Employment Rights Act 2025: spotlight on changes to zero-hours contracts

Insight

18.12.2025

Updated as of 18 December 2025

Labour’s manifesto promised to ban “exploitative zero-hours contracts”. While the Employment Rights Act 2025 (ERA 2025) does not go that far, the new rights in the ERA 2025 can be categorised into four themes: (1) a right to offer guaranteed hours; (2) a right to reasonable notice of shifts; (3) compensation for changed or cancelled shifts; and (4) protection from detriment and dismissal.

Employment Rights Act 2025 webinar series

Our three-part webinar series will explore the key reforms coming into effect under the Employment Rights Act 2025, focusing on the changes most likely to affect organisations, how to prepare for and manage the impact.

Zero- and low-hours

The reforms apply to zero-hours workers, agency workers, and workers on ‘low’ guaranteed hours who regularly work more than those hours.

As it will be relevant to a number of points below, it is helpful to outline how the ERA 2025 defines zero- and low-hours contracts. A zero-hours contract is defined as a contract of employment, under which there is no certainty that any work will be made available to a worker. The ERA 2025 also covers “zero-hours arrangements” which has a similar definition but the arrangement can be contractual or non-contractual. A low-hours contract is not defined in the ERA 2025 but will be defined in further regulations following consultation.

1. Duty to offer guaranteed hours for regular workers

An employer will be obliged to offer, at the end of every reference period, a guaranteed hours contract to a qualifying worker (including agency workers) that reflects the hours worked in that period.

A 'qualifying worker' is someone on a zero- or low-hours contract who regularly works more than the minimum hours specified in their contract during a reference period. The exact hours threshold and the length of the reference period will be set by future regulations, but the reference period is anticipated to be 12 weeks. This means, at the end of each reference period, employers will be required to offer an affected worker a contract guaranteeing them hours that reflect the actual hours worked in that period, until the worker is no longer a 'qualifying worker'.

Employers must either offer to vary the worker’s existing terms to guarantee the hours worked or issue a new contract. If only hours are being guaranteed, no other terms may be changed. If a new contract is offered, its terms must not be less favourable overall. Fixed-term contracts may only be offered where reasonable in specified circumstances.

A worker will be able to bring a claim to the Employment Tribunal for failing to comply with the duty and the Tribunal will have the power to award “just and equitable” compensation subject to a cap which will (again) be specified in future regulations.

2. Right to Reasonable Notice of shifts

Employers must give reasonable notice of shifts to workers on a zero-hours or other specified contract, including agency workers. The notice must state:

The date of the shift
The start and end time of the shift
The numbers of hours to be worked.

Similar requirements apply if a shift is cancelled or changed.

Notice will be presumed unreasonable if given less than a specified period before the shift starts; this period will be set by future regulations, but the Government has confirmed it will not exceed seven days.

If a worker brings a claim, a Tribunal must examine matters specified in the regulations and again has the power to award “just and equitable” compensation subject to a cap (amount to be confirmed)

3. Compensation for Cancelled or Changed Shifts

Employers will have an obligation to pay certain workers compensation if they cancel or curtail "qualifying shifts" on short notice.

A qualifying shift is defined as a shift worked under a zero-hours contract or arrangement, or low-hours contract. Short notice will be defined in later regulations, but will not exceed seven days before the shift’s scheduled start, or, if the shift is moved, the earlier of the original or new start time.

The amount of compensation, also to be set by regulations, will not exceed what the worker would have earned for the cancelled shift. If a shift is moved, compensation applies to any part of the original shift not covered by the new one. Regulations will also set out when compensation is not payable; in such cases, the employer must notify the worker of the specific regulation relied upon.

A Tribunal may order compensation if an employer fails to pay for a cancelled, moved, or curtailed shift, fails to give proper notice, or provides notice that is inadequate or untrue.

4. Unfair Dismissal and Detriment

The ERA 2025 has already made sweeping changes to the law on unfair dismissal (as seen in our blog: How is the law on unfair dismissal changing under the Employment Rights Act 2025?). The rights outlined above will provide enhance protection further, making it automatically unfair for an employer to dismiss a worker because:

The worker accepted or rejected (or proposed to accept or reject) a guaranteed hours offer made by the employer.
The employer sought to “avoid compliance” with the duty to offer guaranteed hours.
The employer believed the worker was entitled to guaranteed hours offer.
The employee brought proceedings alleging, in good faith, a breach of these obligations.

A worker can also allege they have suffered a detriment because:

The worker accepted or rejected (or proposed to accept or reject) a guaranteed hours offer made by the employer in compliance or purported compliance with the ERA 2025.
Declined to work a shift, or part of a shift, on the reasonable belief an employer failed to give reasonable notice.
Brought proceedings against the employer, in good faith, relating to rights to guaranteed hours.

A Tribunal will have the ability to award just and equitable compensation, taking into account any loss attributable to the detriment. If the detriment is dismissal, it will not exceed the compensation for unfair dismissal.

What should employers be doing now?

Audit your current practices – While these reforms are not expected to come into force until 2027, it is important to understand their impact sooner rather than later. Review your existing arrangements and assess how upcoming changes could affect your workforce management.
Update systems – Ensure you have the technology and processes to track hours worked over reference periods, monitor when guaranteed hours obligations arise, and manage shift allocation and cancellations efficiently.
Training – Provide manager with training on new policies and procedures, highlighting the risks of non-compliance. Encourage managers to seek guidance when needed.
Contracting Out – The only way to contract out of these rights is through a collective agreement with an independent trade union, properly incorporated into contracts and communicated to workers. Ultimately, whether to engage in collective bargaining discussions will be a commercial decision, but it is something to consider.
Keep an eye on development – As you will tell from the above, a lot of the critical details about how the guaranteed hours will operate in practice are subject to further consultation and regulation. We will update this article as and when further details are confirmed.

Many thanks to Alex Evans, current trainee in the team, for his help preparing this article.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.