Government’s Consultation on Zero-Hours Contracts: affirming the need for organisations to get ahead

The Employment Rights Act 2025 ("ERA 2025") introduces a broad package of reforms designed to reshape the relationship between employers and workers. Among its most notable measures are the new rules affecting zero-hours contracts, an area that has been the subject of sustained policy debate. Following the launch of the Government’s consultation, this article examines the key proposals and their practical implications for your organisation.

What do you need to know?

On 2 June 2026, the Government launched its consultation on the regulations that will give practical effect to the zero-hours contracts measures in the ERA 2025.

Under the measures, organisations engaging in-scope workers face three key duties:

1. A duty to offer guaranteed hours

Employers will be required to offer guaranteed hours reflecting the hours actually worked by low hours workers over a specified reference period. A low hours worker will be a worker who on average works more than a minimum number of hours over a specified reference period. The minimum number of hours will be determined by the Government following consultation but is likely to be somewhere between 8 and 20 hours per week. The Government's preferred starting point is a 12 week reference period, with the duty applying where a worker exceeds a threshold number of hours during that period. The Government’s preference is to set that threshold between 8 and 20 hours, although a wider range is under consultation. The duty to offer guaranteed hours would repeat at the end of each reference period, with later reference periods being either 12, 26 or 52 weeks.

2. To provide reasonable notice of shifts

The consultation seeks views on the threshold for the right to reasonable notice, with options ranging from 1 to 4 weeks’ notice. Data from the Living Wage Foundation cited in the consultation found that 54% of variable-hours workers currently receive less than one week's notice. Where notice falls short of the chosen threshold, the burden will fall to the employer to demonstrate that the notice given was reasonable in the circumstances. The Consultation also seeks views on what factors a Tribunal should consider when assessing whether notice was reasonable, including whether certain circumstances warrant longer or shorter notice.

3. To make payment where shifts are cancelled, moved, or curtailed at short notice

The Government is proposing payments between 10% and 80% of the earnings the worker would have received for the shift. It is also considering a two-tier system of "short notice" (with options ranging from 1 to 7 days)  and "very short notice" (with options ranging from less than 1 day to 5 days), with a higher payment applying in the latter case. Where a very short notice payment is introduced, the proposed payment percentages range from 30% to 80%. The consultation also asks what circumstances should qualify as "exceptional circumstances", that is, situations in which an employer would not be required to make a short notice payment at all.

The duties outlined above will also extend to agency workers, with responsibility allocated between agencies and hirers depending on the obligation in question. 

What will these additional duties look like in reality?  

How can organisations start to prepare? 

The Consultation, and the breath of the topics it addresses, underscores the Government’s clear intention to redress the balance of power and to end the use of exploitative zero-hours contracts.

We therefore encourage organisations to begin preparing now by ensuring that they are well-equipped to comply with the new duties once they take effect:

1. Administration: Do your current systems track hours worked by every in-scope worker throughout each reference period? You will need that data to generate accurate guaranteed hours offers at the end of it. A useful first step may be to conduct an audit of your existing zero-hours and low-hours arrangements.
2. Financial exposure: Short-notice cancellation payments will be a direct cost to your business. The Fair Work Agency (established on 7 April 2026) will be granted powers to  enforce this obligation through civil penalties of up to £5,000 per worker.
3. Workforce planning: These reforms reward better demand forecasting and more structured scheduling. If your business relies on flexible or agency labour, now is the time to review how you plan rotas and manage shift changes. Organisations should assess both cost and operational impact of guarantees hours, and plan accordingly.

The consultation closes on 25 August 2026, and we encourage you to respond. Our specialist employment team is actively participating and would be happy to discuss any concerns/observations or support you in preparing your response.

If you need help assessing what these changes mean for your organisation, get in touch.

Keep your organisation informed and prepared by visiting the Bevan Brittan Employment Rights Act 25 Hub.