Zero hours uncertainty under review

The government is currently consulting on potential reform of zero-hours and low-hours contracts. While providing flexibility for both employers and staff, they can also cause wage and employment uncertainty. The implications of potential reforms will be greatest for sectors that traditionally rely upon flexible contracts to manage seasonal and variable demand, such as domiciliary care providers. Employment solicitor Lydia Button of Thackray Williams outlines what the government is proposing, how this could impact business owners and staff, and what action SMEs should be taking ahead of likely reform.

What are zero-hours and low-hours contracts, and why do we have them?

Zero-hours contracts, also known as casual contracts, are arrangements where an employer does not guarantee a minimum number of working hours, while workers are generally not obliged to accept work that is offered. Low-hours contracts differ in that they provide some guaranteed hours, but at a level below what an individual regularly works in practice.

These arrangements have become common in sectors where demand can fluctuate significantly, including social care, hospitality, retail, logistics, education and seasonal industries. For example, for domiciliary care providers, workforce requirements often vary depending on client needs, hospital discharge rates, staff availability, seasonal peaks and local authority commissioning activity. Flexible contracts can therefore help providers respond quickly to changing circumstances while continuing to deliver essential services.

However, the Government believes that some workers experience what it describes as “one-sided flexibility”, where they face unpredictable hours, last-minute shift changes and uncertainty over future income. The current consultation is intended to explore how greater security and predictability can be achieved without removing operational flexibility altogether.

What changes might the government introduce to the laws around zero- and low-hours contracts?

The Government has launched a consultation, running until 25 August 2026, to determine how new protections for workers on zero-hours and low-hours contracts should operate in practice. The proposals build on wider commitments to strengthen employment rights and focus on three key areas.

A right to guaranteed hours

The most significant proposal is a new right for qualifying workers to be offered guaranteed hours where they have regularly worked a certain number of hours over a defined reference period. The consultation suggests an initial reference period of 12 weeks, although longer alternatives of 26 or 52 weeks are also being considered. Guaranteed hours would be based on the hours actually worked during that period.

The Government is also consulting on how “regular” working patterns should be assessed, including whether workers should meet a minimum number of weeks worked, a minimum number of additional hours worked, or both.

A right to reasonable notice of shifts

The second proposal would introduce requirements for employers to provide reasonable notice of shifts and changes to working patterns. The consultation seeks views on what constitutes reasonable notice, with options ranging from one to four weeks for directly engaged workers and potentially shorter periods for agency workers.

The consultation also explores circumstances where longer notice may be appropriate, as well as situations where shorter notice may remain necessary, such as emergency cover requirements.

Compensation for short-notice cancellations

A further proposal would require employers to compensate workers when shifts are cancelled or significantly curtailed at short notice. Under the proposals, the definition of “short notice” would be set out in regulations and could not exceed seven days. Compensation could be calculated as a percentage of expected earnings or as a percentage of the National Living Wage or National Minimum Wage.

What impact would reform of zero- and low-hours contracts be likely to have?

The sectors most likely to be affected are those that depend on flexible staffing models, including hospitality, retail, social care, warehousing and logistics, education and seasonal work. For Capital Space customers, the implications may be particularly relevant for domiciliary care providers and nursing agencies, where staffing requirements can change quickly in response to client demand and workforce availability.

For workers, the proposed reforms could provide greater certainty around working hours, earnings and shift scheduling. This may improve financial stability and make it easier for individuals to plan both work and personal commitments. More predictable scheduling may also contribute to improved wellbeing and reduced staff turnover.

For employers, the picture is more complex. Care providers may need to offer guaranteed hours to workers whose patterns demonstrate regular demand, reducing the flexibility that many organisations currently rely upon. Advance notice requirements could also make it more challenging to respond to unexpected client needs, sickness absence or urgent care requests.

The proposals could also increase administrative obligations. Employers may need to monitor working patterns more closely, maintain more detailed records, review existing contracts and workforce models, and budget for potential compensation payments where shifts need to be cancelled or rearranged at short notice.

What steps should businesses be taking ahead of the likely changes?

Although the outcome of the consultation is not yet known, businesses that rely on variable hours working should start preparing now. Early preparation is likely to reduce disruption if the proposed reforms become law.

If you run a domiciliary care provider, nursing agency or other business that has traditionally relied on the flexibility of zero- and low-hours contracts, it’s worth getting ahead of potential changes in the law and reviewing how rotas are currently designed, communicated and amended. You should also consider whether existing workforce models could accommodate future notice period requirements or compensation obligations. And it is worth assessing how agency workers are engaged and managed.

Record keeping is likely to become increasingly important. You need to ensure you can accurately capture and retrieve information relating to shift offers, acceptances, cancellations, notice periods and the reasons for any changes. Clear and contemporaneous records could prove essential in demonstrating compliance with any future obligations.

If your business is likely to be impacted, I would also recommend that you review the consultation proposals in detail, identify areas where you may face operational challenges, and consider whether you wish to contribute to the consultation process before it closes.

While the final shape of the legislation remains uncertain, businesses that rely on flexible staffing models should use the consultation period to review their workforce arrangements now, rather than waiting until new legal obligations arrive.

MEET THE EXPERT

Lydia Button is an employment solicitor with Thackray Williams, a leading South East law firm. Lydia advises commercial clients across a range of sectors on day-to-day employment matters. She helps employers to navigate complex workforce challenges while balancing legal compliance with commercial and operational realities, , as well as building a specialist practise in neurodiversity discrimination.

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