Beyond the Employment Rights Act – Consultation on zero hours and other related contracts

On 2 June 2026, HM Government (HMG) launched a consultation on reforms related to zero hours and other related contracts. 

By way of reminder, the Employment Rights Act 2025 (ERA) gives workers the right to:

• guaranteed hours, where the number of hours offered reflects the hours worked by a qualifying worker during a reference period;
• reasonable notice of shifts and changes to shifts; and
• payment for shifts cancelled, curtailed or moved at short notice

HMG’s stated aim is to ensure that workers on zero hours and similar contracts are protected while enabling businesses to continue to adapt to market conditions and seasonal variations.

The ERA sets out the (complex) statutory framework for these rights, with the detail to be provided by supplementary regulations. The consultation paper now seeks input on that detail. 

The consultation presents a range of options, the purpose of which is to help HMG understand how different thresholds and timeframes interact with each other and affect both workers and employers, including across different sectors. 

One feature that emerges from a review of the consultation paper is just how complex the rules are likely to be, and how much detailed record-keeping will be required.  Employers will find the new regime administratively challenging. HMG acknowledges in relation to the shift notice requirements that the new rules are “an inherently complicated set of measures” – this appears equally true of other aspects of these reforms. 

The consultation closes on 25 August 2026, and the new zero hours regime will come into force in 2027.

This blog does not address the position of agency workers, which will be covered in a separate blog. 

Right to guaranteed hours

Under the ERA, employers will be required to make a guaranteed hours offer to qualifying workers. 

The right to guaranteed hours is intended for workers who regularly work for an employer, but whose contractual arrangement does not reflect the hours they regularly work. The right will allow in-scope workers to enter into a guaranteed hours contract that reflects the hours they regularly work, should they wish to. Their contract must set out the number of hours of work the worker would need to work and the employer would need to provide. The hours offered must reflect the number of hours that the worker worked for that employer during a reference period.

Hours threshold: to qualify, workers will need to satisfy an ‘hours threshold’ (i.e. they will either have no guaranteed hours – a zero-hours arrangement – or a guaranteed number of hours up to a maximum amount).  HMG is seeking views on where to set the ‘hours threshold’ but in doing so it does not intend to extend protections to workers who already have a baseline level of security and predictability.  HMG’s stated preference is to set the threshold within the range of 8 to 20 hours per week – on the basis that options within this range are more likely to provide a favourable balance of costs and benefits.   

Length of initial reference period for determining hours threshold: HMG is also seeking views on the length of the initial reference period for determining whether the ‘hours threshold’ has been met.  HMG’s preference is for the initial reference period to be 12 weeks long (which it believes balances the need for qualifying workers to be offered guaranteed hours reasonably soon after they start a role, and the need for a reference period long enough to establish the hours they regularly work). However, the consultation also seeks views on alternative reference period lengths. 

Length of subsequent reference periods: after the initial reference period, there will be subsequent reference periods. At the end of each reference period (initial or subsequent) employers will be required to issue guaranteed hours offers to qualifying workers.  Subsequent reference periods cannot be used to reduce the hours already guaranteed in a worker's contract (this can only be achieved by mutual agreement), but they can increase the guaranteed hours.  HMG is consulting on the length of the subsequent reference period, which does not have to be the same as the initial reference period.

HMG acknowledges that rolling 12-week subsequent reference periods could increase the administrative burden for employers, whereas longer subsequent reference periods would extend the time workers must wait between opportunities to receive guaranteed hours offers.  

HMG also asks for views on whether subsequent reference periods should run on a back-to-back basis or with gaps.  This could have significant implications for record-keeping.

Regularity requirements: HMG’s intention is that only workers who work regularly for their employer will be entitled to guaranteed hours. The consultation seeks views on two options for defining the regularity requirements for the hours worked during a reference period. 

The first option is a weekly distribution requirement of the hours worked (with the hours distributed over a specified minimum number of calendar weeks out of the total length of the reference period: for example, if the requirement is set at 8 weeks, then a worker who worked in 8 or more weeks of a 12-week initial reference period would qualify).   

The second option would require the worker to meet both the weekly distribution requirement and a minimum number of hours in excess of the worker’s total number of contracted hours to qualify for a revised guaranteed hours requirement.  The consultation gives a complex example of how this might work in practice (unhelpfully, it is not clear that the example is correct, which underlines the administrative challenge that the new rules are likely to pose for employers).

Guaranteed hours offer calculation: the guaranteed hours offer will need to reflect the number of hours a qualifying worker worked during the reference period. HMG is consulting over whether a mean average or a median average should be adopted.  In the latter case, hours worked during outlier weeks (such as those where the worker works an unusually high number of hours or does not work at all) will have less influence on the guaranteed hours offer.  HMG does not indicate a particular preference.

HMG is also consulting over whether employers should be able to use an adjustment margin.  This would be a small fixed amount that could be added or subtracted. An adjustment margin could help protect employers against theoretical legal liability arising from minor calculation errors. It could also make it easier to align guaranteed hours offers with an employer’s usual shift allocation pattern. For example, where shifts are always 8 hours long and an offer is close to a multiple of 8, the guaranteed hours offer could be revised up or down (as far as the adjustment margin allows).

Seasonal work: employers can use limited-term contracts to manage periods of increased demand (for example, due to seasonal fluctuations). If a limited term contract is shorter than the relevant reference period, the employer would not need to make a guaranteed hours offer to a qualifying worker, provided it was ‘reasonable’ for the contract to be entered to as a limited term (for example, the worker is only needed for 8 weeks to perform a specific task, and the contract terminates after it is completed). 

The ERA defines what it means for a limited-term contract to be reasonable, namely where: 

• a worker is only needed to perform a specific task and the contract will be terminated when that task is performed (for example, a fruit picker is needed until all fruits have been picked); or
• a worker is needed only until a particular event occurs (or does not occur) and so the contract terminates at that point (for example, a conference worker is needed until a conference comes to an end); or
• that there is a ‘temporary need’ (that does not include either of the scenarios above), that will be set out in regulations, and the contract is to expire when it is reasonable for the employer to consider that need will be over.  

HMG has asked for examples of circumstances that would not be covered by the first two of these scenarios and will therefore need to be specifically provided for in regulations.

Reasonable notice of shifts and payment for shifts cancelled, curtailed or moved at short notice

HMG position is that these rights should only apply to those with up to and including a certain number of hours guaranteed in their contract. This number is the ‘hours threshold’.  This mirrors the approach taken on the guaranteed hours measure described above, although HMG emphasises that the hours threshold may be set in a different place for each. 

HMG is also consulting on what would constitute reasonable notice.  It accepts that setting a fixed period of notice that must be given in every case is unlikely to work for all situations and that what is ‘reasonable’ will depend on the circumstances of each case. HMG will set out in regulations a presumption of what amounts to reasonable notice: this will act as the starting point for tribunals in deciding whether notice was reasonable. HMG will also set out in regulations the factors tribunals should consider when determining whether notice was reasonable or not.  The consultation paper seeks views on the factors tribunals will be required to consider and how to set the presumption of reasonableness (the periods raised in the consultation paper range from 1 to 4 weeks). 

The ERA requires employers to make a payment to eligible workers when they cancel, curtail, or move a shift at short notice. The aim is to incentivise employers to plan effectively so they do not need to cancel or change as many shifts at short notice, and to ensure workers do not bear all the financial risk of unforeseen circumstances. The aim is to give workers more financial certainty. 

The amount of the payment and what constitutes ‘short notice’ will be set out in regulations (although the ERA prohibits this from being set at more than 7 days). It is also intended that there may be some limited exceptions from the requirement to pay, to be set out in regulations.

The consultation notes that HMRC is considering whether to have a single time-period, or to have both a short notice period and a ‘very short notice’ period, with a higher payment due for cancellations, movements and curtailments at ‘very short’ notice.  Views are sought on whether this approach should be followed and what the relevant period or periods should be.

In terms of the amount of the payment, HMG’s intention is that:

• in cases where shifts are cancelled, the payment will relate to what the worker would have earned if they had worked the shift; and
• in cases where shifts are moved or curtailed, the payment will relate to what they would have earned if they had worked the hours that were moved or curtailed. 

HMG puts forward two options – either that the payment should be a percentage of what the worker would have earned from working the shift or the relevant hours or a percentage of what the worker would have earned from working the shift or the relevant hours at the National Living/Minimum Wage rate. HMG does not indicate a preference in the consultation paper but seeks views on what approach it should adopt. It is also seeking views on what the relevant percentage should be.

Enforcement

The ERA places responsibility for enforcement of the zero hours measures with the employment tribunal system. In addition, HMG proposes that the new Fair Work Agency (FWA) should have power to enforce aspects of these rights to help increase compliance. HMG’s view is that this could also minimise costs for both employers and workers, through helping them to reach a resolution more quickly than if a claim was pursued to the employment tribunal.

Based on the FWA’s enforcement powers, HMG believes the most appropriate zero hours measure that the FWA could enforce would be the right to payment for shifts cancelled, moved or curtailed at short notice. This is because not paying a short notice payment is a discrete, measurable event with a clear financial impact.  Other elements of the regime will require a more complex assessment, which HMG has concluded is better provided by the employment tribunal.

A penalty will apply for non-compliance with short notice payments.  HMG proposes to set this at 50% of the arrears owed to the worker, with a minimum penalty of £100 per case and a maximum of £5,000 per worker.

What are the next steps?

The consultation period provides an opportunity for employers to input into the detail of how these arrangements will work.  Although HMG has expressed a preferred approach in relation to some of the matters covered by the consultation, it appears to remain open-minded in many areas.  However, the overall impression that the consultation paper leaves is that the administrative and record-keeping demands for employers who rely heavily on zero hours and other related contracts will be significant, regardless of whatever ends up being adopted.

If you would like to discuss the consultation, or the implications of the ERA as it relates to zero hours or similar contracts more generally, please contact one of the authors of this blog or your usual Freshfields contact.