One of the key measures under the Employment Rights Act 2025 (“ERA”) are the reforms to zero and low hours contracts. These reforms are due to take effect in 2027, however, the key details of the new rights are to be set out in regulations. The government has launched a consultation inviting employers for their views on how these new rights are to be implemented in practice. 

What are the reforms and who will they apply to?

While short of the outright ban on ‘exploitative zero-hour contracts’ proposed in its manifesto, the Labour government’s reforms aim to end one-sided flexibility and provide a baseline level of income security and predictability of hours for workers engaged on zero or low hours contracts. 

The ERA will address this by giving workers the right to:

• guaranteed hours;
• reasonable notice of shifts and changes to shifts; and
• payment for shifts cancelled, curtailed or moved at short notice. 

These rights will apply to ‘qualifying workers’ engaged on zero and low hours contracts (but will not affect workers whose arrangements provide them with substantial guaranteed hours and income security). Following a consultation in October 2024, the reforms extended to agency workers, in part to prevent agency work becoming a loophole for employers to avoid the reforms (however, please note that this update focuses on the application of the reforms to directly engaged workers). 

The consultation seeks views on these three rights which are to be specified in regulations, and will run until 25 August 2026. 

1. Right to guaranteed hours 

The ERA places a duty on employers to make a guaranteed hours offer (“GHO”) to qualifying workers. The right to guaranteed hours is intended to offer stability and security to workers whose contractual arrangements do not reflect the hours they regularly work. 

To be a qualifying worker, the worker must: (i) be engaged on a zero or low hours contract; (ii) have contractually guaranteed hours which fall below a specified ‘hours threshold’; (iii) have worked more than their contractually guaranteed hours during a ‘reference period’; (iv); have satisfied the ‘regularity requirement’; and (v) not be an excluded worker. 

If these conditions are met, an employer must make an offer to the worker to enter into a guaranteed hours contract. The offer made by the employer must reflect the number of hours worked by the worker in the reference period. Workers may accept or reject the GHO. The employer must continue to make a GHO after the end of every reference period, until the worker is no longer considered to be working under a zero or low hours contract. 

While the consultation sets out the basic framework, key issues and thresholds determining when and how the framework will operate, are to be set out in regulations. The consultation seeks views on how the framework should operate in practice, including: 

• Hours threshold: what should be the threshold number of hours at which workers will be in scope of the right to guaranteed hours? The government’s preference is that the threshold should be set between 8-20 hours. 
• Length of initial reference period: what period should be used to determine the hours worked by a qualifying worker when calculating a GHO? The government’s preference is that the initial reference period should be 12 weeks long. 
• Length of subsequent reference period: should the length of the initial and subsequent reference periods be the same or different? Should the subsequent reference periods be ‘rolling’, or should there be gaps between the reference periods where employers would not need to record workers’ hours for the purposes of making a GHO? 
• Regularity requirement: how ‘regularly’ must the worker have worked during the reference period to qualify for a GHO? The consultation proposes two options:
  • that the worker’s hours must be distributed over a minimum number of calendar weeks of the reference period; or
  • that the worker’s hours must be distributed over a minimum number of calendar weeks of the reference period and the worker must have worked a minimum number of hours more than their total number of contractually guaranteed hours.
• Seasonal work and temporary need: are there any examples of a temporary need for workers which is not related to a specific task or event?
• Calculation of guaranteed hours offer: how should the GHO be calculated to ensure this reflects the hours worked by the worker during the reference period? The consultation asks whether the worker’s mean or median average hours should be used.
• Exclusions and exemptions: should any eligible workers be excluded from the right to a GHO and are there circumstances where employers should be exempt from making a GHO? 

2. Right to reasonable notice of shifts 

The ERA gives workers a right to reasonable notice of and changes to shifts. The consultation seeks views on the following:

• Threshold hours: what should be the hours threshold for workers to be eligible to receive right to reasonable notice of and changes to shifts? The consultation proposes that the same hours threshold be used for the right to reasonable notice of and changes to shifts and the right to payment for shifts cancelled, moved or curtailed at short notice.
• Reasonable notice: what period of time should be presumed ‘reasonable notice’ and what factors should be taken into account when determining whether the notice given was reasonable in the circumstances?
• Exemptions to provide reasonable notice: should there be any types of hirers who should not be liable for failing to provide an agency worker with reasonable notice?

3. Right to payment for shifts cancelled, moved or curtailed at short notice

The ERA also provides that employers will be required to make a payment to eligible workers when they cancel, curtail, or move a shift at short notice. The consultation seeks views on the following:

• What constitutes short notice: what period of time constitutes short notice? The ERA provides that this cannot be a period of over seven days. 
• ‘Very short notice’ period: should there be a ‘very short notice’ period, for which a higher payment for shift cancellations, movements and curtailments would be payable. If so, what constitutes ‘very short notice’?
• Short notice payment amount: how should the short notice payment amount be calculated? The consultation proposes two options:
  • a percentage of what the worker would have earned from working the shift or relevant hours calculated based on their actual wage; and
  • a percentage of what the worker would have earned from working the shift or relevant hours calculated based on the national living wage.
• Exceptions to short notice payments: should there be any circumstances where an employer is not required to make a short notice payment? The consultation confirms that employers will not be liable to make a short notice payment where cancellation, movement or curtailment is initiated by the worker.

Enforcement 

While enforcement of the new rights will sit primarily with the employment tribunals, the consultation also seeks views on whether and how the Fair Work Agency should enforce the right to short notice payments. 

So what for employers?

The zero and low hour reforms are one of the most significant and complex changes under the ERA 2025. However, most of the detail of how the reforms will operate in practice has been left up to regulations, making it difficult for organisation to gauge how big an impact this will have. It was hoped that the consultation would provide further insight, however at present it appears that there is still a lot left to be decided and it seems likely that further consultations will be required. This gives employers a real opportunity to influence how the new framework will work in practice. 

It also calls into question whether the current implementation date of 2027 is realistic, given the government has committed to giving employers plenty of time to prepare for the changes, including publishing guidance to support employers. Therefore, for now employers who engage zero or low hours workers may wish to keep a watching brief as the final position is still very much unknown.

If you would like to discuss how our team of experienced employment lawyers can support your organisation, please get in touch. You can also find further resources on all things ERA 2025 on our ERA 2025 hub.