Employment Rights Act 2025: Key takeaways from the Consultation for Zero Hour Reforms

The government published its consultation on reform of zero hour, low hour and agency worker contracts on 2^nd June 2026.  The consultation closes on 25 August 2026 and so there is still time to get responses in to help shape the operation of the new provisions in the Employment Rights Act 2025 (the “Act”).

How is the law set to change?

The Act received Royal Assent on 18 December 2025.  In a nutshell, the Act proposes that qualifying workers will have:

• A right to be offered a guaranteed hours contract reflecting the number of hours they have regularly worked over a specified reference period;
• A right to reasonable notice of shifts (and reasonable notice of changes to these); and
• Aright to compensation for shifts cancelled, curtailed, or moved at short notice.

It also extends these measures to agency workers tailored to reflect the tripartite arrangements between the agency worker, agency and end client.

These provisions are not yet in force and require further Regulations to provide the detail to the new rights.   The new rights are expected to come into force in 2027.

What is the consultation?

The government has launched a consultation seeking views on some of the details involved in implementing these rights. The responses can then be considered and regulations drafted taking these into consideration.

Below are some of the key takeaways from the consultation.

The Right to be offered a guaranteed hours contract

The ‘Hours Threshold’

Workers will only be qualifying workers if they are either a zero hours worker or they have a guaranteed number of hours in their contract which is the same or less than a specified number of hours (referred to as the ‘hours threshold’) but where, in reality, they regularly work in excess of these contracted hours. The government is seeking views on the level this ‘hours threshold’ should be set at and has proposed options ranging from 8 to 48 hours per week, though it has stated its preference is to set this between 8-20 hours per week.

Reference Periods

Guaranteed hours offers are based on the hours worked by a qualifying worker during a reference period and employers will be obliged to make an offer of guaranteed hours at the end of each reference period.

There will be an initial reference period which starts when the regulations come into force (for existing employees) and on the first day of employment (for new starters).  The government has indicated that it would like this initial reference period to be 12 weeks though it is seeking views on alternative options such as 26 weeks or 52 weeks.

After the initial reference period there will be subsequent reference periods. The government does not state a preference here and invites views on a subsequent 12 week, 26 week or 52 week period. It also seeks views on whether the subsequent reference period should begin immediately as the initial period ends or if there should be a gap between reference periods.

Regularity Requirements

To qualify for a guaranteed hours offer, the hours the worker works during the reference period must satisfy conditions around regularity. The government is seeking views on two possible options here:

1. A weekly distribution requirement of the hours worked (i.e. if the requirement is set at 8 weeks, then a worker who worked in 8 or more weeks of the reference period would qualify) or
2. A weekly distribution requirement AND a total hours’ requirement (i.e. if the weekly distribution requirement is set at 8 weeks and the total hours requirement is set at 96 hours, then a worker would have to work 96 hours in excess of their contracted hours across the reference period AND work in at least 8 calendar weeks of the reference period).

The government is seeking views on the length of the weekly distribution requirement (setting out options of 6,8,10 and 12 weeks) and on the appropriate level for the total hours’ requirement (in particular it sets out this being less than 48 hours, 48 hours, 72 hours or 96 hours).

Seasonal work and fixed term contracts

Employers will not have to offer guaranteed hours contracts to those on limited-term contracts provided the limited contract was reasonable. It will only be considered reasonable if:

1. A worker is only needed to perform a specific task and the contract will be terminated when that task is performed.
2. A worker is needed only until a particular event occurs (or does not occur) and so the contract terminates at that point.
3. Where there is a ‘temporary need’ (that does not include (1) or (2) above), that will be set out in regulations, and the contract is to expire when it is reasonable for the employer to consider that need will be over.

The consultation seeks views on whether there are examples of ‘temporary needs’ that would not fall into categories 1 or 2 above.

Calculating the guaranteed hours offer

The guaranteed hours offer must reflect the number of hours a qualifying worker worked during a reference period. The government is seeking views on two potential options here as to how this should be calculated:

1. Mean average – For example, a worker works 8 hours per week for 7 weeks, then 20 hours per week for the remaining 5 weeks. The result would be a mean average of 13 hours per week.
2. Median average – In the example above, the result would be a median average of 8 hours per week.

The Government is also seeking views on how the hours will need to be presented in the offer, such as over a week or month (it is considering allowing employers flexibility provided the number of hours is scaled up accordingly) and whether it should allow an ‘adjustment margin’ to account for minor calculation differences or to align offers to usual shift patterns (e.g. rounding up or down slightly to reflect typical hours in a shift).

Exemptions

The Act allows for exemptions or exclusions for certain types of worker and the consultation seeks views on whether there should be these exceptions and, if so, who they should cover.

The right to be given reasonable notice of shifts and changes to these

Hours Threshold

The government is proposing that the rights to reasonable notice (and payment for shifts cancelled, curtailed, or moved at short notice) should only apply to workers who have a number of hours guaranteed in their contract for the reference period that is below or equivalent to an ‘hours threshold’. This ‘hours threshold’ can be different to that which applies for an offer of guaranteed hours, set out above. The consultation is seeking views on what this ‘hours threshold’ should be and, in particular, has sought views on this ranging from 8 hours to 48 hours.

Reasonableness

In terms of what will constitute reasonable notice, the government has said that it recognises this will depend on the circumstances and that there is no one size fits all here.  It will set out in regulations a presumption of what is reasonable notice, which will be the starting point for tribunals to work from (and has sought views on what this should be, setting out options ranging from one week to 4 weeks).  It will also set out the factors tribunals should consider when determining whether notice was reasonable and has sought views on what these could be.

Exemptions

The consultation is also seeking views on whether there should be any exemption to this right for particular workers and, if so, who.

The right to payment for shifts cancelled, moved or curtailed at short notice

Short Notice/Very Short Notice

The Act, requires employers to make a payment to eligible workers when they cancel, curtail, or move a shift at short notice. Short notice will be less than 7 days but the consultation seeks views on what this could be. The government is also considering whether to have two time periods here i.e. short notice and very short notice, with differing compensation and is seeking views on this.

Compensation

In terms of the compensation payment, the consultation proposes that this could be either:

1. A percentage of what the worker would have earned from working the shift/hours; or
2. A percentage of what the worker would have earned from working the shift/hours at the National Living/Minimum Wage rate.

It then seeks views on what this percentage could be, ranging from 10-80% for short notice cases and 30-80% for very short notice cases.

Exemptions

The consultation again, seeks views on whether there should be any exemptions to the right to compensation.

Fair Work Agency and Enforcement

The Act allows workers to enforce their rights through the Tribunals, but the government states that it intends for the FWA to be able to enforce aspects of these rights, including the right to compensation for shifts that are cancelled, curtailed or moved at short notice.  The consultation therefore seeks views on this, as well as whether the FWA should have the ability to issue a penalty to employers who fail to comply with the rules.

The consultation states that the government proposes setting the penalty for non-compliance with short notice payments at 50% of the arrears owed to the worker, with a minimum penalty of £100 per case and a maximum of £5,000 per worker. However, it also proposes that if the employer pays the worker the amount owed and at least 50% of the penalty within 14 days of the date the penalty is issued, the penalty would be treated as fully paid. It says this approach takes into account that the right to short notice payment is a new right and allows time for employers to familiarise themselves with implementing the new obligations.

The provisions in the Act relating to zero hour, low hours and agency workers are both significant and technically complex.  Much of the detail is still to come in regulations and the consultation demonstrates the government’s desire to engage with interested parties on these matters before making these.  However, the breadth of the options available in the consultation means that we are still unable to assess the impact this will have on businesses with certainty.  Clearly, if low thresholds are adopted this could have a more substantial impact on employers.  It is worth noting that, reassuringly, the government has said that businesses will not be expected to make changes overnight and guidance on how to comply with the new legislation will be published to help them understand their new duties and obligations.

Is your organisation ready for the Employment Rights Act 2025?

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