What is the current situation?

Employers can currently use zero hours contracts with no obligation to provide regular work, to offer a set number of hours, or to pay for hours that are not worked. Employers can also use minimum hours contracts, with no obligation to offer work beyond the stated minimum. These types of contracts are often used to help manage fluctuations in demand and workload.

When scheduling or varying workers’ shifts, employers must be mindful of working time and health and safety regulations, the risk of indirect discrimination claims, and,  where the individuals are employees, the duty of mutual trust and confidence. Employers must also comply with any contractual obligations relating to the timing of shifts. Subject to these limits, employers can schedule, cancel or amend shifts at short notice without paying compensation.

Similarly, hirers can engage agency workers on arrangements equivalent to zero hours or minimum hours contracts, and can schedule, cancel or change shifts at short notice without compensation, subject to the terms agreed with the agency.

So what’s changing and when?

The Employment Rights Act seeks to address one-sided flexibility by changing how zero hours and minimum hours contracts operate. (It is not yet clear which minimum hours contracts will be covered; they will need to meet the definition of ‘low hours’ contracts, which will be set out in regulations.)

The Act will also introduce a requirement for workers to receive reasonable notice of shifts and of any changes to those shifts.

These new rules will apply to agency workers as well.

Many aspects of the new regime will be set out in regulations, and the Government has indicated that it will consult on these measures before they come into force.

Guaranteed hours

It is expected that from 2027, employers will be required to offer workers on zero hours contracts and qualifying minimum hours contracts a guaranteed hours contract. This must reflect the hours the worker usually works over a reference period and include details of when those hours are to be worked.

The reference period will be defined in regulations and is expected to be 12 weeks. Regulations will also cover the required working patterns or days to be included in the guaranteed hours offer, the format of the offer, and how long the offer must remain open.

Workers will be able to refuse an offer of guaranteed hours and remain on a zero or low hours contract. However, they must still be offered guaranteed hours again at the end of each subsequent reference period.

It will be possible for a collective agreement to disapply the right to guaranteed hours.

Regulations will also set out the maximum award for failure to comply with these requirements.

Reasonable notice for shifts

It is expected that from 2027, employers will have to give reasonable notice of shifts and of changes to shifts for workers on zero or minimum hours contracts, workers with no fixed working pattern, and workers who are offered shifts outside their usual working pattern. This includes changes to shift start and finish times.

Where employers cancel, move or reduce the length of shifts at short notice, and the worker reasonably believed they were required to work, the employer will have to make a ‘short notice payment’. The definition of short notice, the level of payment and any exceptions will be set out in regulations. The payment will be proportionate to the cancellation or change.

What counts as reasonable notice will depend on the circumstances, but regulations will establish minimum notice requirements and the factors a tribunal will consider when deciding whether sufficient notice was given.

A collective agreement may disapply the right to reasonable notice of shifts and shift changes.

Agency workers

The Act will introduce similar protections for agency workers, to prevent businesses from using temporary staff to avoid the new requirements.

In most cases, the hirer will be responsible for making the guaranteed hours offer. If the agency worker accepts the offer, they will become the hirer’s worker for the purposes of that particular contract. Regulations are expected to prevent hirers from terminating an agency worker’s engagement to avoid offering guaranteed hours.

The hirer must ensure that the pay offered under a guaranteed hours contract is no less favourable than either the pay the worker received as an agency worker or the pay of a comparable directly engaged worker.

Both the agency and the hirer will be responsible for ensuring that agency workers receive reasonable notice of shifts and changes to shifts. Although the agency will be responsible for making any short notice payments, in practice these costs are likely to be passed on to the hirer where the hirer is responsible for the change.

The collective agreement provisions allowing contracting out of the guaranteed hours and reasonable notice requirements can also apply to agency workers.

What you need to do

The timing of these steps will depend on when the detail of the new legislation is finalised and when it comes into force. However, employers can start preparing now by:

• Reviewing the types of contracts used to manage variations in workload or demand, such as zero hours contracts, minimum hours contracts, annualised hours contracts, fixed-term contracts, overtime arrangements and agency workers. Identify where these are used across the business and whether they still meet operational needs.

• Reviewing actual working practices against contractual arrangements. Consider how much flexibility built into zero or minimum hours contracts is used in practice.

• Thinking strategically about how to manage fluctuating demand in the future. Consider how the requirement to offer guaranteed hours may affect workforce planning and whether alternative contractual models may be more appropriate, including changes to the use of agency workers.

• Checking that record-keeping systems are sufficiently detailed to comply with the new legislation, particularly if zero or minimum hours contracts will continue to be used. This includes being able to track working patterns over the reference period (expected to be 12 weeks).

• Auditing current practices around notice for new shifts, shift changes and cancellations. Consider whether more notice could be given and what process changes would be required.

• Where a recognised trade union is in place, developing a constructive relationship to increase the likelihood of reaching a collective agreement to contract out of certain new requirements.

How Bhayani Law can help you

Bhayani Law can support employers in preparing for and implementing the new zero and low hours contract reforms by:

• Reviewing existing contracts, working patterns and use of agency workers

• Advising on workforce planning and suitable contractual alternatives

• Updating contracts, policies and processes to reflect the new requirements

• Supporting compliance with notice, record-keeping and guaranteed hours obligations

• Providing practical advice on managing risk and disputes during transition

We work with employers to ensure compliance while maintaining operational flexibility.

Already supported by Bhayani Law?

You will receive ongoing updates from us as the law develops, helping you stay compliant.

Our HR and employment law resources include template contracts and policies for zero and low hours arrangements. We can also help you audit your workforce structure, analyse shift allocation processes, and implement practical solutions to reduce risk and cost.

If you need training for managers or supervisors, our team can deliver targeted sessions on managing variable hours staff within the new legal framework.

New to Bhayani Law?

You do not have to prepare for these changes alone. Whether you need one-off advice or ongoing HR and legal support, we can tailor our services to your organisation’s needs.