Written by Rebeca Moss
10 Dec 2024
Zero hours contracts UK: What employers need to know
Eden Scott is a team of recruitment professionals. While the information provided here is accurate to the best of our knowledge, it is intended for general guidance only. To ensure compliance with current and upcoming legislation, employers can consult with an HR or employment law specialist.
The bill provides the right to guaranteed working hours to most UK employees (excluding those in Northern Ireland). At the time of writing, some 102,000 workers in Scotland and over 1 million workers in the UK as a whole work zero hour contracts (ONS).
Zero hours contracts have been criticised for their lack of stability, with workers unable to predict shift patterns and the amount they earn varying from week to week. Complaints have been raised about the requirement to be continually ‘on call’, causing workers to miss out on normal family life and social activities (Money).
For example, if over a period of 12 weeks, an employee works an average of 10 hours a week, they would need to be offered a contract for 10 hours per week.
The employee can work beyond their guaranteed hours if it’s mutually agreed. However, if the employee’s regular working hours increase, then their guaranteed-hours contract will also need to be increased following an additional 12-week reference period (Geldards).
Employers must also provide workers with reasonable notice of shift changes, and will need to provide compensation if a shift is cancelled at short notice (Menzies).
Actions for employers and HR teams
Although reforms to zero hours contracts aren’t expected to come into effect until 2026, employers and HR teams can begin preparing for the changes now.
Review current working hours
To estimate the number of hours you’ll need to guarantee to workers in the future, assess shift patterns from the past three months. Calculate the average number of hours per employee.
Review your record-keeping
Make sure you’re tracking employees' working hours accurately, as it’s likely you’ll need to be able to provide up-to-date records if called upon in the future to comply with regulations.
Prepare contracts
Create new contract templates consistent with guaranteed-hour requirements - these should outline consistent working hours.
Consider financial implications
Plan for potential increased costs related to guaranteed hours, including statutory sick pay (SSP).
Use shift-planning software
If it’s cost-effective, shift-planning software could help you save time when it comes to tighter contract regulations. It could help you plan ahead, so you can be sure to provide reasonable notice if shift changes happen. PCMag has compiled a list of the best employee scheduling and shift planning software.
Train managers and shift leaders
Before the new legislation comes into effect, make sure those responsible for shift scheduling are aware of the new requirements, and the number of hours they should offer workers each week. Provide training to keep your company compliant.
Communicate upcoming changes to staff
Notify employees about their new entitlements. They can choose to accept guaranteed-hour contracts or remain on zero-hour contracts.
2 An end to ‘fire and rehire’: What employers need to know
3 National Living Wage and National Minimum Wage
4 Workplace discrimination: Equality Act 2024 updates
As part of the UK government’s Employment Rights Act, new regulations will apply to zero hours contracts.
The bill provides the right to guaranteed working hours to most UK employees (excluding those in Northern Ireland). At the time of writing, some 102,000 workers in Scotland and over 1 million workers in the UK as a whole work zero hour contracts (ONS).
What is a zero hours contract?
A zero hours contract (or a ‘casual contract’) are employment contracts with no defined or guaranteed working hours. These contracts require employees to work when they’re asked to by an employer, which can often be at the last minute (People Management).What’s the problem with zero hours contracts?
Although some employees prefer the flexibility of zero hours contacts, there are concerns that the practice can be exploitative, and only beneficial to employers.Zero hours contracts have been criticised for their lack of stability, with workers unable to predict shift patterns and the amount they earn varying from week to week. Complaints have been raised about the requirement to be continually ‘on call’, causing workers to miss out on normal family life and social activities (Money).
What are the upcoming changes to zero hours contracts?
Workers will soon receive the ‘right to guaranteed hours’. This right will require employers to offer a guaranteed-hours contract to all employees following a 12-week reference period.For example, if over a period of 12 weeks, an employee works an average of 10 hours a week, they would need to be offered a contract for 10 hours per week.
The employee can work beyond their guaranteed hours if it’s mutually agreed. However, if the employee’s regular working hours increase, then their guaranteed-hours contract will also need to be increased following an additional 12-week reference period (Geldards).
Employers must also provide workers with reasonable notice of shift changes, and will need to provide compensation if a shift is cancelled at short notice (Menzies).
What is ‘reasonable notice’?
The government hasn’t yet outlined what constitutes reasonable notice - this will be confirmed after a period of consultation.Does the new law ban zero hours contracts?
No - employers must offer guaranteed hours, but an employee doesn’t have to accept the offer and can remain on a zero hours contract should they wish to.Where will the law apply?
The law will apply in Scotland, England and Wales. It will not apply in Northern Ireland where employment law is devolved.When will the new law come into effect?
The Employment Rights Act bill was passed in October 2024. Reforms to zero hours contracts will come into effect some time in 2026 (Blake Morgan).How will the new law be enforced?
The government previously confirmed it will establish an enforcement body called the Fair Work Agency. Its remit and means of enforcement are yet to be announced (The Guardian).Actions for employers and HR teams
Although reforms to zero hours contracts aren’t expected to come into effect until 2026, employers and HR teams can begin preparing for the changes now.
Review current working hours
To estimate the number of hours you’ll need to guarantee to workers in the future, assess shift patterns from the past three months. Calculate the average number of hours per employee.
Review your record-keeping
Make sure you’re tracking employees' working hours accurately, as it’s likely you’ll need to be able to provide up-to-date records if called upon in the future to comply with regulations.
Prepare contracts
Create new contract templates consistent with guaranteed-hour requirements - these should outline consistent working hours.
Consider financial implications
Plan for potential increased costs related to guaranteed hours, including statutory sick pay (SSP).
Use shift-planning software
If it’s cost-effective, shift-planning software could help you save time when it comes to tighter contract regulations. It could help you plan ahead, so you can be sure to provide reasonable notice if shift changes happen. PCMag has compiled a list of the best employee scheduling and shift planning software.
Train managers and shift leaders
Before the new legislation comes into effect, make sure those responsible for shift scheduling are aware of the new requirements, and the number of hours they should offer workers each week. Provide training to keep your company compliant.
Communicate upcoming changes to staff
Notify employees about their new entitlements. They can choose to accept guaranteed-hour contracts or remain on zero-hour contracts.
Further reading
1 GUIDE: Unfair dismissal - How to protect your business2 An end to ‘fire and rehire’: What employers need to know
3 National Living Wage and National Minimum Wage
4 Workplace discrimination: Equality Act 2024 updates
