What’s the Future for Zero-Hours Contracts?
The government has launched its consultation on changes to zero-hours contracts under the Employment Rights Act 2025, and if your business relies on flexible staffing, this is one to watch.
Sectors like hospitality, tourism and retail could feel the biggest impact, as could the young workers who often rely on flexible roles to get into work and start building their careers.
The government’s aim is clear – Make Work Pay by giving workers more security and predictability. The challenge will be getting the balance right and not leaving employers with yet another bill to pay.
What’s being proposed?
- Guaranteed hours contract based on actual hours worked in a reference period
Employers will need to offer guaranteed-hours contracts based on the hours someone has worked over a set reference period. The consultation seeks views on what those reference periods should be, when the requirement kicks in and how eligibility should be defined
The concern for employers her is the potential admin burden, how to manage seasonal fluctuations, and the risk of guaranteeing hours that aren’t then needed.
- Reasonable notice of shifts
Workers under a weekly-hours threshold (e.g. 18 hours) would gain the right to reasonable notice of shift cancellation, change or curtailment. The required notice looks likely to be at least one week.
Shorter notice may still be allowed for genuine last-minute needs like sickness cover, but the right to compensation means that changes to planned shifts could become a costly process.
- Compensation for cancelled shifts
If Employers cancel, change or curtail a shift at short notice, they will need to pay compensation. The consultation suggests that notice to avoid having to pay compensation will be at least 24hrs, but may be more. There are also indications that compensation may be a percentage of pay, not the full shift pay.
There may also be exemptions for things outside of the employer’s control (extreme weather, power cuts) or for when workers choose to swap or cancel shifts themselves.
What does this mean for Employers?
There’s clear recognition that small businesses need flexibility, but also a push to give workers more stability. The risk is increased cost and complexity for employers; the opportunity is a fairer, more predictable system for young and low-hours workers.
What should you do now?
- Keep an eye on the consultation — it’s your chance to influence the final rules.
- Start reviewing how you use zero-hours contracts and where patterns of regular work already exist.
- Think about how you schedule, communicate shifts and manage cancellations.
If you want to help shape balanced legislation, you can respond to the consultation here:
Make Work Pay: ending one-sided flexibility – reforms of zero-hours and similar contracts (GOV.UK)
And if you need help understanding what these changes could mean for your business, our HR experts are ready to support you. Email lucy@mcmillanandassociateshr.com.