Situation before reforms under the Employment Rights Act 2025
Employers can currently engage workers on zero hours and low hours contracts with no obligation to provide regular work, to offer a certain number of hours, or to pay for hours not worked. Such contracts are often used to help manage fluctuations in demand and workload.
When scheduling and varying workers’ shifts, employers are mindful of regulations governing working time and health and safety, potential indirect discrimination claims, and – if the individuals are employees – breaching trust and confidence. In addition, they must have regard to any contractual obligations regarding the scheduling of shifts. Within these parameters, they can schedule, cancel or alter shifts at short notice, and without compensation.
Similarly, hirers can use agency workers on the equivalent of zero hours and low hours contracts, and can schedule, cancel or alter shifts at short notice without compensation, subject to their agreement with the agency.
So what’s changing and when?
The Employment Rights Act aims to tackle one-sided flexibility by changing the way that zero hours and low hours contracts operate.
The new rules will apply to agency workers too.
Many elements of the new regime will be contained in regulations, and a Government consultation, which closed on 25 August 2026, has sought views on certain key points. We are currently awaiting the outcome of the consultation.
Low hours threshold
The Government has consulted on the threshold for low hours contracts - i.e. the maximum number of contractual hours a worker can have and still be eligible for guaranteed hours and for rights to reasonable notice of work schedules - with options ranging from eight hours to 48 hours per week. The consultation stated that the thresholds do not need to be aligned across the two new obligations, and it is only with regard to guaranteed hours that it has put forward a preference (of between eight and 20 hours per week).
Guaranteed hours
It is expected that from 2027 employers will in certain circumstances have a duty to offer zero hours and qualifying low hours workers a guaranteed hours contract that reflects the hours they usually work. A worker can accept the offer or decline and stay as they are, but employers would still then need to assess whether the worker should again be offered a guaranteed hours contract in respect of each subsequent reference period.
Under the Act, a worker will qualify for a guaranteed hours offer if, during a defined reference period, they worked in excess of their contractual hours and their hours of work met the ‘regularity requirement’.
The Government has consulted on the length of the initial reference period (with its preference being 12 weeks). The consultation has also asked how subsequent reference periods should work, including their length and whether they should run back-to-back or with gaps.
With regard to the regularity requirement, a worker qualifies only if their hours were spread regularly enough across the reference period, and the Government has asked whether a second requirement should be added, i.e. whether a minimum number of hours in excess of contracted hours must be worked over the reference period.
The consultation also covered whether the calculation for the number of guaranteed hours should be based on the mean or median hours worked in the reference period, and asked whether employers should have flexibility to determine how the guaranteed hours be allocated, e.g. weekly or monthly. However, it did not address details such as the format of the offer and how long the offer should remain open.
The Act states that the duty to offer guaranteed hours does not arise where a limited-term contract that is shorter than the reference period is reasonable, such as when a worker is needed for a specific task, until a particular event or for a ‘temporary need’. The consultation asked whether ‘temporary need' should be defined to cover scenarios such as seasonal demand.
It will be possible for a collective agreement to disapply the right to guaranteed hours.
Workers will be able to enforce their right to guaranteed hours by making a claim to the employment tribunal. Regulations will set out the maximum award for failure to comply.
Reasonable notice of shifts and changes to shifts
It is expected that from 2027, employers will be required to give reasonable notice of shifts and shift changes, including cancellations, to workers on qualifying zero or low hours contracts. (See above - ‘Low hours threshold’ - for who may qualify as a low hours worker for this purpose.)
The Government has consulted on whether the starting point for the notice that will be considered reasonable notice should be one week, two weeks, three weeks or four weeks (‘presumed reasonable notice’). The Government also sought views on the factors a tribunal should consider when deciding whether notice was reasonable or not.
Employers that cancel, move or shorten the length of shifts at ‘short notice’ (where the worker reasonably believed they were needed for such shifts) will have to make a ‘short notice payment’ to the worker. The Government has consulted on the ‘short notice’ period, with options of one, two, three, five, or seven days, and whether to introduce a ‘very short notice’ period, which would trigger a higher payment. It has also consulted on the level of the short notice payment and whether it should be a percentage of the worker’s actual expected earnings for those hours or of the applicable National Minimum Wage.
It will be possible for a collective agreement to disapply the right to reasonable notice for shifts and changes to shifts.
Workers will be able to enforce their right to reasonable notice of shifts or changes to shifts by making a claim to an employment tribunal for the loss suffered. Regulations will set out the maximum award. However, the Government has proposed that the Fair Work Agency be able to enforce short notice payments through its Notice of Underpayment regime, since non-payment is a discrete, measurable event. (See our separate Spotlight on the Fair Work Agency for more details of this new enforcement body and how it operates.)
Agency workers
The Act will give similar protections to agency workers, to stop businesses from using temporary staff to avoid the new rules. (This follows a Government consultation in 2024 on the application of zero hours contracts measures to agency workers.)
The hirer will generally be responsible for making the offer of guaranteed hours, and if the agency worker accepts the offer, they will become the hirer’s worker for the purpose of that particular contract. However, the consultation explored shifting the responsibility to the agency in some circumstances.
The hirer must ensure that pay offered to agency workers under a guaranteed hours offer is either no less favourable than the pay they received as an agency worker or no less favourable than the pay of a comparable direct worker.
The agency and the hirer will both be responsible for giving the agency worker reasonable notice of shifts and changes to shifts. Although the agency will be responsible for making the short notice payments, in practice this is likely to be passed onto a hirer where the hirer is at fault. The Government consultation asked for views on a shorter threshold for presumed reasonable notice for agency workers, including an option for below five days.
The collective agreement contracting out provisions in relation to both guaranteed hours and notices of shifts and changes to shifts (see above) can also cover agency workers.
What you need to do
The timing of some of these actions will depend on when the detail of the new laws is finalised and when the changes come into force. However, you can start to plan now:
- Review what sort of contracts you use to manage variations in workload or demand (i.e. flexible labour). For example, do you use zero hours contracts, low hours contracts, annualised hours contracts, fixed-term contracts, overtime and/or agency workers? Map out which parts of the business use these contracts and work out if your business needs have changed since you introduced them.
- Review your working patterns against your contracts. To what extent do you actually use the flexibility that is built into contracts such as zero and low hours contracts?
- Think strategically about how to manage workload variations and fluctuating demand in the future. How will the requirement to offer guaranteed hours affect workforce planning? Might this requirement make different contractual arrangements more suitable? Might you need to alter the way you use agency workers?
- Check your record-keeping systems are detailed enough for the new legislation, if you are likely to continue with zero or low hours contracts. Make sure you can track working patterns over the reference period(s).
- Audit how much notice you give for new shifts, to change shift times or duration or to cancel shifts. Are there circumstances where you could provide more notice, and what processes would you need to change to achieve this?
- If you have a recognised union, build a positive relationship to boost your chances of entering into a collective agreement to contract out of the new requirements.
How we can help
The Employment Rights Act reshapes how employers manage flexible labour, shift planning and short-notice changes. Guaranteed hours and shift scheduling requirements will require better visibility, stronger systems and more deliberate workforce planning.
Our HR and legal experts can help you assess where flexibility is genuinely needed and how to retain it lawfully. We can support you with:
- Flexible labour audit: Reviewing how zero hours, low hours, agency and other flexible contracts are used across your organisation and potential areas of risk.
- Guaranteed hours readiness: Helping you assess which workers are likely to qualify for guaranteed hours and how this may affect workforce planning and cost.
- Workforce planning and contract strategy: Supporting decisions on whether different contractual models may better suit future demand and operational needs.
- Shift notice and cancellation processes: Reviewing how shifts are scheduled, changed and cancelled, and helping you design processes that meet the new notice requirements.
- Record-keeping and systems support: Helping you put systems in place to track working patterns, reference periods and notice given for shifts and changes to shifts.
- Agency worker arrangements: Advising on responsibilities between hirers and agencies and how to manage guaranteed hours and shift scheduling obligations in practice.
- Union and representative engagement: Supporting discussions with unions or employee representatives where collective agreements may be used to contract out of new requirements, supported by targeted training such as Conducting Workplace Negotiations and Working Successfully With Trade Unions.
Additional support and resources
Stay informed and prepared by signing up to our email updates, where we’ll share confirmed changes and key dates as they come into force. Members can access up-to-date guidance, template policies and letters in our HR & Legal Resources section, and our expert team is on hand to answer questions or provide practical support, whether or not you are a Make UK member. You can also contact our ERA enquiry line.
To see the planned changes at a glance, download our free Employment Rights Act planner for clear timelines and practical next steps. If you’d like a deeper insight, ask about our Audit and Impact Assessment - a structured review to help you understand your levels of risk, prioritise actions and plan with confidence.