Government consultation on zero and low hours contract reforms: what employers need to know

The government has published a consultation on regulations to implement the zero hours reforms in the Employment Rights Act 2025 (The Act). The consultation closes on 25 August 2026, with the reforms expected to come into force in 2027 (although no specific date has been set).

Reforms to zero-hours contracts

The government's manifesto promised to ban 'exploitative zero-hours contracts' but the changes stop short of an outright ban. The government's stated aim is to address 'one-sided flexibility' while preserving business flexibility, and to give greater security and predictability to workers whose working patterns are more regular than their contracts suggest.

For details about the government's proposed changes to zero-hours contracts, see here.

Many aspects of the reforms remain uncertain, and the consultation reflects an early stage of policy development. However, the reforms are likely to change how zero and low hours arrangements operate and may make them less attractive for some employers.

The consultation focuses on three new rights:

1. a right to guaranteed hours;
2. a right to reasonable notice of shifts and changes; and
3. a right to payment for shifts cancelled, moved or curtailed at short notice.

The Act will also introduce protection from detriment and dismissal in connection with these rights, although this is not the focus of the consultation.

Agency workers are also in scope for these rights, but this article will mainly focus on directly engaged workers, highlighting some key differences for agency workers below.

In this article, we summarise the consultation proposals and highlight implications for employers.

Right to guaranteed hours

1. Qualifying for the right

Workers will qualify for a guaranteed hours offer (GHO) if they:

• are on a zero-hours contract or arrangement; or
• have guaranteed hours below a specified threshold and work more than those hours, and they work sufficiently regularly during a reference period.

For the purpose of the consultation, a zero-hours contract or arrangement means where the worker must accept work when offered or where they may accept or decline work, and in both cases where the employer is not obliged to offer work.

The reforms will also apply to low hours arrangements, with the hours threshold being set in regulations. The higher the threshold number, the greater the number of people will be eligible. Options in the consultation range from eight to 48 hours per week, with the government preferring eight to 20 hours. Regulations may also define excluded categories of workers or exempt employers in limited cases.

2. Reference periods

Eligibility is assessed over a reference period, and the government prefers an initial reference period of 12 weeks. Alternatives of 26 and 52 weeks are also being considered.

If the qualifying conditions are met, the duty to make a GHO arises at the end of the reference period. The worker does not automatically move onto guaranteed hours; instead the employer must make an offer reflecting the hours worked in the previous reference period and the worker can accept or decline it.

The consultation also considers subsequent reference periods, including their length (with suggested options being 12, 26 or 52 weeks) and whether they run on a rolling basis or include gaps. Allowing longer subsequent reference periods and/or gaps would reduce how often employers must reassess entitlement and make further offers. One of the examples the consultation suggests has:

• an initial reference period;
• followed by a 26-week gap; and
• then a 26-week subsequent period.

This type of model would permit employers more flexibility than a model with rolling reference periods and/or no gaps between reference periods.

3. Regularity requirement

Workers must have worked sufficiently regularly during the reference period to be eligible for a guaranteed hours offer. The consultation proposes two broad approaches for assessing regularity:

• Option A: working in a minimum number of weeks in the reference period; or
• Option B: option A plus working a minimum number of hours above contractual hours.

Option B would be harder to meet and would reduce the likelihood that occasional overtime triggers the right. Further detail would be needed for either approach.

4. Seasonal and temporary work

Employers do not have to make a GHO where a worker is on a limited-term contract shorter than the reference period, provided the contract is reasonable.

A limited term will be reasonable if the worker is needed:

• for a specific task;
• until a particular event occurs; or
• for a 'temporary need' (to be defined in regulations).

The consultation recognises that there may be circumstances where neither of the first two bullet points would apply and seeks views on such circumstances.

5. Calculating the GHO

The consultation proposes two methods for calculating guaranteed hours:

• Mean average (all hours weighted equally); or
• Median average (less affected by weeks with unusually high or low hours).

It also asks whether employers should have a small adjustment margin to account for minor variations or align with typical shift patterns.

Although the Act allows regulations to require employers to ensure GHOs reflect when the worker's hours in the reference period were worked (as well as reflecting the number of hours worked) the consultation focuses only on overall hours. If regulations do not go further, employers may have some flexibility in how the guaranteed hours are scheduled, provided the number of hours offered is consistent with the reference period.

Right to reasonable notice of shifts

1. Scope

The government proposes that this right will apply only to workers with guaranteed hours at or below a specified threshold (which may differ from the threshold for GHOs).

2. Reasonable notice

Employers must provide reasonable notice of shifts and changes to shifts.

Regulations will set a period that is presumed reasonable, which will be the starting point for tribunals. For directly engaged workers, options range from one to four weeks.

If insufficient notice is given, the worker may bring a tribunal claim for compensation for loss suffered.

Payment for short notice cancellations or changes

Employers must make a payment where a shift is cancelled, moved or curtailed at short notice.

'Short notice' will be defined in regulations, with options of one, two, three, five or seven days being proposed (short notice cannot exceed seven days under the Act). The government is also considering a 'very short notice' category which would attract higher payments.

The payment would be a percentage of either:

• the worker’s expected earnings; or
• those earnings calculated using the National Minimum or Living Wage.

No payment is required where the worker initiates the change, fails to attend or voluntarily swaps shifts. The consultation also seeks views on limited exceptions, such as extreme weather or power outages.

Agency workers

Agency workers are within scope, but key differences to the position for directly engaged workers include:

• Responsibility: the hirer will usually be responsible for making GHOs, although this may be shifted to the agency or another intermediary in some cases. For short notice payments, the agency pays the worker but may recover the cost from the hirer.
• Eligibility: agency workers do not need to show that they have worked above contractual hours in the same way as directly engaged workers.
• Outcome of an offer: accepting a GHO results in direct engagement with the hirer, rather than a variation of an existing contract.
• Liability: responsibility for failures (for example on reasonable notice) may be shared between agency and hirer, with tribunals apportioning liability.

Enforcement

Workers will be able to enforce these rights through employment tribunals. The government also proposes that the Fair Work Agency (FWA) should enforce short notice payments, reflecting the fact that non-payment is a clear and measurable breach.

The preferred penalty is:

• 50% of arrears;
• with a minimum of £100 per case; and
• a maximum of £5,000 per worker.

GHOs and reasonable notice which involve more fact-sensitive assessments and are likely to remain primarily tribunal-based.

Implications for employers

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, with multiple moving parts and many key details still to be set in regulations. That combination makes it difficult for employers to plan with confidence and raises a real question about how workable the regime will be in practice.

Against that backdrop, employers should both begin preparing and consider engaging with the consultation before the deadline of 25 August 2026, while there is still an opportunity to influence its direction.

Practical steps include:

• Auditing current arrangements, including seasonal and temporary work.
• Reviewing systems to ensure they can track hours, regularity, shift scheduling and cancellations.
• Training managers on the changes and associated risks, including as details are confirmed.
• Considering a response to the consultation if employers wish to contribute views.
• Monitoring developments, as much of the key detail, and therefore the true impact, will depend on future regulations.

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

© Farrer & Co LLP, June 2026