How will the Employment Rights Act 2025 impact on the use of fixed term and casual contracts in schools?

Important considerations for academy trusts and schools in 2026 and beyond.

School employers rely on a range of different contracts to engage staff across teaching, support and auxiliary roles. Fixed-term contracts are often used to cover staff on family leave, or for other temporary requirements. Zero-hours or low-hours contracts (or ‘casual’ contracts) are often used to engage exam invigilators, to staff enrichment activities, lunchtime supervision, and wrap-around care, and to plug urgent gaps. In this article we consider how the new protections and obligations for employers under the Employment Rights Act 2025 (ERA 2025) will impact on schools using these kinds of contracts.

If someone on a zero-hours or low-hours arrangement in fact works a regular pattern of hours, schools will be required to offer guaranteed hours reflecting an average of worked hours over a (still to be defined) reference period. The ERA 2025 also introduces obligations to give reasonable notice of shifts, and to pay compensation when they are cancelled or curtailed at short notice. We expect these changes to take effect during 2027.

In addition, from the expected date of 1 January 2027, most employees will be able to bring an unfair dismissal claim after only six months’ service, and the compensatory cap on unfair dismissal claim awards will be removed, so inadequate internal processes increase the risk of significant liabilities developing.

The changes impacting on casual contracts in the ERA 2025

Governments have been concerned about so-called ‘one-sided’ flexibility and precarious working arrangements in the gig economy for many years. The changes in the ERA 2025 are designed to prevent situations where the employer derives most of the benefits and freedoms of flexible arrangements whilst the worker is left with the drawbacks. The ERA 2025 seeks to do this by bringing in a duty on the employer to offer guaranteed hours to reflect the hours actually worked by casual staff.  

Guaranteed-hours offers: if a person on a zero-hours or low-hours contract has been regularly working more hours than their contract guarantees, an employer must offer terms that reflect that working pattern to align the written contract with the reality of the working arrangement. A reference period will be set over which this will need to be assessed (widely expected to be 12 weeks). We do not yet know where the threshold for a low-hours contract will be set. This threshold will be key to understanding the impact of these changes on schools currently using low guaranteed hours contracts. The new rules can be contracted out of through a collective agreement with recognised trade unions.

Reasonable notice of shifts: employers will need to publish and apply reasonable notice periods for offering work. What counts as ‘reasonable’ will depend on context and be set out in future regulations (although it will not be more than seven days).

Compensation for cancellations: if an employer cancels, moves or cuts short a shift at short notice, they will be required to compensate the worker. Again, the amounts of compensation due and the thresholds in terms of timing will be set out in regulations which are not yet made.

Unfair dismissal: from 1 January 2027, the unfair dismissal qualifying period will reduce from two years to six months, and the compensatory cap for awards for unfair dismissal will be removed. Staff who are moved from contracts with no guaranteed hours to contracts with guaranteed hours are likely to become employees and therefore to have the right not to be unfairly dismissed after six months’ service. For schools, this means processes relating to managing performance and conduct issues will need to be well structured and closely followed, and that clear documentation will need to be gathered to support the fair reason for any dismissal relating to the employee.

The use of casual contracts in schools

Some roles are more likely to be impacted by the changes to rules around casual contracts than others. School employers should review their use of casual contracts including the following.

Exam invigilators: many schools rely on a bank of invigilators who return year after year. If a school rosters the same invigilators to broadly similar patterns each year and the hours worked do not reflect the written contract, then there is a risk that a guaranteed-hours offer will need to be made. The cancellation-pay rules may also impact here, for example if invigilation requirements change at short notice, this may trigger obligations to make late-notice payments to staff.

Switching to use fixed-term contracts for invigilators may make more sense, including a set termination date aligned with the end of the exam period. However, caution is advised as a series of fixed term contracts over four years is likely to mean the employee is considered to be a full-time employee under the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (FTRs). There will also be rules around offering limited-term contracts to comply with the duty to offer guaranteed hours (see below*).

Peripatetic music and sports coaches: where lessons are timetabled weekly, schools will likely trigger the duty to offer guaranteed hours if the number of hours worked does not reflect the number of hours stated in the contract. To avoid this, schools might consider moving away from zero-hours contract towards low guaranteed hours contracts which are aligned to the hours worked, or using annualised-hours contracts. Schools can keep flexibility for concerts, tournaments and trips, but will need to accept that regular weekly sessions are likely to trigger the new duty.

Wrap-around care and lunchtime supervisors: regular rotas, even if short, may meet the qualifying test for guaranteed-hours offers. The pragmatic answer may be term-time only guaranteed-hours contracts with sensible baselines for weekly hours and overtime to manage peak demands.

Zero-hours contracts will still have a place where work demand is genuinely unpredictable (e.g. occasional cover, one-off events, holiday clubs that may or may not run). When using these contracts, schools should put in place workable systems to track the hours worked per person across the reference period (to be defined) and be ready to pivot to an offer of guaranteed hours if a regular pattern of work emerges. Schools should take care to avoid employment status drift: just because someone is labelled as a ‘casual worker’ when they join, does not mean a tribunal will agree when they look at how the arrangement worked and developed in practice.

*Can schools offer a limited-term contract to comply with the new duty?

The ERA 2025 states that an offer of a guaranteed hours contract must not be for a fixed term unless that is “reasonable”. Such an offer will be reasonable where the contract is to complete a specific time-limited task, to cover another worker until they return, or where there is only a “temporary need” as defined in regulations which are yet to be made.

It may therefore be possible to offer a limited-term contract to comply with the duty to offer guaranteed hours where there is a seasonal or temporary need for the work. The Government has agreed to consult relevant employers and workers on what counts as a "temporary need" before making regulations allowing a guaranteed hours offer to take the form of a limited-term contract.

Considerations for schools when using fixed term contracts

Fixed-term contracts will remain the right tool where the demand is time-limited, such as maternity and other family leave, long-term sickness, secondments, externally funded or time-limited projects, or short-term recruitment cover. However, fixed term contracts require a fair reason to bring them to an end, including a decision not to renew the contract on expiry.

Fixed term staff and redundancy rights

The reason for terminating a fixed term contract will often be redundancy and school employers should remain aware that staff on fixed term contracts will accrue redundancy payment rights after two years’ service.

Staff on fixed term contracts will also have the right not to be unfairly dismissed after six months, and so a full redundancy process will need to be followed, including pooling fixed term staff with other staff performing similar roles.

Academy trusts and maintained schools will be aware that the Redundancy Modification Order can also increase redundancy costs by treating previous service in other schools and trusts as continuous for redundancy pay purposes.

Next steps for school employers to prepare for the ERA 2025 changes

1. School employers should keep track of Government consultations and regulations which will set out the detail on the duty to offer guaranteed hours, including the reference period, the low-hours threshold and what is meant by short notice when it comes to the cancellation of shifts.

2. Schools should consider an audit exercise, identifying their casual contracts and considering which are genuinely ad hoc and which involve regular work, even if the hours are low. For each regular pattern, consider a contract model that reflects the reality: for example, permanent term-time only or year-round guaranteed hours; permanent guaranteed annualised-hours; or fixed-term contracts. More flexible arrangements can still be used where demand is genuinely unpredictable.

3. Schools should seek legal advice to review and renew their casual and fixed term contracts. Atypical contracts which have been adapted from permanent contracts can often lead to risk for school employers, for example where zero hours contracts include exclusivity clauses, or where notice provisions are missing or are misaligned with a fixed term.

4. Ensure staff who will be administering contracts and systems to keep track of hours worked in a reference period undertake relevant training and that they understand the upcoming rules for offering guaranteed hours in sufficient time to create workable systems.

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.