Consultation on new rights for workers on zero/low hours contracts due to come into force next year | The Indicator Podcast

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The government has launched a consultation seeking views to help it understand how the proposed changes to zero/low hours contracts will affect existing systems and processes and the steps that will need to be taken to comply with the proposed reforms. The consultation also provides more detail as to how these rights may work in practice and on the government’s preferred approach. Listen along to find out more!

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Speaker #0
Today in the Indicator HR and Employment Law podcast, we're discussing the government consultation on the operation of zero-hours contracts. The Employment Rights Act 2025 contains a number of provisions yet to come into force which will reform the way zero-hours contracts operate. Prior to introducing these measures into law, the government is now seeking views to help it understand how the proposed changes will affect existing systems and processes, and the steps that will need to be taken to comply with the proposed reforms. The consultation provides more detail as to how these rights may work in practice. It discusses the right to guaranteed hours, noting that when the relevant provisions of the Act come into force, there will be an obligation on employers to make a guaranteed hours offer to qualifying workers, and it will be the employer's responsibility to ensure that such an offer is made at the appropriate time. The offer will be an invitation to the worker to enter into a new or varied contract with the employer, and if the worker accepts the offer, their new contract will provide for a number of guaranteed hours which the employer must then offer, and the worker must work. The hours offered will be calculated by reference to the number of hours worked by the worker during a set reference period. The government has confirmed that its current preference is for the reference period to be 12 weeks long. In order for a worker to qualify for the right to guaranteed hours, they must work for their employer on a zero hours contract, or under a zero hours arrangement, and have currently no guaranteed hours or a number of guaranteed contractual hours in their contract that is below a set hours threshold. The government's current preference being that the threshold is set between 8 and 20 hours per week. In addition, they must also have worked during the reference period, worked hours in excess of their current contractual hours during that period, must have met the regularity requirements (the meaning of which will be set out later), and the worker must not be an excluded worker. While the definition of an excluded worker is yet to be decided, one example given in the consultation document is a worker who has more than one contract with the same employer, one of which exceeds the hours threshold. In terms of regularity requirements, the aim is that only workers who work regularly for an employer will be entitled to the right to guaranteed hours. The government is proposing two options on this front. The first being that the hours worked under the reference period must be distributed over a specified minimum number of weeks during the total reference period. The weeks do not have to be consecutive. And the second being that the worker must meet the minimum weekly distribution as set out in the first option, and must also work a minimum, yet to be determined, number of hours in excess of those they are already guaranteed in order to qualify for a guaranteed hours offer. A worker is entitled to decline the offer of guaranteed hours and choose to remain on their existing contract if they prefer. This will not stop them being entitled to further offers of guaranteed hours in relation to subsequent reference periods. After the initial reference period, there will be subsequent reference periods in which a worker may once again qualify to be offered guaranteed hours. Offers will need to be made in subsequent reference periods under the same circumstances as in the initial reference period and also in circumstances where a worker has previously accepted an offer of guaranteed hours and then has worked in excess of those hours during the subsequent reference period. As with the initial reference period, if the number of hours in their guaranteed hours contract is in excess of the hours threshold, then they will not be entitled to further offers in subsequent reference periods. The government notes that it needs to strike a balance between the increased administrative burden for employers brought on by a shorter subsequent reference period, such as 12 weeks, and the reduction in opportunities for workers to be offered guaranteed hours should a longer subsequent reference period, such as 26 or 52 weeks, be adopted. The right will also extend to agency workers, with the end user being obligated to make guaranteed hours offers to qualifying agency workers. An agency worker will qualify if they have worked for and under the supervision or direction of the end user during the reference period, have met the regularity requirements, proposed to be the same as for directly engaged workers, and not be an excluded agency worker, should any exclusions be included in the final regulations. Current views suggest that an agency worker may be excluded if they are already guaranteed hours above the hours threshold by their agency, regardless of whether all hours will be worked with one end user, and/or if they already have a contract guaranteeing hours above a particular threshold for one end user. Should an agency worker take up an offer of guaranteed hours with an end user, they will become a directly engaged worker, including for the purposes of any subsequent reference periods. A worker will be able to enforce their rights to guaranteed hours by making a claim in the Employment Tribunal. The consultation also discusses seasonal workers. It is proposed that employers will be able to use limited term contracts in relation to workers and agency workers to manage periods of increased demand, such as seasonal work fluctuations. If the limited term contract is shorter than the relevant reference period, the employer would not need to make a guaranteed hours offer to workers engaged on that contract. If workers are employed on multiple limited term contracts for the same employer, it will be presumed that it was not reasonable for them to be on a limited term contract, unless the employer is able to show otherwise. For example, the worker is only needed for eight weeks to perform a specific task and the contract terminates after it is completed. If an employer comes under a duty to make an offer of guaranteed hours to a worker, that may take the form of a limited term contract if reasonable. Periods of increased need are referred to as a temporary need, and this will be defined in the final regulations with the consultation asking whether there are examples of temporary need which are not related to a specific task or event. A further proposed change involves giving reasonable notice of shifts and payment for shifts cancelled, moved or curtailed at short notice. It is proposed that this right will only apply to workers and agency workers whose contracts provide for hours up to and including the hours threshold. It will apply to both notice of scheduled shifts and rearranged shifts to ensure reasonable notice is given for both. For example, if the hours threshold for the right to reasonable notice and short notice payments was 16 hours per week, then a worker whose contract guaranteed them 18 hours a week of work would not be entitled to reasonable notice of shifts or a cancellation payment if their shift was cancelled at short notice under the legislation. The consultation is seeking views on what the hours threshold should be, ranging from 8 to 48 hours per week, with an option of specifying another amount. The government recognises that not all workers are guaranteed hours on a weekly basis. For example, some workers are guaranteed hours over a month or year and this will be taken into account when the regulations are made. It is proposed that there will be a set amount of notice that is presumed reasonable and this will be the starting point for employers, workers and tribunals. The consultation is seeking views on what this should be, ranging from 1 week to 4 weeks with an option of specifying another amount. Should a case go to tribunal where the employer has given less notice than that which is presumed reasonable, it will be for the employer to show that the notice was reasonable and if the employer has given at least the presumed reasonable notice, the worker will have to show that it was not reasonable. Where shifts are cancelled, moved or curtailed at short notice, employers will be obligated to make a payment to affected workers. This will not apply where workers agree between themselves to swap shifts, or where the worker initiates the cancellation, curtailment or change. The government is considering whether it is appropriate to have just one time period or multiple, such as a short notice period and a very short notice period, with the latter attracting a higher payment to the worker than the former. The consultation is seeking views on what such periods may be with the time frame for short notice for directly engaged workers ranging from one to seven days with an option of specifying another amount, and the time frame for very short notice for directly engaged workers ranging from less than 1 to 5 days with an option of specifying another amount or stating that there should not be a very short notice period. The government intends that the amount of payment due to the worker in these circumstances will directly relate to the amount they would have earned had the shift gone ahead as expected. It proposes two options, one whereby a percentage payment is calculated with reference to the worker's personal salary Thank you. and the other whereby it is calculated at the national living or national minimum wage rate. The government is also considering imposing an additional fine, payable to the government, for employers who fail to make payments in accordance with this right. Rights to payments for cancelled, moved or curtailed shifts at short notice will be enforceable via the Employment Tribunal. The consultation is now open and will close on 25 August 2026. Look out for further episodes in this series to stay up to date on all things HR and employment law related.

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Visit www.indicator.co.uk to explore our product range, or connect with us on social media:

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Hosted on Ausha. See ausha.co/privacy-policy for more information.

Transcription

Speaker #0
Today in the Indicator HR and Employment Law podcast, we're discussing the government consultation on the operation of zero-hours contracts. The Employment Rights Act 2025 contains a number of provisions yet to come into force which will reform the way zero-hours contracts operate. Prior to introducing these measures into law, the government is now seeking views to help it understand how the proposed changes will affect existing systems and processes, and the steps that will need to be taken to comply with the proposed reforms. The consultation provides more detail as to how these rights may work in practice. It discusses the right to guaranteed hours, noting that when the relevant provisions of the Act come into force, there will be an obligation on employers to make a guaranteed hours offer to qualifying workers, and it will be the employer's responsibility to ensure that such an offer is made at the appropriate time. The offer will be an invitation to the worker to enter into a new or varied contract with the employer, and if the worker accepts the offer, their new contract will provide for a number of guaranteed hours which the employer must then offer, and the worker must work. The hours offered will be calculated by reference to the number of hours worked by the worker during a set reference period. The government has confirmed that its current preference is for the reference period to be 12 weeks long. In order for a worker to qualify for the right to guaranteed hours, they must work for their employer on a zero hours contract, or under a zero hours arrangement, and have currently no guaranteed hours or a number of guaranteed contractual hours in their contract that is below a set hours threshold. The government's current preference being that the threshold is set between 8 and 20 hours per week. In addition, they must also have worked during the reference period, worked hours in excess of their current contractual hours during that period, must have met the regularity requirements (the meaning of which will be set out later), and the worker must not be an excluded worker. While the definition of an excluded worker is yet to be decided, one example given in the consultation document is a worker who has more than one contract with the same employer, one of which exceeds the hours threshold. In terms of regularity requirements, the aim is that only workers who work regularly for an employer will be entitled to the right to guaranteed hours. The government is proposing two options on this front. The first being that the hours worked under the reference period must be distributed over a specified minimum number of weeks during the total reference period. The weeks do not have to be consecutive. And the second being that the worker must meet the minimum weekly distribution as set out in the first option, and must also work a minimum, yet to be determined, number of hours in excess of those they are already guaranteed in order to qualify for a guaranteed hours offer. A worker is entitled to decline the offer of guaranteed hours and choose to remain on their existing contract if they prefer. This will not stop them being entitled to further offers of guaranteed hours in relation to subsequent reference periods. After the initial reference period, there will be subsequent reference periods in which a worker may once again qualify to be offered guaranteed hours. Offers will need to be made in subsequent reference periods under the same circumstances as in the initial reference period and also in circumstances where a worker has previously accepted an offer of guaranteed hours and then has worked in excess of those hours during the subsequent reference period. As with the initial reference period, if the number of hours in their guaranteed hours contract is in excess of the hours threshold, then they will not be entitled to further offers in subsequent reference periods. The government notes that it needs to strike a balance between the increased administrative burden for employers brought on by a shorter subsequent reference period, such as 12 weeks, and the reduction in opportunities for workers to be offered guaranteed hours should a longer subsequent reference period, such as 26 or 52 weeks, be adopted. The right will also extend to agency workers, with the end user being obligated to make guaranteed hours offers to qualifying agency workers. An agency worker will qualify if they have worked for and under the supervision or direction of the end user during the reference period, have met the regularity requirements, proposed to be the same as for directly engaged workers, and not be an excluded agency worker, should any exclusions be included in the final regulations. Current views suggest that an agency worker may be excluded if they are already guaranteed hours above the hours threshold by their agency, regardless of whether all hours will be worked with one end user, and/or if they already have a contract guaranteeing hours above a particular threshold for one end user. Should an agency worker take up an offer of guaranteed hours with an end user, they will become a directly engaged worker, including for the purposes of any subsequent reference periods. A worker will be able to enforce their rights to guaranteed hours by making a claim in the Employment Tribunal. The consultation also discusses seasonal workers. It is proposed that employers will be able to use limited term contracts in relation to workers and agency workers to manage periods of increased demand, such as seasonal work fluctuations. If the limited term contract is shorter than the relevant reference period, the employer would not need to make a guaranteed hours offer to workers engaged on that contract. If workers are employed on multiple limited term contracts for the same employer, it will be presumed that it was not reasonable for them to be on a limited term contract, unless the employer is able to show otherwise. For example, the worker is only needed for eight weeks to perform a specific task and the contract terminates after it is completed. If an employer comes under a duty to make an offer of guaranteed hours to a worker, that may take the form of a limited term contract if reasonable. Periods of increased need are referred to as a temporary need, and this will be defined in the final regulations with the consultation asking whether there are examples of temporary need which are not related to a specific task or event. A further proposed change involves giving reasonable notice of shifts and payment for shifts cancelled, moved or curtailed at short notice. It is proposed that this right will only apply to workers and agency workers whose contracts provide for hours up to and including the hours threshold. It will apply to both notice of scheduled shifts and rearranged shifts to ensure reasonable notice is given for both. For example, if the hours threshold for the right to reasonable notice and short notice payments was 16 hours per week, then a worker whose contract guaranteed them 18 hours a week of work would not be entitled to reasonable notice of shifts or a cancellation payment if their shift was cancelled at short notice under the legislation. The consultation is seeking views on what the hours threshold should be, ranging from 8 to 48 hours per week, with an option of specifying another amount. The government recognises that not all workers are guaranteed hours on a weekly basis. For example, some workers are guaranteed hours over a month or year and this will be taken into account when the regulations are made. It is proposed that there will be a set amount of notice that is presumed reasonable and this will be the starting point for employers, workers and tribunals. The consultation is seeking views on what this should be, ranging from 1 week to 4 weeks with an option of specifying another amount. Should a case go to tribunal where the employer has given less notice than that which is presumed reasonable, it will be for the employer to show that the notice was reasonable and if the employer has given at least the presumed reasonable notice, the worker will have to show that it was not reasonable. Where shifts are cancelled, moved or curtailed at short notice, employers will be obligated to make a payment to affected workers. This will not apply where workers agree between themselves to swap shifts, or where the worker initiates the cancellation, curtailment or change. The government is considering whether it is appropriate to have just one time period or multiple, such as a short notice period and a very short notice period, with the latter attracting a higher payment to the worker than the former. The consultation is seeking views on what such periods may be with the time frame for short notice for directly engaged workers ranging from one to seven days with an option of specifying another amount, and the time frame for very short notice for directly engaged workers ranging from less than 1 to 5 days with an option of specifying another amount or stating that there should not be a very short notice period. The government intends that the amount of payment due to the worker in these circumstances will directly relate to the amount they would have earned had the shift gone ahead as expected. It proposes two options, one whereby a percentage payment is calculated with reference to the worker's personal salary Thank you. and the other whereby it is calculated at the national living or national minimum wage rate. The government is also considering imposing an additional fine, payable to the government, for employers who fail to make payments in accordance with this right. Rights to payments for cancelled, moved or curtailed shifts at short notice will be enforceable via the Employment Tribunal. The consultation is now open and will close on 25 August 2026. Look out for further episodes in this series to stay up to date on all things HR and employment law related.

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