Changes to Zero-Hours Contracts: What the Proposed Changes Could Mean for Employers and Workers
Zero-hours contracts have become a familiar part of working life in the UK, especially in sectors such as hospitality, retail, care, leisure, delivery work and seasonal services. In simple terms, a zero-hours contract usually means the employer does not promise a set number of hours, while the worker is not normally required to accept every shift offered. This can suit some people very well. Students, parents, semi-retired workers and people with more than one job may value the ability to work when it fits around their lives. For employers, the arrangement can help them manage busy and quiet periods without committing to fixed staffing costs all year round.
However, the same flexibility can also create uncertainty. A worker may not know how much they will earn from one week to the next. They may arrange childcare, travel to work or turn down other opportunities, only to find that a shift is cancelled or reduced at short notice. That uncertainty can make ordinary financial planning difficult, such as paying rent, applying for credit, budgeting for bills or deciding whether to accept another job. The proposed changes are intended to reduce that kind of one-sided flexibility, where the employer benefits from flexibility but the worker carries most of the risk.
What is expected to change?
The government is currently consulting on reforms linked to zero-hours and similar low-hours arrangements. The key idea is not necessarily to remove all flexible working, but to give people more predictable work where their actual working pattern shows they are regularly needed. The proposed rights include a right to be offered guaranteed hours, reasonable notice of shifts and changes, and payment where shifts are cancelled, moved or cut short at short notice. The details are still important because the final cost and practical impact will depend on where the hours threshold is set and how the rules are implemented.
For example, if the new rules apply only to workers regularly doing a small number of hours, the impact on employers will be lower. If they apply to people working much longer weekly hours, the impact will be greater. Analysis by the BBC shows a wide range of possible employer costs, from hundreds of millions of pounds to as much as £2.9 billion a year, depending on the final design. The BBC also notes that a large part of the cost could come from compensation for cancelled shifts. At the same time, the government analysis suggests some wider economic benefits may come from better wellbeing, improved stability and higher productivity.
What does this mean for workers?
For workers, the main benefit is likely to be greater certainty. Someone who regularly works similar hours each week may be offered a contract that better reflects their normal pattern. This could make it easier to plan income, arrange childcare, manage travel and make household decisions. Reasonable notice of shifts could also reduce last-minute disruption. If a shift is cancelled at short notice, payment may help cover the costs and inconvenience that the worker has already incurred.
It is also important to remember that existing basic rights already apply. Zero-hours workers are still entitled to statutory annual leave and the National Minimum Wage in the same way as regular workers. Employers also cannot stop a zero-hours worker looking for or accepting work elsewhere through an exclusivity clause. Health and safety duties still apply too. The proposed reforms would sit alongside those existing protections, rather than replacing them.
What does this mean for employers?
For employers, the changes could mean more planning and administration. Businesses may need to keep clearer records of hours worked, monitor patterns over a reference period, update contracts, review rota systems and budget for possible cancellation payments. Sectors that rely heavily on variable staffing, such as hospitality and retail, may feel the change most strongly. If staffing costs rise, some employers may respond by limiting overtime, using smaller pools of workers, offering more fixed-hour contracts, changing opening hours or reviewing prices.
There is a genuine balance to strike. Some flexibility is useful and sometimes necessary. A café may need more staff during school holidays, a retailer may need extra cover at Christmas, and a care provider may need to respond to changing client needs. But where a person is working regular hours week after week, it may be fairer and clearer for the contract to reflect that reality. The challenge for employers will be to keep enough flexibility to run the business while giving workers a more reliable foundation.
Practical steps businesses can take now
Although the final rules may still be refined, businesses do not need to wait before preparing. A sensible first step is to identify all zero-hours, casual, bank and low-hours arrangements currently in use. Employers should then look at actual working patterns. If someone is consistently working the same number of hours, or broadly the same shifts, that may indicate that the business has an ongoing staffing need rather than a purely casual arrangement.
Businesses should also review how shifts are offered, changed and cancelled. Good rota planning will become more important. Managers may need guidance on when to cancel shifts, how much notice to give and how to record decisions. Payroll systems may need to handle new payment types if cancellation or curtailment payments become required. Employment contracts and staff handbooks may also need updating so that the written documents match both the law and the way the business actually operates.
How ATN Partnership can help
In addition to accountancy, ATN Partnership offers business and HRM services so it’s very well placed to provide valuable support because the changes are both financial and people-related. On the accountancy side, the firm can help clients understand the likely cost of different staffing models, build payroll forecasts, budget for possible cancellation payments and assess the effect on margins and cash flow. It can also review whether payroll software, bookkeeping systems and management accounts are capturing the right information.
On the HR side, ATN can help clients review contracts, staff handbooks, rota processes and manager guidance. It can identify workers whose regular hours may need closer attention, suggest clearer procedures for offering and cancelling shifts, and help employers communicate changes to staff in plain language. This joined-up support is especially useful for small businesses that do not have a separate finance department and HR team. By combining payroll, tax, cash flow and employment advice, a small accountancy and HR practice can help clients stay compliant, control costs and treat workers fairly while still running a flexible and commercially practical business.