Zero-hour Contracts

Policy

Guaranteed hours offers

The Employment Rights Bill does not ban zero-hour contracts outright but includes several measures which will significantly inhibit their use.

The Employment Rights Bill contains detailed and (very) complex rules, but in short it will require employers to make a ‘guaranteed hours offer’ to ‘qualifying workers’ after the end of certain ‘reference periods’.

For now, much of the detail of how this will operate is left to further regulations, but what we know so far is:

• To whom it will apply: A ‘qualifying worker’ includes zero-hour workers and certain ‘low hours’ workers who have a low number of guaranteed hours. What is considered ‘low hours’ will be set in regulations. Where this threshold falls will have a big impact on how significant this new right will be.
• When to make a guaranteed hours offer: An employer must make a guaranteed hours offer to a worker if in relation to an ‘initial reference period’ the hours worked during such period satisfy certain conditions (such as to their number or regularity) and for low hours workers, the hours worked exceed the minimum number of hours under the contract. The detail will be set in regulations including:
  • the length of the initial reference period, although the Government indicates this will be 12 weeks;
  • the conditions that would trigger the obligation to make an offer (such as the number or regularity of hours to be worked over the reference period or such further conditions);
  • any workers that will be ‘excluded workers’.

A guaranteed hours offer will be an offer to a qualifying worker to either vary their terms and conditions or enter a new contract, although what the details will be set out in regulations.

This is not a one-time only duty, instead employers will have to repeat the assessment of whether a new guaranteed hours offer needs to be made. After the initial reference period, the employer must monitor the worker’s working time over subsequent reference periods (the length of which is unknown – again, this will be subject to consultation and will be set in regulations) and offer further contracts for guaranteed hours if the conditions to make an offer are met.

As the law has been drafted to permit a worker the flexibility to choose to accept or reject a guaranteed hours offer, there are a raft of complicated rules as to what will constitute such an offer, with certain crucial details left to regulations.

• Information rights: A set of Government amendments, agreed at Committee Stage, will place a duty on employers to take reasonable steps to give and provide continued access to specified information to certain workers regarding their rights to a guaranteed hours offer within an ‘initial information period’ and continuing thereafter.
• Exceptions and withdrawals: There are some exceptions where an employer will not be required to make a guaranteed hours offer, or such an offer will be treated as withdrawn, where there is a ‘relevant termination’ (such as resignations other than constructive dismissal scenario, worker terminations that are akin to fair dismissals, or expiry of a limited term contract where it was reasonable to be a limited term contract) during the reference, offer or response periods. Government amendments, agreed at Committee Stage, will require employers to give workers a notice where they consider an exception to the duty to make a guaranteed hours offer or where a guaranteed hours offer has been withdrawn.
• Limited term contracts: Where work is genuinely temporary there will be no expectation on employers to offer permanent contracts but a guaranteed hours offer can only be on a limited-term basis if it is ‘reasonable’. A Government amendment to the Employment Rights Bill, agreed at Committee Stage, will essentially create a rebuttable presumption that is it ‘not reasonable’ for the workers contract to be limited-term unless the contrary can be shown. The Government in its consultation response on the matter confirmed that employers will be able to offer temporary contracts where there is a genuine temporary work need. The Government will consult before setting out further detail about what constitutes a temporary need in regulations and is also “keen to discuss other ways in which it believes the legislation can cater for seasonal work.”
• Anti-avoidance: Anti-avoidance provisions have been included in the amendments to the Employment Rights Bill on 5 March 2025. These provisions will introduce additional grounds of action to prevent the manipulation of hours made available to a worker for the sole or main purpose of either making a reduced offer or avoiding the requirement to make a guaranteed hours offer altogether.   
• Claims: A worker can bring a claim to the employment tribunal for failure by an employer to make an offer or a compliant offer for the purposes of these provisions or breaches the anti-avoidance provisions. A successful claim can lead to an award of compensation (with regulations being needed to set the maximum compensation that could be awarded). There are also amendments to the Employment Rights Bill that have been tabled by the Government for additional rights to bring a complaint to the employment tribunal regarding failing to give certain information or notices under the provisions.

As is usual, there are some corresponding dismissal and detriment protections:

• Contracting out by way of collective agreement: Following amendments to on 5 March 2025, the rights to a guaranteed hours offer can also be contracted out by way of collective agreement for workers. This is subject to the terms of the collective agreement to expressly exclude and replace the duty or right being incorporated into the qualifying worker’s contract and the employer notified the worker in writing of the incorporation and effect of the terms.

These provisions are complicated, and unfortunately much of the detail is saved for regulations, so we cannot say yet how this new right will work in practice. There is also a promise to consult later on the implementation of the zero-hour contracts measures more generally.

It will be interesting to see what the threshold will be for being a low hours worker, as some employers may try to bypass these complicated laws and just set minimum contractual hours above that threshold if they aren’t set too high – although such employers may be caught by the new anti-avoidance provisions. Even if not – this might not be workable for all businesses.

Further, as the obligation to monitor working time and make guaranteed hours offers is an ongoing one, this will likely be a compliance headache for smaller businesses and for certain sectors such as retail and hospitality that may rely on zero-hour contracts to fill seasonal resourcing gaps. Employers will be watching to see what, if any, concessions the Government makes in respect of seasonal workers.

Notification of shifts

The Employment Rights Bill will introduce the following rights and obligations:

• It will require an employer to give a worker ‘reasonable notice’ of shifts for workers engaged on zero hours or certain workers with no set working patterns. What length of time amounts to ‘reasonable notice’ is not defined and the minimum time will be left to regulations.
• Such workers also will have the right to ‘reasonable notice’ of any cancellation of or change to a shift.
• If an employer fails to provide sufficient notice of a cancelled, moved or curtailed shift, they must make a payment to the worker (the amount of the payment will be set out in regulations – but it will be proportionate to the cancellation, change or curtailment).
• The right to reasonable notice of shifts can also be contracted out by way of collective agreement for workers in a similar way as to the requirements for a guaranteed hours offer.

The above provisions are aimed at ending one-sided flexibility, although employers will need to be organised with resourcing and have facilities to make payments for short notice changes to shifts – this may be more significant for large employers that employ flexible workers regularly (such as in retail and hospitality).

The Employment Rights Bill will also repeal the Workers (Predictable Terms and Conditions) Act 2023, which would have introduced a new right to request a predictable working pattern.

Application to agency workers

The Government launched a Consultation in October 2024, asking for views on whether the provisions should apply to agency workers. The Response and amendments to the Employment Rights Bill confirm that these rights will be extended to qualifying agency workers in a similar way (although with some key differences to reflect the nature of this different arrangement). The amendments to the Employment Rights Bill clarify that:

Guaranteed hours offers

• An agency worker (as defined) of a hirer will be a qualifying agency worker if during the particular reference period the agency worker worked for and under the supervision and direction of the hirer for a certain number of hours and with a certain regularity (details of which are not yet known and will be set out in regulations.)
• It will be the end hirer who is obliged to make a guaranteed hours offer to the qualifying agency worker. Details on how this will work is not yet known and will be set out in regulations and there is a power for this to be disapplied in certain circumstances so that a work-finding agency or other party is required to make the offer.
• It appears that the effect of this provision will be that if a qualifying agency worker accepts the offer from the hirer, it will become a direct worker of the hirer.
• As for workers, a guaranteed hours offer must not propose a limited-term contract unless it is reasonable to do so, and there are provisions which set out what is ‘reasonable’.
• The amendments seemingly do not change the system of transfer fees and extended hire periods which are set out in the Conduct of Employment Agencies and Employment Businesses Regulations 2003 – which the Government has confirmed will continue to apply.

Reasonable notice of shifts and compensation for short notice:

• Agency workers will be entitled to the rights in respect of reasonable notice of shifts, unless the shift is an ‘excluded shift’ (details of which are currently unknown). This responsibility will be placed on both the work-finding agency and the end hirer and liability will be apportioned to reflect the party responsible for providing unreasonable notice in each case.
• Qualifying agency workers, as for qualifying workers, are also required to be paid compensation for short-notice cancellation, curtailment or movement of shifts (but not in respect of ‘excluded shifts’). It will be the responsibility of the work-finding agency to make the payment for compensation on the basis that the Government considers this is “most efficient option,” as the agency worker will already be on the agency’s payroll. There are transitional provisions which will allow the agency to recover from the hirer the proportion of payments made to agency workers for short notice that reflect the hirer’s responsibility for the insufficient notice. However, this will only apply where the arrangement between the employment agency and the hirer was pre-existing on or before the period of two months after the Employment Rights Bill is passed and it has not been modified since. After this, it will be for the agencies and hirers to negotiate the terms between them in their contracts as to the recovery of such payments.

Contracting out by way of collective agreement:

• The rights to a guaranteed hours offer and to reasonable notice of shifts can also be contracted out by way of collective agreement for agency workers in a similar way as for workers.

Employers are likely to be concerned about these measures, and the knock-on impact of using agency workers, including increased complexity and costs, but the impact of this will largely depend on some of the details of the threshold application. The Government has said that it will maintain flexibility to cater for different circumstances by exception – but as with many of the elements of this reform, details of how the measures will work in practice are still to be set out.

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Timing and developments

Included in the Employment Rights Bill.

The Government launched a Consultation on 21 October 2024 on how the provisions will apply to agency workers. A response was published on 4 March 2025 confirming how the right will apply to agency workers and introducing amendments to the Employment Rights Bill on 5 March 2025.

The legislation simply creates a policy framework, and so further consultation is promised on the regulations that will be required to flesh out the detail. For example, on:

• guaranteed hours offers – the definitions of low and zero-hour contracts and what working hours and patterns will make an agency worker qualify for the rights, length of any reference periods and the requirements of a guaranteed offer etc; and
• shifts – what amounts to short notice or a moved shift and the payment amount.

The Government has also promised that it will develop guidance on understanding the new rights before they come into force. Further consultation is also promised in respect of the rights more generally and are likely to commence in 2025.

Implementation is currently anticipated no earlier than 2026, though firm details on timing have not yet been provided.