The UK Employment Rights Act: zero hours and low hours contract provisions

The Employment Rights Act (“Act”) received Royal Assent on 18 December 2025 and the government plans a staged implementation over 2026 and 2027

The Act includes 28 employment reforms and, cumulatively, the scale, breadth and complexity of the changes are significant for employers (read our tracker to keep abreast of developments across the Act and timescales for implementation).

To support employers as they respond to the Act’s diverse measures, our more detailed briefings focus on specific topics within the Act and include the latest developments and practical implications. In this briefing, we review the provisions that apply to zero and low hours worker contracts.

For our briefings focusing on the Act’s changes to:

• new state enforcement powers, read our update
• trade union and collective rights, read our update
• dismissal and re-engagement (“fire and rehire”), read our update
• family-friendly rights and SSP, read our update
• collective redundancies, read our update
• unfair dismissal, read our update
• equality and harassment duties, read our update

Zero hours and low hours contract provisions

The government estimates there are around 1.13 million people in employment on zero hours contracts in the UK representing around 3% of employed persons. In addition, around 140,000 agency workers identify as being on zero hours contracts. 

As part of its Plan to Make Work Pay, the government pledged to “ban exploitative zero-hours contracts” and “end one-sided flexibility”.  Although the Act's provisions do not go as far as an outright ban, they create a complex new suite of rights for zero and low hours workers, including certain agency workers. Below we summarise the key provisions, explain practical impact and steps employers should take now to prepare. 

What does the Act say?

Right to guaranteed hours

The Act introduces a new duty for employers to offer “qualifying workers” a guaranteed hours contract which “reflects” the hours they work over a “reference period”. 

The definition of a qualifying worker has various elements and includes those employed by the employer on one or more worker’s contracts (whether or not continuously) during the reference period. Their workers contract(s) must either be: 

• a zero hours contract
• entered into under a zero hours arrangement, or
• a “low “hours” contract i.e. one which specifies a minimum number of guaranteed hours not exceeding a threshold (which is still to be determined). To be a qualifying worker, hours worked in the reference period must exceed the minimum guaranteed hours in the contract. The worker will cease to be a “low hours” worker (and cease to be a qualifying worker therefore) when their hours exceed the low hours threshold

Regulations may also specify further conditions for hours worked during the reference period, including their regularity. The worker must also not be an “excluded worker” which is to be defined in regulations (and employers will want to keep a close eye on possible exemptions, although we expect these to be narrow in scope).

Agency workers (i.e. essentially engaged/employed by a third party to work under the end-user’s supervision etc.) are also covered by the duty. Please see further below.

The threshold for who is a low-hours worker and the length of the reference period will also be confirmed in further regulations, with the government’s stated preference for the latter being 12 weeks.

This duty applies at the end of the initial reference period and each subsequent reference period, and will continue to be triggered until the worker is no longer a low hours worker (because their contractually guaranteed hours exceed the low hours threshold). Employers must follow complex rules around the timing, form and content of a guaranteed hours offer. The guaranteed hours offer must “reflect” the hours worked during the reference period, although it is currently unclear exactly how employers must calculate this i.e. is this an average, or some other calculation. It is also not clear whether the ‘reflection’ would be an identical reflection of hours/times/patterns worked in the reference period (e.g. all night shifts), or some variation.

The guaranteed hours offer must propose terms and conditions that are no less favourable overall than those applied during the reference period (save for some limited circumstances). Some have raised concerns that this could lead to some employers facing difficult issues where the hourly rate of the former zero/low hours worker  (including an agency worker) exceeds their ‘full time’ existing employees to reflect any ‘premium’ rate that the zero/low hours worker and received previously to reflect the greater flexibility for the employer/hirer/agency. Presumably to partly address these concerns, the Act includes, in relation to qualifying agency workers only, an option for the end hirer to offer the qualifying agency worker a pay rate which reflects certain directly employed comparators (subject to certain conditions and definitions being met). 

Detailed rules also apply to a worker’s acceptance or rejection of an offer. Importantly, a worker does not have to accept the offer if they wish to remain under their current zero or low hours working arrangements.

Employers can make a fixed-term offer of guaranteed hours in circumstances where it is “reasonable” to enter into a fixed-term contract. This will include where it is “reasonable” for the employer to conclude that the worker is only needed for a specific task, or until the occurrence of an event, or where there is only a “temporary need of a specified description” (to be defined in further regulations).

Exceptions to the duty to make a guaranteed hours offer apply if, during the reference period or a guaranteed hours offer/response period, the worker: 

• resigns 
• is “fairly dismissed” by the employer (meeting a legal test similar to the current unfair dismissal test); or 
• their fixed-term contract has terminated. However, again, it must have been “reasonable” to use a fixed-term contract (as per the circumstances set out above) and there must be a “limiting event”. It will be presumed that it is not “reasonable” to use a fixed-term contract if there is another worker carrying out the same or similar work under another contract during the reference period or guaranteed hours offer/response period – this is to prevent employers using a series of fixed-term contracts to circumvent the legislation

Employers must provide a notice to the worker explaining which exception applies. Future regulations may set out further exceptions, including where the Secretary of State considers there may be a “significant adverse effect on employers who are dealing with exceptional circumstances”. Impacted employers will want to watch this area closely.  

Anti-avoidance measures prevent employers from manipulating or structuring hours of work in such a way to make a lower guaranteed hours offer, or to avoid the duty altogether. 

Employers must also provide workers with information about their rights to guaranteed hours where it is reasonable to consider the worker could become a qualifying worker within an initial information period and on a continuing basis, with further detail to be set out in regulations.

Right to reasonable notice of shifts, shift changes or cancellation and to payment for shifts cancelled, curtailed, or moved at short notice

These rights will apply to zero-hours workers, zero-hours arrangements, and a further category of low hours or low paid workers to be determined in further regulations which may set a threshold in terms of both low hours and low pay. It is not known if the low hours threshold will be the same as that for guaranteed hours, but this seems logical. The rights will apply to those low hours/paid workers (as to be defined) with no contractually agreed work times/patterns, as well as those with contractually agreed times/patterns who are offered shifts outside of those times/patterns.

What is “reasonable notice” will be the subject of further consultation and the government has indicated it will set out the factors that tribunals should look to when determining whether or not notice was reasonable. 

Workers will also be entitled to compensation if their shift is cancelled, curtailed, or moved at “short notice” (yet to be defined) and a payment will not need to be made in “specified circumstances”, (again to be set out in regulations).

Agency workers

Following government consultation, these provisions will also be extended to qualifying agency workers, with some amendments to reflect the tri-partite nature of the relationship. 

End hirers will have the responsibility for making a guaranteed hours offers (rather than the agency, although further regulations could place obligations on the agency in specified circumstances). If accepted, the agency worker will enter into a direct contract with the end hirer, transferring employment from the agency to the end hirer. Agencies can continue to include transfer fees or extended hire periods in contractual agreements with end hirers in accordance with existing legislation, subject to the parties’ negotiation. 

Both the agency and end hirer will be jointly responsible for reasonable notice of shifts, cancellation or curtailment and employment tribunals will be able to apportion liability based on each party’s responsibility. Agencies will be liable to pay compensation for short notice cancellations or curtailments, but can recover those costs from end hirers in some circumstances. The agency and end hirer should be able to apportion risk/cost under their commercial arrangements. 

Contracting out?

It is possible to contract out of the above rights and duties under the terms of a collective agreement. For agency workers, the collective agreement would need to be between a union and the entity which contracts with the worker (i.e. the agency in most circumstances). 

Practical implications

How will employers know which of its workers are in scope?

Employers await detail of who will be a “low” hours worker to fully assess those workers in scope. For example, a threshold of 16 hours per week would bring more workers within scope than a threshold of two hours per week. Further regulations may confirm a category of excluded workers/agency workers who are excepted from the right to guaranteed hours. 

Employers will need a system in place to track hours worked and when by zero and low hours workers across the reference period in order to assess whether or not the duty to make a guaranteed hours offer is triggered. Given that this is a positive and ongoing duty on employers (rather than a right to request), it is anticipated that the provisions will place a significant administrative burden on impacted employers. 

Could the Act make it more difficult for employers to engage workers flexibly to respond to fluctuations in work. For example, to meet seasonal needs or fluctuations in customer demand?

Many employers engage casual workers to respond to fluctuations in need, including seasonal and customer demands. 

If a worker works an inflated number of hours over a reference period to meet seasonal or temporary demand, a guaranteed hours offer would need to reflect those hours worked. However, if there is no longer a need for those hours beyond the reference period, or if the employer experiences a sudden, unexpected drop in demand, this could pose challenges.

An employer may be able to offer a fixed-term contract, or make a fixed-term guaranteed hours offer where it is “reasonable” to use a fixed-term contract (as above). This provides a potential route to manage short-term demand; although employers should anticipate claims, and developing case law, to determine what is “reasonable”.  

The ability to offer fixed-term contracts/guaranteed hours offers will not cater for all scenarios, such as a reduction in work not related to a limiting event. Employers may need to consider other options to manage fluctuating staffing levels. See below for a discussion of other potential engagement models. If all other options have been exhausted and the employer remains overstaffed as a result of guaranteed hours offers, employers may also need to consider redundancies.

In such circumstances, employers will need to consider whether unfair dismissal rights apply. Separately, the Act introduces a six month qualifying service for unfair dismissal rights for employees. If a zero or low hours worker accepts a guaranteed hours offer and is contractually obliged to work those hours, a risk is that they become an employee and gain full employee rights (because of the new mutuality of obligations). This increases potential dismissal risks and costs, making it more challenging for employers to manage fluctuating demands.

What will be the potential impact of the right to reasonable notice of shifts, shift changes or cancellation and to payment for shifts cancelled, curtailed, or moved at short notice?

Employers await further details in order to fully understand impact. Some employer concerns raised to date include: 

• how the right to reasonable notice provisions would apply to employee “shift swapping”, with employers keen to have further clarity to avoid being penalised; and
• in which circumstances a payment for shifts cancelled etc. will not need to be made (which is TBC) and if these will adequately cover circumstances outside of the employer’s control

The provisions will impact day-to-day management of shifts, such as where a worker requests overtime, agreed by the employer, which is then rearranged. The provisions also apply to “multi-worker requests”, for example where an employer sends out a message to more workers than is needed and some of those workers are not given a shift.

What will happen if employers are in breach of the Act’s provisions?

Workers will be able to pursue various claims against employers, depending on which right is breached. In line with wider provisions in the Act to extend tribunal claim time limits, claims will be subject to a six month time limit. 

We await exact detail of the compensation regime, but we do know that compensation will subject to maximum caps (giving employers some degree of certainty once we know what those caps are).

The Act also provides protection from automatic unfair dismissal, or detriment, relating to these rights. Also, it seems that the compensation for ‘short notice’ of cancellation etc. of a shift will be limited to the pay the employee would have received for the shift in question.  

How will the provisions impact employers’ ability to engage agency workers on zero or low hours contracts?

Employers frequently engage agency workers in order to avoid the administrative burden of engaging workers directly and increase their flexibility. However, under the new rules, end-hirers of agency workers will be liable to offer guaranteed hours to qualifying agency workers and, where accepted, engage those workers directly. Again, a key risk is that, once directly engaged, those workers will acquire the status of employees and acquire corresponding employment rights with the end hirer. The Act states that, where a qualifying agency worker accepts a guaranteed hours offer from a hirer, they will become a “worker” of the end hirer. The use of the term “worker” is potentially significant here, given this potential risk that a qualifying agency worker could be held to be an “employee” of the end hirer given the new mutuality of obligations in the relationship. Employers await further interpretation and guidance, which may emerge during further consultation and regulations. In the meantime, employers may  want to carefully consider if, and how, it will continue to engage agency workers on zero hours/low hours arrangements and the potential risks and costs in doing so. 

Are there other engagement models employers could consider to manage fluctuating demand?

Alternative engagement models that employers may wish to consider to manage fluctuating demand might include:

• Shorter fixed-term zero or low hours contracts, but only where it is “reasonable” (also remaining mindful of the anti-avoidance measures)
• “Ordinary” fixed-term contracts (e.g. with a fixed-number of hours either above the low hours threshold, or below it but which do not fluctuate). However, employers would again need to bear in mind the impact of expanded unfair dismissal rights under the Act, which could apply where such fixed-term contracts come to an end. Depending on where the low hours threshold is set, this could be impracticable 
• A fully outsourced model, with zero or low hours workers engaged directly by a third-party, which delivers a fully managed service (similar to, say, IT or FM services). Employers would lose direct supervision and control over those workers who would instead be engaged by a third-party; however any administrative burden / duty to offer guaranteed hours would be passed to such third-party
• Engage fully self-employed contractors only. Genuinely self-employed relationships should be safely outside the scope of the zero or low hours reforms (for example, where the services are provided by a specialist to one of its many clients. However, less specialist/lower paid work would be likely to face closer scrutiny  
• Other bespoke solutions may apply, depending on individual circumstances

What steps should employers take now to prepare?

Further consultation is planned soon and regulations will confirm the outstanding details. These provisions will not therefore become law until 2027, as confirmed in the government’s roadmap for implementation (read our briefing).  In the meantime, there are preliminary steps that employers can take now to prepare including:

• Risk assessing the Act’s impact on current staffing models, including an analysis of how a potential 12-week reference period might apply to current working patterns of both directly employed workers and agency workers. Employers should take preliminary advice and consider options, including potential alternative engagement models. Although the Act’s measures are diverse, their impacts should be looked at as a whole – for example, a well-resourced Fair Work Agency increases the risk profile for employers. Employers should also note the policy of moving to single worker status. Although those reforms are not included within the Act, they are expected to move forward (with consultation etc.) under the Government’s term
• Considering current methods for recording shifts worked and when and ensuring there are robust processes in place for tracking this
• Considering current processes and systems for giving notice of shifts and any changes to shifts and how these may need to be changed

Originally published: December 17, 2025