Zero Hour Contracts in 2026: What Employers Need to Know About New Restrictions and Worker Rights

Zero hour contracts have long been a key part of the UK workforce, offering businesses the flexibility to adjust staffing levels according to demand. But as expectations around fairness and predictability grow, the zero hours contract is evolving and so are the legal obligations attached to it.

Due to the Employment Rights Act 2025, the use of zero hour contracts is changing. This means that employers must balance operational flexibility with compliance, ensuring that workers’ rights are respected while maintaining efficient business operations.

We’ll dive into the latest changes, what they mean for businesses and practical steps businesses can take to get prepared. 

What is a zero hour contract

A zero hour contract is a type of employment arrangement where an employer is not obliged to provide a minimum number of working hours and usually the individual is not required to accept every shift offered (although some zero-hours contracts place a requirement on the worker accepting every shift they are required to work). In simple terms, the zero hours contract centres on flexibility and work is offered as and when it is needed, rather than being guaranteed in advance.

These contracts are commonly used in sectors where demand can fluctuate, such as:

• Hospitality
• Retail
• Healthcare 
• Events

Zero hour contracts are particularly useful for casual work, seasonal peaks or on-call roles where businesses need access to a pool of workers without committing to fixed hours.

For employers, zero hour contracts can make it easier to manage staffing levels and control labour costs. For workers, they can offer the freedom to choose when and how often they work, which can be beneficial for students, carers or those seeking supplementary income. However, this flexibility must be balanced with fair treatment and compliance with employment law, especially as expectations and regulations continue to evolve.

Key changes to zero hour contracts in 2027

The UK is entering a period of significant reform for zero hour contract arrangements, with new restrictions designed to improve predictability and strengthen worker protections. While zero hours contracts are not being banned, the way they are used  and the responsibilities attached to them are changing substantially.

Here’s everything employers need to keep in mind when it comes to the changes around zero hour contracts. 

Guaranteed hours for regular workers

One of the most important developments from the Employment Rights Act 2025 introduces a new duty on employers to offer guaranteed hours to individuals working regular patterns on zero hours or low hours contracts.

From 2027 (a date still to be set), employers will be required to:

• Assess the actual hours worked over a reference period (expected to be around 12 weeks).
• Offer a contract that reflects those regular hours.
• Repeat this process at the end of each reference period unless or until the worker is offered sufficient guaranteed hours to meet the threshold that will be set by future regulations.

Workers can choose to accept or refuse the offer, but the obligation to make the offer remains ongoing. The rules will also apply to agency workers, with responsibility shared between the hiring business and the agency.

This marks a major shift from purely flexible arrangements to a system where consistent working patterns create an entitlement to greater certainty.

In applicable cases it may be possible to engage workers on fixed-term contracts whereby they are offered a set number of guaranteed hours for a set period of time. When the contract terminates the employer will then be able to engage them on a separate fixed-term contract with a lower number of guaranteed hours. But this will only be possible where this arrangement is deemed reasonable, e.g. where there is a genuine business need to engage individuals in this way.

Wider reforms under the Employment Rights Act

Alongside guaranteed hours, broader reforms under the UK’s employment law changes are reinforcing the expectation that zero hour contract employee rights must include:

• Fair notice of shifts.
• Reasonable compensation for late cancellations.
• Greater transparency in working arrangements.

Together, these measures are designed to address the long-standing concern of “one-sided flexibility,” where businesses benefit from variable hours but workers carry most of the risk.

What’s in effect vs what’s coming for zero hour contracts

As the legal framework evolves, employers must understand the difference between current obligations in 2026 and new requirements coming into force from 2027 onwards under the Employment Rights Act 2025. Preparing early is essential to avoid compliance risks and ensure a smooth transition.

Area	What’s in effect in 2026	What’s coming in 2027 and onwards
Use of zero hour contracts.	Zero hour contracts remain legal and widely used across sectors with fluctuating demand.	Still permitted, but subject to tighter regulation and increased employer responsibilities.
Guaranteed hours.	No legal obligation to offer guaranteed hours, even if a worker regularly works the same pattern.	Employers must assess hours worked over a reference period (likely 12 weeks) and offer a contract reflecting regular hours where applicable.
Shift notice.	No universal statutory minimum notice period, though best practice encourages reasonable notice.	New expectations for fair and reasonable notice of shifts will be formalised.
Cancelled shifts.	No automatic entitlement to compensation unless contractually agreed.	Workers may be entitled to compensation or protections if shifts are cancelled at short notice.
Worker protections.	Workers are already entitled to core statutory rights such as National Minimum Wage, paid leave and rest breaks.	Stronger protections against one-sided flexibility, including clearer rights around scheduling and treatment.
Agency workers on zero hours.	Rights depend on existing agency worker regulations.	Agency workers to be included in guaranteed hours rules, with shared responsibility between agency and employer.
Employer obligations.	Focus on correct worker status, fair treatment and basic employment law compliance.	Increased duty on employers to monitor hours, offer predictable work and demonstrate fair scheduling practices.

Worker rights under the new legislation

As the changes draw closer to coming into effect, zero hour contract employee rights are becoming clearer, stronger and more enforceable. While these arrangements still allow for flexibility, workers engaged on zero hours or low hours contracts are entitled to a growing set of protections designed to ensure fair treatment, predictable income and job security.

Right to guaranteed hours

Under the Employment Rights Act 2025, workers who regularly work consistent hours over a reference period will gain the right to be offered a contract reflecting those hours. This gives individuals the option to move away from fully variable schedules where their working pattern has, in reality, become stable. Importantly, workers can choose whether to accept or decline the offer, allowing them to retain flexibility if that suits their circumstances.

Protection from unfair treatment and dismissal

Zero hours workers are protected against unfair or detrimental treatment for asserting their rights.. As with other workers, they are also protected under UK law from discrimination  reinforcing that flexible status does not mean they do not have any legal protections.

Access to core employment rights and benefits

Individuals on zero hour contracts are still entitled to key statutory rights, including:

• National Minimum Wage and paid annual leave.
• Rest breaks and working time protections.
• Protection from discrimination and harassment.
• Where applicable, Statutory Sick Pay (where eligibility criteria are met).

Depending on their employment status and length of service, they may also qualify for additional rights such as redundancy pay or family-related leave.

How these rights are evolving

Recent reforms mark a clear shift from “on-demand labour” towards fair, predictable flexibility. The introduction of guaranteed hours, stronger protections around scheduling and clearer rights for agency and casual workers all signal a more balanced approach — one that supports both business needs and worker wellbeing.

For employers, this means understanding not just how to comply with the rules, but how to create working arrangements that respect these rights in practice.

Practical steps for employers

As zero hour contract regulations evolve, proactive preparation is essential for UK SMEs. It’s important to recognise that businesses that rely on flexible or seasonal labour can maintain operational agility while staying compliant by taking the following steps:

1. Conduct a workforce audit

Review all zero hour and low hours contracts across your business. Although we do not yet know the threshold for when someone will be deemed a “low hours worker”, review all your staff working on a casual basis as they may have the right to be offered guaranteed hours under the Employment Rights Act 2025. Monitoring actual hours worked over time helps you understand compliance obligations and reduce risk.

2. Update contracts and policies

Ensure contracts and HR policies reflect current and upcoming legal requirements. Remove outdated exclusivity clauses and (in advance of the changes to the law) clarify shift scheduling, notice periods and cancellation procedures. Clear, transparent policies protect both the business and your workforce.

3. Monitor hours and working patterns

Even before the full legal changes take effect in 2027, 2026 is a critical preparation year. During this time, businesses should:

• Review their use of zero-hour contracts.
• Track working patterns carefully.
• Prepare systems to record hours accurately.

Early preparation ensures that when the guaranteed hours requirements come into force, your business can offer hours appropriately and comply with evolving obligations.

4. Leverage technology for compliance

Use workforce management tools to simplify scheduling, hours tracking and HR compliance reporting. Automation reduces administrative burden, supports consistent decision-making and ensures fair treatment of workers.

5. Train managers and HR teams

Managers and HR staff should understand when guaranteed hours offers must be made, how to communicate them, and how to handle refusals. Training ensures fair treatment and reduces the risk of complaints or tribunal claims.

6. Plan ahead for regulatory updates

Stay alert to further guidance on reference periods, minimum thresholds, and agency worker obligations. Strengthening workforce planning now allows for smooth implementation of changes and avoids last-minute compliance challenges.

Navigating zero hour contracts in 2026 and beyond

Zero hour contracts will continue to play a role in UK workforce planning, but 2026 marks a turning point. With new legal requirements around guaranteed hours, shift notice and worker protections, businesses can no longer rely on flexibility alone,  compliance is now equally critical.

By auditing contracts, updating policies, monitoring hours, training managers and communicating proactively with employees, HR leaders and business owners can maintain operational agility while respecting zero hour contract employee rights. Proactive preparation not only reduces legal risk but also strengthens employee trust and engagement, positioning your organisation to thrive in a more balanced and predictable flexible working environment.

Feeling unsure about navigating these changes? Employment Hero’s HR Advisory service provides expert guidance and support, helping businesses stay compliant, implement best practice and turn new zero-hour contract regulations into an opportunity for growth.