The UK Government has issued a consultation on planned reforms designed to protect zero and low-hour workers. The reforms will apply in Great Britain only, i.e. not to employees with contracts written under Northern Irish legislation where employment law is devolved.
The Labour Party’s Plan to Make Work Pay includes a section ‘Zero hours contracts and one-sided flexibility’ and was brought into legislation via the Employment Rights Act 2025. Specifically, we are looking at three measures:
1. The statutory right to be offered guaranteed hours (where the number of hours offered reflects the hours worked by a qualifying worker during a reference period);
2. The right to ‘reasonable’ notice of shifts and changes to these; and
3. The right to payment for shifts that are cancelled, curtailed or moved at short notice
The UK Government issued a Factsheet on the proposals and is now seeking views in a consultation paper issued on 02 June 2026 (closing 25 August 2026) on the Regulations needed to implement the measures.
Important Notes
- It is NOT the intention to ban zero and low-hour contracts. The intention of the legislation is to end perceived one-sided flexibility, i.e. the employer has rights over and above the employee. The aim, therefore, is to provide protections whilst preserving business flexibility;
- The UK Government has pledged that the employment law reforms will not be introduced ‘in 2027’. Employment law reforms that impact payroll normally take effect from the start of the tax year. Otherwise, normally, reforms such as this will take place from 01 October
Guaranteed Hours
This is the central proposal. The legislation will apply to agency workers which means that workers that are hired (and employed by an agency) may need to be employed by the employer using their services.
The concept is that employees / agency workers on zero hours contracts or on contracts below an ‘hours threshold’ must be offered a contract with guaranteed hours if they regularly work more during a ‘reference period’. There will be an initial reference period and then subsequent ones, so the employer will have to assess whether they have to offer guaranteed hours by reference to the hours worked.
For both employees and agency workers, the consultation asks questions about the suggested lengths of:
- The hours threshold (e.g. 8 hours per week, 12, 16 etc);
- The initial reference period (suggested as 12 weeks); and
- The length of subsequent reference periods (12 weeks, 26, 52 etc)
The consultation also seeks views on two options for defining the regularity requirements for the hours worked during the reference period. Essentially, this is the test for when the employee / agency worker is regularly working and the employer has an obligation to offer a contract with guaranteed hours.
1. Across the reference period, option A tests regularity by looking at the number of weeks worked, for example, 8 out of 12 would be regular; and
2. Option B which requires the employer to look at weeks and hours worked. We suggest this option sets a higher target for the employee, thereby benefiting the employer. It would mean that, for example, hours worked as voluntary overtime can be excluded, only considering the hours worked more than those guaranteed by the employer (which could be zero for a zero-hour worker)
There is no obligation for the employee / agency worker to accept the offer and they can opt out. Akin to the obligation to auto-enrol into a pension scheme, this is an ongoing employer administration issue.
Reasonable Notice and Payment (for Shifts)
The 2025 Act created the statutory right to give workers reasonable notice and the right to a payment for shifts cancelled, moved, or curtailed at short notice. The aim of this is to provide working time and income security to employees / agency workers.
The consultation, therefore, asks questions regarding these statutory obligations, including:
- The hours threshold (for the rights to reasonable notice and short notice payments); and, if qualifying
- The length of the reasonable notice of shifts and changes to shifts, for example, 1 week, 4 weeks etc
This section also asks for the definition of ‘short notice’ if the employer cancels, moves or curtails (shortens) shifts. Plus, asks what payment should be made, giving two options:
1. A percentage of what the worker would have earned from working the shift or the relevant hours, or
2. A percentage of what the worker would have earned from working the shift or the relevant hours at the relevant National Living / Minimum Wage rate
For Bookkeepers
Of course, legislation will specify exceptions and exemptions and employers need to look for these.
ICB comments that this is a very detailed consultation and we have summarised some of the points that will result in equally complicated secondary legislation. The purpose of highlighting the consultation is to bring this to attention of employers and clients who may be impacted.
Regardless of the outcome, from some point in 2027, employers will be faced with ongoing additional administration obligations if they use zero and / or low-hour workers. It may be that employers will want to consider moving away from zero and low-hour contracts, though we must wait to see the definition of ‘low hours’ before this can be done.
ICB recommends responding to the consultation in one of three ways:
1. Online: Make Work Pay: ending one-sided flexibility - reforms of zero hours and similar contracts; (GOV.UK)
2. E-Mail to: zerohours.consultation@businessandtrade.gov.uk; or
3. In writing: Zero Hours Contracts, Employment Rights Directorate Department for Business and Trade Old Admiralty Building Admiralty Place London SW1A 2DY