On 2 June 2026, the Government launched a consultation on its proposals, in the Employment Rights Act 2025 (“ERA 2025”), to reform zero and low hours contracts.
These proposals aim to put an “end to one-sided flexibility” in such contracts; by giving qualifying workers the right to be offered guaranteed hours if they work regular hours over a certain period, as well as the right to be given reasonable notice of shifts (with compensation if these are cancelled, curtailed or moved at short notice). Workers will also be able to decline any guaranteed hours offer made, and remain on their existing contract, if they prefer.
The consultation is asking for views on the conditions that will need to be met in order for workers to qualify for these rights. It runs until 25 August 2026, and can be accessed here.
Below, we’ve set out an overview of the key issues in respect of which the consultation is seeking input.
Who should qualify for the right to guaranteed hours?
Workers on zero hours and “low hours” contracts
Under the Government’s proposals, a worker will have to be on a zero hours contract, or have low contracted hours below a specific threshold, to qualify for the right to guaranteed hours.
The consultation seeks views on what the low hours threshold should be; with options ranging from 8 hours per week to 48 hours per week (and the Government expressing a preference for between 8 to 20 hours per week).
… who have worked during a “reference period” with sufficient “regularity”
The number of guaranteed hours to be offered, will be calculated based on the number of hours the worker has worked during a “reference period”. This reference period will either be 12, 26 or 52 weeks in length (with the Government’s preference being 12 weeks).
Workers will have to have worked sufficiently regularly during the reference period to qualify for a guaranteed hours offer. The consultation suggests two potential options for these “regularity requirements”:
- a “weekly distribution requirement” – with the hours worked during the reference period being distributed over a specified minimum number of weeks; or
- a “weekly distribution requirement and total hours requirement” – with the hours worked during the reference period being distributed over a specified minimum number of weeks and meeting a minimum number of hours in excess of the worker’s total number of contracted hours.
… and are not on a short seasonal or “temporary need” contract
If a worker is on a limited term contract that is shorter than the reference period (and provided that the limited term is reasonable in the circumstances), there will be no obligation to make an offer of guaranteed hours. These provisions are aimed at allowing employers to use short fixed-term contracts to manage periods of increased workload – for example, seasonal fluctuations.
Under the ERA 2025, a limited term will be reasonable if the worker is needed for a specific task, until a particular event occurs, or for another “temporary need”. A limited term is less likely to be reasonable if the worker works on multiple contracts doing the same or similar jobs (unless the employer can show otherwise).
The consultation asks for input into how “temporary needs” (that are not related to a specific task or event) should be defined. It confirms that the Government wants the definition to be “contained to what is necessary to ensure genuine temporary need is catered for and to ensure it aligns with the fundamental policy objective of ensuring many workers benefit from the reforms”.
… or exempted for any other reason
The consultation seeks views on whether any groups of workers should be excluded from the right to guaranteed hours, and/or whether employers should be exempted in certain circumstances.
Possible examples of the former include workers who have another contract with the same employer which exceeds the requisite threshold; and possible examples of the latter include exceptional circumstances, such as business closure due to flooding.
How should guaranteed hours be calculated?
A guaranteed hours offer will reflect the number of hours a qualifying worker has worked during a relevant reference period. The Government is considering two options for how this should be calculated: either a “mean average” or a “median average”. The consultation asks for views on which method would be best, and why.
The consultation also asks for input on whether employers should have flexibility to determine the period over which guaranteed hours will be allocated (weekly, monthly or other), and whether employers should have the flexibility to use an “adjustment margin” of either a fixed figure or a percentage of hours.
What should “reasonable notice of shifts” be?
The consultation asks for feedback on how much notice of shifts would be reasonable; bearing in mind the aim of giving workers greater certainty around working hours and income.
For directly engaged workers, notice options given in the consultation range from one to four weeks (or “other”). For agency workers, the options also include five days or less.
The consultation also asks in what circumstances longer and/or shorter notice should or can be given (an example of the former being when a worker is contractually obliged to work any shift offered; an example of the latter being when last-minute cover is needed for sickness absence or some other reason).
What will constitute “short notice” in relation to the cancellation, curtailment and/or moving of shifts by the employer?
Under the provisions already in the ERA 2025, “short notice” will be defined in regulations, but will not be more than seven days.
The consultation seeks views on how short “short notice” should be (subject to the seven-day maximum already specified in the legislation). It also floats the idea of a separate “very short notice” period, which would attract a higher compensation payment if triggered.
How will a worker’s compensation for short notice shift changes be calculated?
The Government’s intention is that the amount the worker receives as a “short notice payment” should relate to how much they would have earned had they worked the shift as expected.
The consultation asks whether these short-notice payments should be based on a percentage of expected earnings, or a percentage of the National Minimum Wage. It gives options for the percentage in question, ranging from 10% to 80% (and 30% to 80% for very short notice).
The consultation also asks whether there should be any exceptions to short notice payments, for example, where there is extreme weather or a widespread power outage. In the event that an exception applies, employers would have to issue an “exception notice” explaining why.
How will workers enforce their right to short notice payments?
Under the proposals in the ERA 2025, workers will be able to enforce their rights in respect of zero and low hours contracts generally in the Employment Tribunal.
However, the consultation asks whether the right to short notice payments should also be enforceable by the newly established Fair Work Agency (“FWA”). The consultation suggests that the FWA could be responsible for issuing “notices of underpayment”; requiring employers to pay any sums owed to workers, and to pay a penalty to the Government.
The consultation proposes a penalty of 50% of the arrears owed (with a minimum of £100 and a maximum of £5,000 per worker), and reductions for prompt payment (of up to 50%). The consultation suggests that this approach “takes into account that… this is a new right and allows time for employers to familiarise themselves with implementing the new obligations… [and aims] to balance deterrence with fairness – providing an incentive for compliance without imposing excessive penalties”.
The consultation closes at 11:59pm on 25 August 2026. Organisations can respond online here.
If you would like to discuss anything outlined in this article, please get in touch and our team of experienced Employment lawyers would be happy to help.
The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further advice.