Zero-hours contract reforms will reshape workforce planning for employers

With fresh government analysis suggesting that reforms to zero-hours and low-hours contracts could cost UK employers up to £2.9 billion annually, the debate over how best to balance worker security with business flexibility has been reignited.

The reforms form part of the Government’s plans to strengthen employment rights and will introduce new protections for workers, including rights to guaranteed hours, reasonable notice of shifts, and compensation where shifts are cancelled at short notice.

Charlotte Smith, Employment & Sport, Partner at Walker Morris, says that while the headline cost of the reforms has attracted significant attention, employers are equally focused on the practical and operational implications of the changes.

Charlotte comments: “The government’s latest figures illustrate the challenge at the heart of the zero-hours contracts debate: how to improve security for workers without removing the flexibility that many businesses and some workers genuinely value.

“While the estimated cost to employers of up to £2.9 billion a year has hit the headlines, employers will pay equal attention to the practical implications of the reforms. Rights to guaranteed hours, reasonable notice of shifts and compensation for late cancellations will require businesses to fundamentally review how they schedule, resource, and manage their workforces.

“For sectors such as hospitality, retail, logistics, sport, leisure, and manufacturing, where staffing needs can fluctuate significantly from week to week, the reforms will have a substantial impact.

“The key issue now is the outcome of the current consultation on the details of how these reforms will be implemented. Businesses need clarity on issues like where the threshold for “low” hours will be set, how reference periods will operate, what the ‘regularity requirements’ will be, and what constitutes ‘reasonable notice’ of shifts and a ‘short notice’ cancellation. Until those details are finalised, employers face significant uncertainty.

“In the meantime, employers can audit their workforce arrangements to assess where they may be exposed, consider how the changes may impact operations, and determine which technologies and processes will need to be in place to manage compliance. It’s now the final two days to respond to the current consultation and help shape the details of the reforms; the consultation is open until 25 August 2026 and can be found here: Make Work Pay: ending one-sided flexibility – reforms of zero hours and similar contracts – GOV.UK .

“The organisations that prepare early will be best placed to balance compliance, workforce flexibility and employee expectations when the new regime comes into force.”