess entitlement and make further offers.
• The consultation provides an example of a gap of 26 weeks after the end of the initial reference period, during which the employer is not required to record a worker's hours for the purpose of generating a guaranteed hours offer, followed by a 26-week subsequent reference period. Such a model, with gaps between reference periods, could reduce the administrative burden for employers, as the duty to make guaranteed hours offers would arise less frequently.
• It should be noted that subsequent reference periods cannot be used to reduce the hours already guaranteed in a worker's contract. If both the worker and employer wish to reduce guaranteed hours, they may do so only through mutual agreement to vary the contract.

Seasonal and temporary work

• If a limited-term contract is shorter than the relevant reference period, the employer would not need to make a guaranteed hours offer to a qualifying worker, provided it was 'reasonable' for the contract to be entered into as a limited term.
• The ERA defines a limited-term contract as reasonable where it would be reasonable for the employer to consider:
  • that a worker is only needed to perform a specific task and the contract will be terminated when that task is performed (for example, a fruit picker needed until all fruits have been picked); or
  • that a worker is needed only until a particular event occurs (or does not occur) (for example, a conference worker needed until a conference comes to an end); or
  • that there is a 'temporary need' (which is not a specific task or event) and the contract is to expire when it is reasonable to consider that need will be over.
• The consultation seeks views on what circumstances may fall within a "temporary need", such as where a worker is only needed until demand decreases.
• If the worker worked for the employer on multiple contracts doing the same or similar jobs, it will be presumed that it was not reasonable for them to be on a limited-term contract unless the employer can show otherwise.

Right to Reasonable Notice of Shifts

• The ERA also requires employers to provide eligible workers with reasonable notice of shifts and changes to shifts. This right will only apply to workers with up to and including a certain number of hours guaranteed in their contract, the 'hours threshold'. This mirrors the approach taken on the guaranteed hours measure, though the hours threshold may be set at a different level for each.
• Regulations will set out a presumption of what is reasonable notice, which will be the starting point for tribunals to decide whether notice was reasonable in any given case. For directly engaged workers, options considered in the consultation range from one to four weeks.
• If employers do not provide reasonable notice of shifts, the employment tribunal will determine what remedy is available.

Payment for Short Notice Cancellations or Changes

• The ERA requires employers to make a payment to eligible workers when they cancel, curtail, or move a shift at short notice. The aim is to incentivise employers to plan effectively and ensure workers do not bear all the financial risk of unforeseen circumstances.
• The ERA enables short notice to be defined in regulations but provides that it must be no more than seven days. The consultation proposes options of one, two, three, five or seven days. The government is also considering whether to have a 'very short notice' period, with a higher payment due for cancellations, movements and curtailments at very short notice.
• The payment would be a percentage of either: what the worker would have earned from working the shift or the relevant hours; or what the worker would have earned from working the shift or the relevant hours at the National Living/Minimum Wage rate.
• No payment is required where the cancellation, movement or curtailment is initiated by the worker, including where a worker notifies their employer at short notice that they are no longer able to work a shift, or does not turn up to work, or where two workers voluntarily agree to swap a shift. The consultation also seeks views on limited exceptions, for example, where the employer has cancelled the shift because of an extreme weather event or widespread power outage.

Agency workers

The ERA extends these new rights to agency workers. In short:

• Hirers will have the obligation to make guaranteed hours offers to qualifying agency workers. If an agency worker accepts a guaranteed hours offer from a hirer, they will take up a worker's contract with that hirer and be directly engaged by that hirer. However, there are instances where the duty may sit with the agency or another intermediary rather than the hirer.
• For the purposes of the right to be offered guaranteed hours, an agency worker does not need to show that they have worked above contractual hours in the same way as a directly engaged worker. The qualifying conditions for agency workers require the agency worker to have worked for and under the supervision and direction of the hirer during the reference period, and to have met the regularity requirements.
• It is the agency which is under the obligation to make short notice payments to agency workers. Agencies are able to recoup such payments from hirers where they are responsible for the short notice.
• Both agencies and hirers have the obligation to provide reasonable notice to agency workers. Where a tribunal finds that unreasonable notice was given, a tribunal can apportion liability between the agency and hirer based on the extent to which each party was responsible.

Collective agreements

The ERA allows collective agreements between independent trade unions and employers to agree specific conditions tailored to their organisation and which modify or opt out of the ERA measures. This provides an additional avenue of flexibility for employers operating in unionised sectors.

Enforcement

• It is proposed that the Fair Work Agency (FWA), which began operating in April 2026, will enforce some aspects of these rights to help increase compliance, in addition to workers being able to bring claims to the employment tribunal. The government considers the most appropriate measure for FWA enforcement is the right to payment for shifts cancelled, moved or curtailed at short notice. The government proposes setting the penalty for non-compliance with short notice payments at 50% of the arrears owed to the worker, with a minimum penalty of £100 per case and a maximum of £5,000 per worker. If the employer pays the worker the amount owed and at least 50% of the penalty within 14 days of the date the Notice of Underpayment is issued, the penalty would be treated as fully paid.
• The right to guaranteed hours and the right to reasonable notice of shifts are more likely to require more complex assessments and are better considered through the employment tribunal system. The detail of remedies available at the employment tribunal for failures in relation to guaranteed hours and reasonable notice, including whether declaratory or compensatory relief will be available, has not yet been confirmed and will be the subject of further regulation.
• Workers are also protected from detriment and dismissal for bringing or seeking to bring claims in relation to these rights, and employers should ensure this is communicated clearly to managers.

Conduct regulations

The consultation also covers a potential amendment to the Conduct of Employment Agencies and Employment Businesses Regulations 2003. The government is considering whether to require agencies to give hirers relevant information to support them in complying with their duties under the zero hours measures; for example, confirmation of whether or not an agency worker is in scope, and contact details to enable the hirer to make a guaranteed hours offer. Businesses using agency workers should monitor this aspect of the consultation carefully.

Impact

• The government remains committed to ending one-sided flexibility and these reforms aim to reduce the insecurity of hours and income that some workers face. The government is clear that it is not banning zero hours contracts, so as not to take away flexibility for workers who need and value it; instead, the measures will ensure all jobs provide a baseline level of security and predictability, ending exploitative arrangements. It is important to note that a worker does not automatically move onto a guaranteed hours contract; instead, the employer must make an offer reflecting the hours worked in the previous reference period, which the worker can accept or decline.
• These proposed changes have the potential to materially reshape how employers use zero or low hours arrangements, or agency labour. However, they are also very complex, and many key details are still to be set in regulations. The government has confirmed that businesses will not be expected to make changes overnight, and guidance on how to comply with the new legislation will be published. While we must await the outcome of the consultation, the increased procedural requirements and entitlements for workers on impacted arrangements may mean that, in the longer term, such arrangements become less commercially attractive. The new rights are also intended to create strong incentives for employers to better forecast their future needs and improve workforce planning.
• The ERA also repeals the Workers (Predictable Terms and Conditions) Act 2023, which would have brought in a 'right to request' a predictable work pattern, which could be turned down by the employer. This government believes employers should be required to offer guaranteed hours to all qualifying workers, as opposed to a right to request where the onus would be on the worker.