On 2 June 2026, the Government launched a consultation regarding changes under the Employment Rights Act (“ERA”) 2025 which will redefine the world of zero hours and low hours contracts of employment.  The legislation in this area is complex and will likely cause significant additional burdens and cost for those employers seeking to maintain flexible workforces to suit fluctuating business needs. 

What will change?

The changes in the ERA 2025 are intended to “end one-sided flexibility and ensure all jobs provide a baseline of security and predictability”.  The intention is not to ban zero hour contracts as there is a recognition that flexibility may be desirable to some.  The Government anticipates the changes will provide greater certainty and security of income for those where required.  It seeks to achieve this by giving employees the following new rights:

• Right to be offered guaranteed hours contracts, which reflect hours worked during a reference period;
• Reasonable notice of shifts or changes to shifts; and
• Payments for cancelled shifts or those changed at short notice.

Scope of the consultation

The consultation paper seeks views on the regulations that will be introduced to implement these changes, including:

• The minimum hours threshold to be applied for the right to a guaranteed contract; with the Government’s indicated preference being between 8 and 20 hours per week.
• The length of the initial reference period, which is to be used when calculating average hours worked; with the Government’s preference stated to be 12 weeks.
• Subsequent reference periods that may apply, for example, if the employee did not work the minimum threshold hours in the initial reference period, or where a previous offer/acceptance of guaranteed hours remained under the relevant threshold number of hours.  26 or 52 weeks are suggested, with thoughts also sought on whether there should be a gap between reference periods or whether these should run concurrently.
• Regularity requirements – whether certain weeks where the employee has not worked should be taken into account, whether a minimum number of weeks in the reference period need to have been worked, and whether there should be a minimum number of hours worked within the reference period.  This seeks to avoid a situation where an employee could be entitled to guaranteed hours contract after working a significant number of hours but for only a few weeks during the reference window rather than with any regularity.
• How short-term contracts should be defined (for example, where there is a need for temporary workers such as fruit picking), when the right to guaranteed hours should not apply.
• Whether a mean or median average hours calculation should form the basis of guaranteed hours contracts to be offered, and whether there should be any margin for adjustment.
• Minimum hours requirements for workers to a) be entitled to receive reasonable notice of cancelled shifts, and b) for payment for shifts cancelled at short notice.
• Factors that may be relevant to the question of what is a ‘reasonable’ period of notice for shifts to be cancelled or moved.
• Level of payments for shifts that are cancelled, moved or curtailed at short notice (due to the employer’s requirements), which is likely to be a percentage of the amount that would have been received had the shift gone ahead.
• Enforcement powers of the Fair Work Agency, established in April 2026 and potential for penalties to be awarded against employers for breaches of the regulations.

The paper requests views on the impact of the changes for both employees and agency workers who are also covered by the changes.

Call for action

Given the significance of the changes, businesses who routinely use zero hour or low minimum hour contracts of employment are strongly recommended to review and respond to the Government consultation paper to ensure that their views and any concerns are taken into consideration.  The consultation will close on 25 August 2026.  A copy of the consultation paper and details of how to respond are available here: Make Work Pay: ending one-sided flexibility – reforms of zero hours and similar contracts - GOV.UK

For further information or to discuss how the reforms in this area may affect your business, please contact Jessica Jones or Kim Knox at Ortolan Legal Ltd.