Consultation provides insights on how the changes might impact on employers using flexible contracts.

We expect the complex rules set out in the Employment Rights Act 2025 (ERA 2025) on the duty to offer guaranteed hours contracts to workers and agency workers on zero hours and low hours contracts to come into effect in 2027. Although the ERA 2025 is now passed into law, there is much detail to be worked out in future regulations and Government decisions on these crucial details will have a huge impact on the practical implications for employers who engage with staff via these kinds of contracts.  

On 2 June, the Government launched its consultation on these reforms, providing some further insight on how these rules might work.

The Government’s stated aim in putting these reforms into effect is to tackle what it calls “one-sided flexibility” in zero hours contracts, and to provide workers with predictable hours and a “baseline of security of work”. The Government believes that these changes are likely to mean workers are more loyal to their employer and more productive.

Having said that, the Government recognises that some workers value the flexibility of a zero hours contract and so is not putting in place an outright ban. Individuals can decide to continue with a zero hours or low hours contract and need not accept the offer of guaranteed hours.

The ERA 2025 sets out the duty on employers to:

• offer guaranteed hours to their own workers and agency workers on zero hours and low hours contracts where

  • the worker has worked hours with sufficient regularity over a reference period

  • the worker has worked in excess of their contractual hours in a reference period

  • the offer of a guaranteed hours contract must reflect the hours actually worked in a reference period

• provide reasonable notice of shifts and changes to shifts

• make payments for shifts which are cancelled, curtailed or moved at short notice

These are some of the most complex provisions in the ERA 2025 and their practical impact will depend on a number of variables, including the meaning of a “low hours” contract, the length of the reference period, what is meant by “regularity” of worked hours, what will be a reasonable period of notice for a cancelled shift, and what payments employers will need to make where shifts are cancelled at short notice.

Low hours contracts

As well as those on zero hours contracts, who have no guaranteed hours in their contracts, the right will extend to workers with a low number of guaranteed contractual hours who in fact work more than their contracted hours over a reference period. But what is meant by a “low hours worker”? Where this threshold is set will be a key decision which determines the impact of these changes.

The consultation explains that regulations will set out an “hours threshold” for low hours workers. The intention of the hours threshold is to extend the right to workers who are guaranteed some hours, but experience unpredictability of hours and income in a similar way to zero hours workers. The intention is not to include workers who already have a “baseline level of security and predictability”.

The Government’s preference is for the hours threshold to be set somewhere between 8 and 20 hours per week. Noting that workers on fewer contracted hours are more likely to work in excess of their contracted hours, the Government believes that a threshold within this range is likely to strike the right balance between costs and benefits. 

Reference period

The offer of a guaranteed hours contract will need to be made at the end of an initial reference period and then again at the end of each subsequent reference period.

The Government’s preference is for an initial reference period of 12 weeks. Subsequent reference periods could be 12 weeks or longer – possibly 26 or 52 weeks. A reference period of 52 weeks would significantly lower the administrative burden on employers and would have the benefit of levelling out seasonal fluctuation.

Regularity of worked hours

In order for the duty to make an offer of a guaranteed hours contract to be triggered, the worker will have to carry out some work in the reference period, and that work must meet a “regularity requirement”. There may be one or two measures of regularity of worked hours.

The consultation explains that the first measure is based on the number of weeks in the reference period in which the worker carried out some work. For example, the regularity requirement might be met where the worker works 6 weeks or 8 weeks in a 12 week reference period.  This is termed the “weekly distribution requirement”. It is possible that this will be the only measure of regularity.

The second measure which might be used in addition to the weekly distribution requirement, is the number of hours worked in excess of the number of contractual hours in the reference period. There is a wide range of options in the consultation from less than 48 hours all the way up to 96 excess hours in a 12 week reference period. This is termed the “total hours requirement”.

Where the reference period is longer than 12 weeks, the regularity requirement would be increased on a pro rata basis.   

Reasonable notice of shifts and payments for short notice changes

The ERA 2025 also brings in a right to reasonable notice of shifts and to payments for cancelling, moving or curtailing a shift at short notice, or very short notice.

This will apply only to people on zero hours contracts and those with up to a certain number of hours guaranteed in their contract. An hours threshold will also be set above which the right to reasonable notice will not apply. This may be the same as the low hours contract threshold above, but it may be set at a different level.

The consultation proposes a reasonable notice period of between one and four weeks for workers engaged directly by an employer. For agency workers, it proposes anywhere from less than five days to four weeks.

Where there is short notice or very short notice of cancellation of shifts, employers will be obliged to make a short notice payment. Short notice will be some period of 7 days or less and the Government is consulting on how long it should be within that range. The short notice payment will be a percentage of what the worker would have earned for the shift, or will be based on a percentage of the notional national minimum wage (NMW) for the shift. For example, 30% of earnings at the worker’s hourly rate, or at NMW, for the cancelled shift.

There is obviously much to be worked out on these changes. The Government has committed to allowing sufficient time before the commencement of the relevant regulations for employers and workers to become familiar with these new rights. The real impact of these changes on employers will depend on the finer details of the outcome of this important consultation.  

Next steps for employers using zero hours and low hours contracts

The Government consultation on reforms to zero hours and low hours contracts is available at Make Work Pay: ending one-sided flexibility – reforms of zero hours and similar contracts - GOV.UK and is open until 25 August 2026. Employers who engage with staff using zero hours and low hours contracts should read the consultation document and consider providing a response.

Employers will no doubt be considering steps to mitigate the risks and administrative burdens of these reforms which might include using more fixed term contracts, or offering contracts with contractual hours above the low hours threshold. Some employers might consider deploying staff in ways which ensure they do not meet the “regularity requirement”. However, employers should be aware that the rules also include provisions which limit these steps.

The offer of a fixed term contract will only be an option where it is reasonable for the employer to consider that there is a temporary need, where the worker is only needed to perform a specific task or until the occurrence of an event.

Employers should also be aware of the anti-avoidance provisions in the ERA 2025. There will be a right to bring a claim in the employment tribunal where the right to guaranteed hours would have applied if the employer had not made work available to the worker in a way which prevented the duty applying – for example limiting the number of hours available to them.

Wrigleys’ employment team will be hosting our annual Employment Law Conference specially curated for charity and not for profit employers on 18 June in Leeds. We will be covering key changes under the ERA 2025, including those already in force and those expected in 2027. You can book your place at Wrigleys Employment Law Conference for Charities | 18 June 2026 - Wrigleys Solicitors LLP. It would be great to see you there.

If you would like to discuss any aspect of this article further, please contact our Employment team on 0113 244 6100. 

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The information in this article is necessarily of a general nature. The law stated is correct at the date (stated above) this article was first posted to our website.

Specific advice should be sought for specific situations. If you have any queries or need any legal advice, please feel free to contact Wrigleys Solicitors.