In brief
On 2 June 2026, the UK Government launched a consultation on the detailed implementation of reforms to zero hours and similar contracts under the Employment Rights Act 2025 (“ERA 2025”).
The stated aim of the reforms is to address “one sided flexibility” for zero and low hours workers by introducing three core rights for qualifying workers:
- A right to guaranteed hours reflecting actual working patterns
- A right to reasonable notice of shifts
- A right to payment for shifts cancelled, moved or curtailed at short notice.
The consultation focuses on the practical mechanics of these rights (including thresholds, reference periods and calculation methods). The consultation closes on 25 August 2026.
Recommended actions
1. Begin workforce audit and modelling
- Identify workers on zero hours or low guaranteed hours contracts.
- Analyse actual working patterns to assess exposure to guaranteed hours obligations.
2. Stress-test workforce planning models
- Consider how predictable scheduling and reduced flexibility may impact operations.
- Review reliance on short-notice shift changes.
3. Prepare for increased cost exposure
- Potential costs include:
- Guaranteed hours commitments
- Compensation for short-notice cancellations
- Increased administrative burden (tracking hours, issuing offers, etc.).
4. Review agency workforce arrangements
- The reforms extend to agency workers, with obligations potentially falling on hirers, agencies or intermediaries depending on the structure.
5. Engage with the consultation
- The framework leaves significant detail open (e.g., thresholds, reference periods, payment levels, etc.).
- Interested parties should submit responses to influence outcomes, particularly where sector-specific flexibility is needed.
6. Monitor implementation timeline
- The measures are not yet in force and will be implemented via secondary legislation, following consultation.
In more detail
Background
The reforms form part of the Government’s “Make Work Pay” agenda and the stated intention is to:
- Establish a baseline of security and predictability
- Rebalance flexibility between employers and workers
- Support sustained economic growth through improved workforce stability.
Importantly, the Government does not intend to ban zero hours contracts, but to regulate their use. The consultation includes the following proposals:
1. Right to guaranteed hours
The Government is considering introducing a minimum hours threshold for entitlement to guaranteed hours, and has expressed a preference for the threshold of somewhere between eight to 20 hours per week. This threshold would apply to both directly engaged workers and agency workers.
Key design issues under consultation include:
- Hours threshold: likely between 8–20 hours per week (determining who is in scope).
- Reference periods: the preferred approach is an initial 12-week reference period to assess working patterns but the Government is also consulting on 26 week, 52 week and ‘other’ alternatives. After the initial reference period, there will be ‘subsequent’ reference periods at the end of which employers will need to issue guaranteed hours offers to qualifying workers in certain circumstances – if they refused an offer previously, if they did not qualify in a prior period but do now, and/or if they accepted an offer previously but worked in excess of the offered hours. The Government has not expressed a preference for the subsequent reference period and is consulting on 12, 26, 52 weeks or ‘other’, and also whether to have a gap between initial and subsequent reference periods.
- Regularity tests: for a worker to qualify, the hours that they worked during the reference period must satisfy certain conditions. Two options are being considered: (i) weekly distribution requirement of the hours worked, i.e., the worker must have worked in a minimum number of weeks during the reference period; or (ii) weekly distribution requirement and a total minimum hours requirement.
- Calculation method: Two potential methodologies are under consideration: mean vs median calculations.
- ‘Adjustment margin’: whether there should be a margin of adjustment for employers to adjust the guaranteed hours offer compared to the hours worked in the reference period. The Government suggests that any margin would be small, giving the example of +/- two hours or +/- 10%.
Workers may decline an offer, but employers must re-assess eligibility in future periods.
2. Reasonable notice of shifts
A statutory right will require employers to provide “reasonable notice” of work schedules.
The Government is proposing that this right would apply only to workers below a certain guaranteed hours threshold.
While an example of 16 hours per week is given, the consultation indicates a broader potential range of eight to 48 hours.
The proposed definition of “reasonable notice” is currently between one and four weeks, subject to consultation. For agency workers, options also include five days or less.
3. Payment for shifts cancelled, moved or curtailed at short-notice
For shift changes or cancellations at short notice, the Government is consulting on:
- Notice periods of one to seven days (with seven days reflecting the current statutory maximum)
- Compensation payments calculated as a percentage (10% to 80%) of either the worker’s expected earnings or the National Living Wage.
- There is also consideration of introducing a separate category for “very short notice” cancellations, potentially attracting higher compensation.
- The consultation further asks whether exceptions to these payments should apply for events like extreme weather or power outages, which would require the employer to issue an explanation notice.
4. Agency worker considerations
The reforms explicitly extend to agency workers to avoid circumvention.
Key complexities include:
- Allocation of liability between hirer, agency and intermediaries
- Joint liability for notice breaches
- Potential obligations on hirers to offer direct contracts
- Whether the Conduct of Employment Agencies and Employment Business Regulations 2003 should be amended, including by adding obligations on agencies to provide information to hirers to help them comply with their guaranteed hours obligations.
5. Enforcement framework
The Government’s current view is that the Fair Work Agency should be responsible for enforcing short-notice compensation, with broader rights relating to zero-hours arrangements enforced through the Employment Tribunal system.
Further information
As outlined, the consultation covers a variety of considerations in relation to zero hours (and similar contracts) and it is clear that these proposals will have significant implications for many employers and workers.
If you would like assistance regarding the practical steps you may wish to consider in response and/or responding to the consultation in light of these proposals, please contact your usual Baker McKenzie contact.
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Amie Ward, Trainee Solicitor, has contributed to this legal update.