UK Zero Hours Contracts Under the Employment Rights Act 2025: Guaranteed Hours and Shift Notice Rights

The Scale of Zero Hours Contracts in Britain

Zero hours contracts have become a defining feature of the modern UK labour market. Current estimates suggest that at least 1 million workers operate under zero hours arrangements, though some research points to higher figures when accounting for workers on extremely low-hours contracts. This rapid growth over the past fifteen years has raised serious questions about job security, income stability, and worker protection.

The appeal of zero hours contracts to employers is straightforward: maximum flexibility without guaranteed pay obligations. Workers, by contrast, often view them as a necessary compromise to gain employment when other options are limited, though many experience genuine hardship as a result of unpredictable income and lack of security. Retail, hospitality, care work, and logistics have become dominated by these arrangements.

For several years, this situation generated political momentum for reform. Trade unions, worker advocacy groups, and some business organisations argued that zero hours contracts had become exploitative and needed serious regulation. The previous government resisted substantive change, but the election in July 2024 changed the landscape. The newly elected Labour government made workers' rights a cornerstone of its agenda, and employment law reform became a priority.

The Employment Rights Act 2025: Royal Assent and Staged Implementation

The Employment Rights Act 2025 received Royal Assent on 18 December 2025. Unlike some legislation that comes into force immediately, this Act takes a staged approach to implementation. The government has sequenced the changes to allow businesses and regulators time to prepare.

The first major milestone was the launch of the Fair Work Agency on 7 April 2026. This new body consolidates enforcement of worker protections, bringing together previous functions scattered across multiple organisations. The Agency will be central to overseeing compliance with the new zero hours provisions once they take effect.

The most substantial changes to zero hours contracts are scheduled to come into force in 2027. Before that date, the government will publish statutory instruments setting out the detailed mechanics of how the new rights work, including the length of reference periods, definitions of minimum hours for qualifying workers, and the standards for reasonable notice of shifts. This period of secondary legislation is critical, as these rules will determine whether the Act delivers meaningful protection or simply shifts the burden of compliance without real change.

What the Act Does NOT Do: No Outright Ban

It is essential to understand from the outset that the Employment Rights Act 2025 does not ban zero hours contracts. The Government examined this option and rejected it. An outright ban would have forced a large-scale reorganisation of entire sectors and risked displacing workers rather than protecting them. Some employers and workers genuinely value the flexibility that zero hours contracts provide.

Instead, the Act takes a regulatory approach. It imposes new obligations on employers who use zero hours contracts, ensuring that workers have a clearer path to guaranteed work if they consistently perform it, and that they receive adequate notice and compensation for shift changes. This is a reform that aims to make zero hours contracts fairer rather than eliminate them altogether.

The Right to Guaranteed Hours

The cornerstone of the Act is a new right to guaranteed hours. Under the new regime, if a worker on a zero or low hours contract regularly works more than a specified minimum number of hours during a defined reference period, the employer must offer that worker a guaranteed hours contract at the end of each reference period.

The key details of this mechanism are still subject to secondary legislation, but the framework is clear. The reference period is expected to be 12 weeks, though this will be confirmed by regulations. A worker becomes a "qualifying worker" when their actual hours during the reference period exceed the minimum threshold set by regulations. Importantly, the worker can accept or refuse the offer of a guaranteed hours contract. However, the employer must make the offer. The obligation is ongoing, meaning that if the worker qualifies again in the next reference period, the employer must repeat the offer.

This creates a ratchet effect. It prevents employers from simply hiring workers at zero hours indefinitely, knowing that they will work regular shifts. If a pattern of work is established, workers have the legal right to demand stability. This addresses one of the primary criticisms of zero hours contracts: their use as a mechanism to extract reliable work without providing corresponding job security or pay stability.

The mechanics of the offer process will be important. When an employer makes the offer, it should specify the guaranteed number of hours per week or month, the times of work (or at least a framework for determining them), and the terms of pay. The regulations will clarify whether workers have a deadline to accept and what happens if they decline.

The Right to Reasonable Notice of Shifts

Even workers who remain on zero hours contracts after the Act comes into force benefit from a new right to reasonable notice of shifts. The Act provides that workers are entitled to reasonable advance warning before being required to work a shift. The specific notice period that qualifies as "reasonable" will be set out in secondary legislation.

This provision directly tackles one of the most disruptive aspects of zero hours contracts: the ability of employers to demand work with minimal or no warning. In sectors like hospitality and retail, workers have sometimes been told to come in with just a few hours or even less notice. This makes it impossible to arrange childcare, secure other work, or plan anything beyond the immediate moment.

The definition of "reasonable" notice will likely take into account industry practice, the nature of the work, and the worker's circumstances. Regulations may set minimum notice periods, such as a requirement for at least one week's notice in most cases, with flexibility for genuine emergencies.

Compensation for Cancelled and Curtailed Shifts

The Act introduces a right to compensation when shifts are cancelled or curtailed at short notice. Again, the details will be specified in regulations, but the principle is established: if an employer cancels a shift that the worker was expecting to work, or reduces the number of hours in a shift, and does so without giving reasonable notice, the worker is entitled to compensation.

This is not compensation for lost wages (which the worker would not have earned in any case). Rather, it is compensation for the disruption and inconvenience caused by unreliable scheduling. In some interpretations, compensation might be a flat fee per shift cancelled, or a percentage of the hours lost. The regulations will determine the precise formula.

This provision creates a financial incentive for employers to provide stable, predictable schedules. If last-minute cancellations attract compensation, employers have an economic reason to avoid them except in genuine emergencies.

Protection from Detriment and Dismissal

The Act makes clear that workers are protected from being treated unfavourably because they exercise these new rights. Specifically, workers are protected from detriment if they assert their right to a guaranteed hours contract, request reasonable notice of shifts, or claim compensation for cancelled shifts.

This protection is critical. Without it, workers might fear that asking for their rights would result in fewer hours being offered or being treated badly by managers. The Act establishes that such retaliation is unlawful. A worker who is dismissed, refused additional work, given worse shifts, or otherwise penalised for exercising these rights can bring a claim before an employment tribunal.

The burden of proof operates in the worker's favour. If a worker is dismissed or treated detrimentally shortly after exercising a right under the Act, the employer must show that the reason was something other than the exercise of the right. This protects vulnerable workers from hidden retaliation.

Extension to Agency Workers

The Act extends these protections to agency workers. An agency worker on a zero hours contract with the supply company has equivalent rights. However, because agency workers have two potential employers (the agency and the hiring business), responsibility is shared. The hiring business cannot simply claim that it has no obligation because the worker is technically employed by the agency.

The statutory instruments will clarify the division of responsibility. In most cases, the hiring business will have a primary obligation regarding reasonable notice of shifts, as it controls the scheduling. The agency will have obligations regarding the guaranteed hours contract, as it is the legal employer. Both may be jointly liable if either fails to comply.

The Fair Work Agency and Enforcement

The Fair Work Agency, which launched on 7 April 2026 under the chairmanship of Matthew Taylor (the author of the 2017 Taylor Review of modern employment), will be responsible for enforcing these provisions. The Agency brings together powers previously held by the Insolvency Service, the Gangmasters and Labour Abuse Authority (GLAA), and other bodies.

The Agency has the power to investigate employers, issue improvement notices, and pursue prosecutions for breaches of worker protection laws. It can work with workers' representatives and unions to identify non-compliance. The Agency will also publish guidance and best practice standards to help employers understand their obligations.

Importantly, workers can also enforce their rights directly through employment tribunals. They do not have to rely on the Fair Work Agency taking action. This gives workers a direct legal remedy if their employer fails to comply.

Implementation Timeline and Secondary Legislation

As noted, the Fair Work Agency has already launched. The next critical date is 2027, when the guaranteed hours provisions and related protections come into force. Between now and then, the government will publish statutory instruments that fill in the operational details of the Act.

Employers should expect regulations on the following points before autumn 2026: the length of reference periods (almost certainly 12 weeks), the minimum hours threshold that triggers the right to a guaranteed hours offer, the definition of "reasonable notice" for shift notification, and the formula for compensation for cancelled shifts. These regulations will be subject to consultation, though the broad parameters are already set by the Act itself.

What Employers Should Do Now

Employers with significant numbers of zero hours workers should begin preparing immediately. First, audit your current workforce. How many workers are on zero hours contracts? Which ones consistently work above a certain minimum threshold? What is your current practice regarding notice of shifts and cancellations?

Second, review your shift scheduling systems. If you currently operate with short notice or frequent cancellations, you will face compliance challenges once the Act comes into force. Consider moving toward longer-notice scheduling as a matter of good practice. This may require investment in roster software and adjustments to operational procedures.

Third, consider your contracts. The new regulations will likely introduce requirements for guaranteed hours contracts to include specific information. Have your legal team draft templates now so that you can transition smoothly when the Act takes effect.

Fourth, communicate with your workforce. Workers should understand what the new rights mean and how to exercise them. Clear communication reduces friction and litigation risk.

Finally, engage with your industry body or employer association. Many sectors are developing guidance on compliance. Being part of that conversation positions your business to transition smoothly.

Conclusion

The Employment Rights Act 2025 represents a significant intervention in the use of zero hours contracts in the UK. Rather than banning them outright, it imposes new obligations that aim to create stability for workers who regularly perform shifts while preserving flexibility where it is genuinely valued. The right to a guaranteed hours contract for workers who work consistent hours, the right to reasonable notice of shifts, and compensation for cancellations address the most exploitative aspects of zero hours work as currently practised.

Implementation in 2027 will be a moment of major change in affected sectors. Success depends on clear regulations, effective enforcement, and genuine effort by employers to move toward more stable employment arrangements. Workers will finally have legal rights that reflect the reality of their working lives. For businesses, early preparation now will make the transition smoother and position them as responsible employers within the new legal framework.

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