Zero-hours contracts have long been scrutinised in employment law, particularly regarding job security and the distribution of risk between employer and worker. While the Labour Party’s 2024 manifesto proposed stronger measures, the Employment Rights Act 2025 does not prohibit the use of zero-hour contracts outright. Instead, it establishes a more structured and regulated framework for their use, alongside other flexible and variable-hours working arrangements.
Although most reforms are expected to take effect in 2027, their implications for employers are already clear. The changes will require a thorough review of contracts, shift-scheduling practices, and workforce-management systems. Employers who act early will be better placed to achieve compliance and minimise disruption once the new rules come into force.
Who the Reforms Apply To
The reforms are designed to apply to:
- Workers engaged on zero‑hours contracts
- Certain agency workers on comparable arrangements
- Workers on low‑hours contracts who regularly work more than their guaranteed contractual hours
A zero‑hours contract is defined in the Act as one under which there is no certainty that any work will be made available. Although “low‑hours contracts” are expressly referenced in the legislation, the hours threshold has not yet been defined and will be confirmed through secondary regulations.
This distinction matters for a wide range of employers. Contracts that guarantee only a small number of hours per week, where workers consistently work significantly more than those guaranteed hours, are clearly within the intended scope of the reforms once the threshold is set.
At the centre of the new regime is the concept of a “qualifying worker”. In broad terms, this will be a worker on a zero‑hours or low‑hours arrangement who, over a defined reference period, regularly works in excess of their contractual minimum.
The Four Changes That Matter
Right to a Guaranteed Hours Offer
The Act establishes a legal obligation for employers to provide guaranteed hours to qualifying workers at the end of each reference period. Although the government indicates that the reference period will likely be 12 weeks, this is not yet in force and will be confirmed through secondary legislation.
When the duty applies, employers must either:
- Modify the existing contract to ensure the specified hours, or
- Provide a new contract that is not less favourable than the worker’s current terms.
If a variation is made solely to guarantee hours, no other contractual terms may be changed.
Workers have the right to refuse a guaranteed hours offer and continue under their current contract. Nonetheless, refusal does not eliminate the employer’s obligations. The worker’s status must be reviewed at the end of each subsequent reference period, and additional offers may be necessary if the worker still qualifies.
Failure to provide a compliant offer may lead to an Employment Tribunal claim, with compensation determined fairly and equitably, subject to any limits set by secondary legislation.
Reasonable Notice of Shifts
The Act establishes a right for workers on zero‑hours and specified low‑hours contracts to receive reasonable notice of shifts. Such notice must confirm:
- The date of the shift
- The start and end times
- The number of hours to be worked
Equivalent requirements apply where a shift is cancelled or amended.
Secondary legislation will define what constitutes “reasonable” notice. The government has confirmed that the minimum notice period set by regulations will not exceed seven days, although the precise period has yet to be determined and may vary by sector or circumstance.
For employers operating in hospitality, retail, social care, and other sectors where short‑notice changes are common, compliance is likely to require meaningful changes to scheduling and planning practices, rather than minor procedural adjustments.
Compensation for Cancelled or Changed Shifts
Where an employer cancels, moves, or curtails a qualifying shift at short notice, the worker will be entitled to statutory compensation. The Act confirms that:
- Compensation will not exceed what the worker would have earned had the shift been worked as originally scheduled
- Where a shift is moved, compensation applies only to the portion of the original shift not worked
- Employers may rely on specified exceptions, to be defined in regulations
Where compensation is not payable because an exception applies, the employer must notify the worker of the specific regulatory basis relied upon. This is a formal statutory requirement, not merely a matter of good practice.
Protection from Dismissal and Detriment
The Act introduces strong protections designed to prevent employers from avoiding or undermining these rights. A dismissal will be deemed automatically unfair where the principal reason is that the worker has:
- Accepted or declined a guaranteed hours offer
- Sought to exercise or enforce their statutory rights
- Been affected by any attempt to avoid or circumvent the employer’s legal obligations
Workers are also protected from detriment on similar grounds. This includes situations where a worker refuses to work a shift on the reasonable belief that adequate notice has not been provided.
Importantly, no qualifying period of service is required for these protections to apply.
What This Means in Practice
Zero‑hours contracts are not prohibited, and employers may continue to operate flexible working models. What changes is the legal consequence once a worker establishes a regular pattern of working hours.
For organisations where flexibility genuinely reflects variable demand, the practical impact may be limited. However, where zero‑hours or low‑hours contracts have become a default model, with workers consistently working 25 or 30 hours per week, the implications are likely to be significant once the new regime is in force.
Managing compliance across a large flexible workforce will require:
- Systems capable of tracking hours over rolling reference periods
- Processes for issuing contract variations or new contractual offers
- Reliable documentation of shift notices, cancellations, and changes
- Training for managers responsible for day‑to‑day scheduling decisions
Contracting Out
The only mechanism for modifying or excluding these statutory rights is through a collective agreement with an independent trade union, properly incorporated into employment contracts and clearly communicated to workers. Individual opt‑outs are not permitted.
How The Infinity Group Can Help
At The Infinity Group, our support extends beyond payroll services to include keeping clients informed of important developments in employment law, including reforms affecting zero‑hours working, redundancy, and collective consultation.
We provide clear, practical guidance on legislative change—particularly the implications of the Employment Rights Act 2025—helping employers understand how these developments impact compliance obligations, operational planning, and financial exposure.
Our focus is on supporting businesses to remain compliant, implement effective processes, and fully understand the practical impact of employment law reform on their workforce and day-to-day operations. operations.