The UK government has initiated a comprehensive consultation process aimed at "ending one-sided flexibility," scrutinising the intricate details of reforms stemming from the upcoming Employment Rights Act 2025. This significant policy initiative specifically targets the regulation of zero-hours contracts, the establishment of reasonable notice periods for shifts, and compensation mechanisms for shifts that are cancelled without adequate warning. The move signals a concerted effort to recalibrate the balance between employer needs for flexibility and workers’ fundamental right to security and predictability in their employment.
The Consultation’s Core Proposals
The consultation, spearheaded by Business Secretary Peter Kyle and Employment Rights Minister Kate Dearden, acknowledges the inherent flexibility that zero-hours contracts can offer both employers and employees. However, it unequivocally states that these measures are designed to ensure all jobs provide a "baseline level of security and predictability." The ministers articulated a stark reality faced by many: "A worker on a zero hours contract could be working 40 hours a week for the same employer for years and still not have any contractual guarantee of how many hours they will get the next day, let alone the next month." They further highlighted the precarious nature of work where "Workers may only be told in the morning that there is work for them in the afternoon or turn up for a shift only to be told that there is no work, and so no pay, for them at all. This cannot be right."
The scope of the consultation is broad, covering several critical areas. It seeks input on the initial and subsequent reference periods that will be used to calculate a worker’s "typical hours," a crucial factor in determining guaranteed minimum hours. It also delves into the hours threshold at which these new rules will apply, how seasonal work — a sector heavily reliant on flexible contracts — will be treated, and the precise methodology for calculating and offering guaranteed hours by employers. Crucially, the consultation extends its reach to both directly engaged workers and agency workers, recognising the diverse landscape of flexible employment. Furthermore, it aims to define what constitutes "reasonable" notice for cancelled or changed shifts and to establish the appropriate level of compensation a worker should receive if insufficient notice is provided.
Background to the Reforms: The Drive for Fairer Work
The concept of addressing "one-sided flexibility" is not new in UK labour policy discourse. It gained significant traction following the 2017 Taylor Review of Modern Working Practices, which examined the implications of the gig economy and evolving employment models. While the review largely defended the flexibility offered by many modern contracts, it also highlighted areas where workers lacked adequate protections, particularly concerning predictability of income and hours. Subsequent government manifestos and policy papers have consistently reiterated a commitment to strengthening worker rights, building on a broader societal push for fairer work conditions and increased economic security. The Employment Rights Act 2025 serves as the legislative vehicle to enshrine these principles into law, building on previous, more piecemeal attempts to regulate aspects of flexible work. This consultation represents a pivotal step in translating policy intent into concrete legal frameworks, signalling a long-term commitment to reshaping the UK’s labour market landscape to better protect vulnerable workers.
The Prevailing Landscape of Insecure Work
The impetus for these reforms is underscored by compelling statistics illustrating the widespread prevalence of insecure work in the UK. According to recent figures, more than 1.2 million workers are currently employed on zero-hours contracts – a record high since data collection began. This number has seen a significant increase of 91,000 over the past year alone, highlighting a growing reliance on these flexible arrangements. Alarmingly, a record 401,000 individuals now depend on zero-hours contracts as their primary source of full-time work, despite the inherent lack of guaranteed hours or earnings.
Zero-hours contracts are particularly prevalent in sectors such as hospitality, retail, social care, and education, where demand can fluctuate significantly. Demographically, young people, students, carers, and those managing health conditions are often disproportionately represented among zero-hours contract workers, frequently valuing the flexibility these arrangements can offer. However, for many, the trade-off is profound instability, making it difficult to plan finances, secure housing, or manage personal commitments. The precariousness can lead to significant stress, underemployment, and a perpetuation of low pay, impacting overall worker well-being and productivity.
Government’s Stance: Balancing Flexibility and Security
Business Secretary Peter Kyle and Employment Rights Minister Kate Dearden have articulated the government’s dual objective: to preserve the legitimate flexibility that zero-hours contracts can offer to both employers and employees, while simultaneously ensuring a fundamental level of security and predictability for workers. Their foreword to the consultation document clearly outlines the unacceptable situations many workers face, such as being on call without pay or having shifts cancelled at the last minute. The government’s preferred reference period for calculating typical hours is 12 weeks, though the consultation also presents options for 26 and 52 weeks, demonstrating an openness to different approaches based on stakeholder feedback. This flexibility in the consultation itself suggests an awareness of the complexities involved and a desire to find a workable solution that garners broad support. The government aims to create a framework where workers have a clearer understanding of their entitlements and a more stable income, without unduly stifling business agility.
Industry Perspectives: Challenges and Concerns
The proposed reforms have elicited a range of reactions from employer organisations, many of whom acknowledge the need for reform but express significant concerns about the practical implications and potential unintended consequences.
Ben Willmott, head of public policy at the CIPD (Chartered Institute of Personnel and Development), emphasised the legitimate role of well-managed zero-hours contracts, stating they "provide welcome flexibility for employers and people who want to work but cannot commit to fixed hours – including students, carers and those managing health conditions." He stressed the importance of a "meaningful consultation" on the new rights, particularly regarding the reference period for guaranteed minimum hours. While a longer reference period might be easier for employers to manage, Willmott warned that "even with this, the new measures are likely to be extremely complex and challenging to comply with, particularly for small firms or those with fluctuations in demand." He also highlighted the difficulty of providing "reasonable advanced notice of shifts," which would likely require "caveats to allow for issues like sickness absence." A significant concern raised by Willmott is the risk that overly complex regulations could lead employers to "simply find other ways to achieve workforce flexibility," potentially by relying more on self-employed contractors or fixed-term contracts, which could paradoxically result in "more rather than less insecure employment" and damage opportunities for young people who benefit from zero-hours arrangements to balance work and study.
Neil Carberry, chief executive at the Recruitment and Employment Confederation (REC), was more pointed in his criticism, asserting that "Getting these proposals wrong would be a disaster for workers, with unemployment rising and youth unemployment a particularly worrying challenge." He expressed disappointment that the government appeared to have "drifted so far from the original proposals agreed by businesses and unions in the Low Pay Commission, towards something that pleases the unions but will damage work opportunities for vulnerable workers, especially those who need flexible work." Carberry urged the government to use the consultation’s "open questions" as a signal for "a change of approach towards working in partnership with employers as well as unions," lamenting what he perceives as a lack of serious consideration for business concerns regarding employment costs, with "predictable results starting to emerge in monthly labour market figures."
Tania Bowers, global public policy director at the Association of Professional Staffing Companies (APSCo UK) and OutSource, underscored the critical need for staffing sector businesses, from SMEs to multinationals, to actively participate in the consultation. She highlighted that agency workers, unlike directly engaged zero-hours workers, already benefit from "worker status and sector regulations including the Agency Workers Regulations, guaranteeing comparable pay and conditions." Bowers voiced deep concern that these reforms could prompt UK employers to increasingly "turn to offshoring and technological alternatives to hiring, or ‘making do’ with existing headcount." She described the policy as an "existential threat to temporary contracting as it has evolved over decades" and predicted that it would necessitate "significant workforce strategy planning programmes across UK employers of all sizes." Given existing pressures on SMEs and the Department for Business and Trade’s own target to reduce administrative burden by 25%, Bowers concluded that "this policy is counterintuitive."
Trade Union and Worker Advocacy
While employer bodies voice concerns, trade unions and worker advocacy groups have largely welcomed the consultation, viewing it as a long-overdue step towards better protections. The Trades Union Congress (TUC), for example, has consistently campaigned for an end to exploitative zero-hours contracts, advocating for a universal right to a predictable contract after a certain period of employment, and stronger rights to reasonable notice and compensation for cancelled shifts. They argue that true flexibility should be a two-way street, benefiting both employers and employees, rather than solely serving business needs at the expense of worker security. Unions believe that guaranteed hours and proper compensation for last-minute changes are essential for workers to plan their lives, manage their finances, and escape the cycle of precarious work.
Alice Martin, head of research for the Work Foundation at Lancaster University, affirmed the significance of the consultation, calling it "an important step towards strengthening protections for workers in insecure employment." She stressed the imperative for these reforms to "deliver meaningful change for the growing number of people who lack certainty over their hours, income and working patterns." Martin reiterated the alarming statistics on the rise of zero-hours contracts and the increasing number of people relying on them for full-time work without any guarantees. She urged the government to "move swiftly once the consultation concludes and provide a clear timetable for implementation," emphasising that "The right to guaranteed hours, reasonable notice of shifts and compensation for late cancellations will be vital in improving security and predictability for workers."
Key Areas of Deliberation in the Consultation
The consultation document presents several critical areas for stakeholders to consider, each with significant implications for how the new regulations will function in practice:
- Reference Periods: The choice between a 12, 26, or 52-week reference period for calculating typical hours is central. A shorter period might offer more immediate benefits to workers by reflecting recent work patterns, but could be highly volatile for employers with fluctuating demand. A longer period provides more stability for employers but might delay a worker’s entitlement to guaranteed hours.
- Hours Threshold: Defining the minimum number of hours a worker must consistently work to trigger the new protections is crucial. Setting this too high could exclude many vulnerable part-time workers, while setting it too low could create an undue burden on businesses for very infrequent work.
- Treatment of Seasonal Work: Seasonal industries, such as agriculture, tourism, and hospitality, rely heavily on flexible staffing. The consultation must find a way to apply these rules without crippling sectors that have inherent fluctuations in demand, perhaps through specific exemptions or modified calculation methods.
- Guaranteed Hours Calculation: The methodology for how employers will calculate and offer guaranteed hours is key. This needs to be robust, transparent, and enforceable, ensuring that offers are genuinely meaningful and not simply nominal.
- Defining "Reasonable" Notice and Compensation: Establishing clear parameters for what constitutes "reasonable" notice for shift cancellations or changes, and a fair compensation model when this notice is not met, is paramount. This could involve a tiered compensation system based on the lateness of the cancellation, similar to models seen in other European countries.
Potential Economic and Social Implications
The reforms, if implemented effectively, could have far-reaching economic and social implications. For workers, the promise of increased security and predictability could lead to improved financial planning, reduced stress, and enhanced overall well-being. It could also empower workers to better challenge exploitative practices and foster a sense of loyalty and commitment to employers who provide stable work.
However, for businesses, particularly SMEs and those in sectors with highly volatile demand, the changes could present significant operational and financial challenges. Increased administrative burden, the potential for higher labour costs due to compensation for cancelled shifts, and the complexities of forecasting demand to offer guaranteed hours might lead to a rethink of workforce strategies. Some employers might indeed shift towards greater reliance on self-employed contractors or fixed-term contracts, potentially creating new forms of insecure work or pushing existing workers into less protected statuses. There is also a risk that some businesses, particularly those operating on very thin margins, might reduce overall headcount or explore offshoring options to mitigate increased domestic labour costs.
From a broader economic perspective, the impact is complex. While increased worker security could theoretically boost consumer confidence and spending, particularly among lower-income households, potential job losses or a slowdown in hiring due to increased employer costs could dampen economic activity. The reforms represent a delicate balancing act between fostering a fairer labour market and preserving the dynamism and flexibility that many businesses and workers value.
Looking Ahead: The Path to the Employment Rights Act 2025
The consultation period will be critical for gathering diverse perspectives from employers, trade unions, workers, legal experts, and advocacy groups. The government’s willingness to consider different reference periods and approaches suggests an openness to refining its proposals based on evidence and practical considerations. Following the conclusion of the consultation, the government will analyse the feedback and publish its response, outlining the final policy direction. This will then inform the drafting of the specific provisions within the Employment Rights Act 2025.
Given the significant number of workers affected and the potential for substantial shifts in employer practices, the implementation phase will require careful planning, clear guidance, and effective communication. The success of these reforms will ultimately hinge on their ability to genuinely enhance worker security and predictability without inadvertently stifling legitimate business flexibility or leading to unintended negative consequences for the wider labour market. All eyes will be on the government to ensure that the "ending of one-sided flexibility" truly delivers meaningful and equitable change for the UK’s workforce.
