Rather than an outright ban on such contracts, the ERA 2025 seeks to introduce limitations on the way businesses use such contracts with the aim of bringing greater stability and certainty for such workers.
Following our previous article about issues to consider ahead of the Government’s consultation on this issue, which still provides useful food for thought on the matter, the consultation about the detail of the proposed changes has now been launched.
Core reforms under the ERA 2025
The ERA 2025 introduces a new framework of rights for zero‑hours, low‑hours and certain agency workers, centred on three key measures:
1. Right to guaranteed hours
Employers will be required to offer qualifying workers a contract that reflects the hours they regularly worked over a defined reference period. The worker will not have to accept the new contract and if they do not, then when the next “reference period” comes round, the employer must again assess their hours and offer them a new contract reflecting the hours regularly worked. There is no opt-out on reviewing and offering.
2. Right to reasonable notice of shifts
Workers will gain a statutory right to reasonable notice of shifts.
3. Right to payment for short‑notice changes
Workers must receive payment where shifts are cancelled, moved or curtailed at short notice.
Consultation and uncertainty: key details still to be defined
The consultation seeks views on how the new rules should work in practice.
Guaranteed hours
Only zero hours workers (those who have no guaranteed hours in their contract) and those whose contracted hours fall at or below a certain threshold will qualify for the right to be offered a guaranteed hours contract. The Government proposes that this threshold should be set at somewhere between eight and 48 hours per week, with a preference for a weekly threshold of between eight and 20 hours. For agency workers, the Government also asks whether the threshold should apply to total hours guaranteed by the agency across hirers, or should only apply to the worker’s hours with one hirer.
Employers will have to calculate the number of guaranteed hours based on hours worked during an initial reference period, starting on the first day of employment (or, for existing workers, on the first day after the measures come into effect). The Government’s preference is for this initial reference period to last 12 weeks, although it seeks views on longer options of 26 or 52 weeks.
During the reference period, workers will need to have worked ‘regularly’ in order to qualify for a guaranteed hours offer. The Government seeks views on a ‘weekly distribution requirement’ under which the worker will need to have worked a certain number of calendar weeks in the reference period. Based on a 12-week reference period, the Government asks whether this should be set at six, eight, ten or 12 weeks out of 12. It also asks whether there should additionally be a ‘total hours requirement’ so that a worker will only be entitled to a guaranteed hours offer if during the reference period they have also worked a certain numbers of hours in excess of their contracted hours. The Government suggests options of less than 48, 48, 72 or 96 hours in excess of contracted hours across a 12-week reference period. Should a longer reference period be decided on these requirements would be adjusted proportionately.
After the initial reference period, employers will still be required to record workers’ hours over subsequent reference periods and offer guaranteed hours contracts. The Government seeks views on whether subsequent reference periods should be longer, for example 26 or 52 weeks and whether there should be a gap between reference periods of perhaps 26 weeks (during which employers would not be required to record a worker’s hours and so would reduce the burden on employers).
The Government also asks whether the guaranteed hours offer should be based on mean or median average hours worked in the reference period and whether employers should have a small ‘adjustment margin’ they could add to or subtract from so as to align a guaranteed hours offer with normal shift lengths or to guard against minor calculation errors.
Finally, the Government asks whether there should be any circumstances where employers should be exempted from the obligation to offer a guaranteed hours contract, for example if a worker has two contracts with the same employer and one of those contracts exceeds the guaranteed hours threshold. In respect of agency workers, it also asks whether there are any circumstances in which the obligation to make a guaranteed hours offer should fall on the agency or other intermediary, rather than the hirer.
Seasonal work
The Government recognises that employers use limited-term contracts to manage periods of increased demand, for example due to seasonal fluctuations. Employers will not be required to make a guaranteed hours offer to workers on limited-term contracts that expire before the end of the reference period, provided that it was reasonable to use a limited-term contract. Similarly, a guaranteed hours offer may take the form of a limited-term contract if this is reasonable. A limited-term contract will be reasonable in three circumstances: where the worker is only needed for a specific task that ends, only until a particular event occurs or to meet a ‘temporary need’ (with ‘temporary need’) to be defined in regulations. The consultation seeks views on circumstances in which it would be reasonable for a contract to be for a limited-term based on a temporary need and whether those circumstances would already fall within one of the first two ‘reasonable’ circumstances in any event (so that a ‘temporary need’ ground would not be required).
Reasonable notice of shifts and payment for cancelled, moved or curtailed shifts
The Government intends to introduce an hours threshold for the right to reasonable notice of shifts and payment for late notice of shift changes. Workers whose guaranteed hours exceed that threshold will not qualify for these rights. This threshold may be different to the hours threshold for guaranteed hours offers and is seeking views on options ranging from eight to 48 hours per week. It also asks whether agency workers should have a similar hours threshold, and whether this should be set by reference to all hours guaranteed by the agency or just the hours they are contracted to work for one hirer.
As regards notice of shifts, the Government is suggesting notice of between one and four weeks would be presumed reasonable (with additional options of five days or less than five days being reasonable for agency workers). If shorter/longer notice is given it would be for the employer/worker to establish that it was reasonable/unreasonable and the consultation seeks views on the factors that employment tribunals might take into account when determining whether notice was reasonable.
For shifts changes, the Government seeks views on what constitutes ‘short notice’, and suggests anything from one to seven days (but it cannot be longer). The level of payment could be set at a percentage (with between 10% and 80% suggested) of what the worker would have earned for working the shift/ the hours that were moved/curtailed or as percentage of what the worker would have earned at National Living/Minimum Wage rate. The Government is also considering whether higher payments should be made for ‘very short notice’ changes, and if so, what should be regarded as ‘very short notice’ (suggesting anything between less than a day and five days) and what the percentage should be (with 30% to 80% being considered).
The Government also asks whether certain hirers should be exempt from the duty to give reasonable notice and make short-notice payments, for example, vulnerable workers who receive care from agency workers.
Enforcement
The new rights will be enforceable through existing employment law mechanisms, including employment tribunal claims. However, the Government believes that the new Fair Work Agency should also be able to enforce the right to payment for shifts cancelled, moved or curtailed at short notice by issuing a notice of underpayment and imposing civil penalties where an employer fails to comply with that notice. The Government seeks views on this and on the level of the civil penalty, with its preferred option being 50% of the arrears owed to the worker, subject to a minimum of £100 per case and a maximum of £5,000 per worker.
Practical challenges and complexity
Although the policy objective is straightforward, the underlying regime is likely to be operationally complex. Employers will therefore need to ensure they have robust hours tracking for workers so that they can assess whether a worker has worked more than their contracted hours over the reference period in play. They may also need to plan shifts further in advance and have less flexibility for rescheduling shifts to suit business needs.
2027 – will we see changes?
The changes to zero/low/agency worker contracts takes up a huge part of the ERA 2025 and this is before we have got to the secondary legislation defining some of the finer details (the subject matter of the current consultation). The consultation document runs to over 80 pages. It is complicated!
The consultation closes on 25 August 2026 so do have a look at what is proposed and consider responding. The breadth of the questions being asked indicates that fundamental decisions still need to be made on the scope of the new protections and how widely they will apply. Consultation responses will likely play a significant part in this.
For now, also think about auditing your current workforce, who works for you, in what capacity and how many hours they are contracted to work -v- how many hours they work in reality.
The new rights are currently scheduled to come into force in 2027. Whether this will timetable will slip in view of the significant changes and their complexity remains to be seen.
We can help you
We can support you with:
- Interpreting the ERA 2025 and following regulations
- Preparing consultation submissions
- Drafting or updating contracts across the supply chain
If you want to shape the final rules—and not simply react to them—now is the time to get involved.
Please feel free to contact our Head of Recruitment Services, Declan Bradley, for any advice you need.