WFM UK | HR & Payroll: Employment Rights Act 2025 - The Zero Hours Consultation - What you need to know

Overview

The Employment Rights Act 2025 introduced three new rights for workers on zero hours and low-guaranteed hours contracts. The detail of how these rights will work in practice is not yet finalised – the government is consulting on the regulations right now, and your input will directly influence the outcome.

The consultation covers 64 questions across three parts and closes on 25 August 2026. No questions are mandatory – you can skip sections that are not relevant to you – but the more specific and evidence-based your responses, the more useful they will be.

Note: The consultation will take a minimum of 3 hours to complete. We recommend reading our full guide before starting and having your workforce data to hand.

The Three New Rights

These rights are already law. The consultation is not asking whether they should exist – it is asking how they should be designed.

• Right to Guaranteed Hours: Workers on zero hours or low-hours contracts who regularly work more than their contracted hours will be entitled to an offer of a contract reflecting the hours they actually work. Workers can accept or decline the offer.
• Right to Reasonable Notice of Shifts: Employers will be required to give eligible workers reasonable advance notice of their shifts and any changes to them.
• Right to Payment for Short Notice Cancellations: If an employer cancels, moves or shortens a shift at short notice, they must make a payment to the worker.

What is the Consultation Deciding?

The regulations will set out the detail that determines how these rights work in practice. The key decisions still to be made include:

• The hours threshold – how many contracted hours a worker can have before they fall out of scope of the new rights. The government's preferred range is 8 to 20 hours per week.
• The reference period – how long the look-back window is for calculating guaranteed hours. Options range from 12 weeks to 52 weeks. This matters significantly for businesses with seasonal trading patterns.
• How qualifying regularity is defined – how consistently a worker must have worked during the reference period to trigger an offer.
• How guaranteed hours are calculated – whether a mean or median average is used. This has significant implications for businesses with seasonal peaks.
• What counts as 'short notice' for cancellation payments – options range from 1 day to 7 days.
• How much the short notice payment should be – expressed as a percentage of the worker's earnings, with options ranging from 10% to 80%.
• What exceptions should exist – circumstances where no payment is required, such as genuinely unforeseeable events outside the employer's control.

Why This Matters for Your Business

These reforms will affect how you structure contracts, plan rotas, manage cancellations and administer payroll. The detail of the regulations – particularly around thresholds, reference periods and payment rates – will determine the scale of the administrative and financial impact on your business.

Some of the decisions still to be made could have very different implications depending on how they are set. For example:

• A reference period of 12 weeks assessed during a Christmas trading period could produce a guaranteed hours offer that is not sustainable year-round. A 52-week reference period gives a much more representative picture.
• A short notice cancellation threshold of 5–7 days would capture the vast majority of cancellations in hospitality and create an unbudgetable financial liability. A 24-hour threshold would apply only on genuinely last-minute changes.
• A payment rate of 50% or more of earnings could represent a significant additional cost for businesses already managing thin margins. A lower percentage would be more proportionate to the actual inconvenience caused.
• The definition of temporary need will determine whether your seasonal hiring practices continue to be protected or whether new guaranteed hours obligations arise for workers taken on specifically for Christmas, summer or other peak periods.

Things to Think About Before You Respond

• How many of your workers are on zero hours or low-guaranteed hours contracts, and what are their typical working patterns?
• How far in advance do you currently publish your schedules?
• How often, and with what notice, are shifts cancelled?
• Do you take on additional seasonal staff? Under what arrangements and would those arrangements be protected as temporary need?
• Do you use agency workers? If so, the consultation has specific questions about agency arrangements that are worth responding to.
• What is the cumulative financial impact of these changes alongside the National Living Wage increases and employer National Insurance contribution rises already taking effect?

How to Respond

The consultation is available online at the government's consultation portal. Click here to go directly to it.

No questions are mandatory – respond to whatever is relevant to you.

Note: The deadline for responses is 25 August 2026. The more businesses that respond with specific, evidence-based views, the better the government's understanding of the real-world impact of these regulations.

More Information

For a detailed, section-by-section guide to the consultation – including what each question is asking, what information you may need and the key considerations for each part – see our full guide.