Zero Hour Contracts Are Changing

What this means for your business, and what you need to do now.

Zero-Hours Contracts Are Changing: What This Means for Your Business (and What To Do Now)  

Over the past few months, many of you have asked me the same question: 

“We use zero-hours contracts… are we still allowed to?” 

Short answer: yes. Longer (and much more important) answer: you can, but the way you manage them is about to change significantly. 

The Employment Rights Act 2025 introduces the biggest shift to casual working arrangements in years, with changes landing across April 2026 and throughout 2027. These reforms aim to keep flexibility while increasing fairness and predictability for workers. 

This blog isn’t a legal lecture. 

 It’s a practical People Strategy briefing, what this actually means for you as a business owner, leader, or manager and what you should be doing now (not in 2027). 

First - A quick reset: what zero-hours contracts actually are 

A zero-hours contract simply means: 

• You don’t guarantee work 

• The worker doesn’t have to accept work 

• You only pay for hours worked 

They’re common in hospitality, care, logistics, retail peaks and seasonal environments and they exist for a reason: operational flexibility. 

For many workers they also offer flexibility - students, parents and people supplementing income often actively choose them. 

So, the government isn’t removing zero-hours contracts. 

What it is removing is unpredictability without accountability. 

The Three Changes You Really Need to Understand 

There are dozens of technical details in the legislation, but from a leadership and risk perspective, there are three headline changes. 

1) Workers gain the right to guaranteed hours (2027) 

After a qualifying period (expected to be 12 weeks), you will have to offer a contract reflecting the average hours actually worked. 

This is the biggest shift. 

Today: 

Someone can work regular weekly hours for years but stay on zero-hours. 

From 2027: 

Regular working patterns create a legal obligation to offer a fixed-hours contract. 

Important: The worker can refuse - but you must make the offer repeatedly on a rolling basis. 

What this means in reality Your rota becomes evidence. 

If your schedules show predictable working patterns, you are effectively creating contractual expectations, whether you intended to or not. 

This moves zero-hours contracts from a staffing decision to a workforce planning decision. 

2) You will have to pay for cancelled shifts (2027) 

Historically, businesses could: 

• cancel a shift 

• shorten a shift 

• change a shift last minute 

The upcoming rules introduce reasonable notice requirements and compensation if not provided. 

In other words: Last-minute flexibility now carries a financial cost. 

You may need to: 

• pay workers for cancelled shifts 

• reassign duties 

• or provide training instead 

This is designed to protect workers from unstable income and schedules. 

People Strategy translation: Rota management becomes a financial risk area, not just an operational one. 

3) Day-one sick pay (April 2026) 

This one arrives first and many businesses are underestimating it. 

From April 2026: 

• Statutory Sick Pay starts day one of illness 

• The minimum earnings threshold is removed 

Meaning: Even someone who works one irregular shift a week may qualify. 

Your casual workforce now affects: 

• payroll cost 

• absence management 

• productivity planning 

Additional Changes You Should Be Aware Of 

While less talked about, these are important: 

Shorter unfair dismissal qualifying period 

Protection is expected after six months of service (not two years) for employees, including those on zero-hours arrangements where classed as employees. 

Businesses should act on this from 1 Jul 26, considering probation periods that may extend beyond 1 Jan 27. 

Poor performance management will become a much bigger legal exposure. 

Day-one family leave rights (April 2026) 

Where individuals are classed as employees, maternity, paternity and parental leave eligibility moves to day one. 

For many SMEs this will be the first time casual staff have structured leave entitlement. 

Holiday entitlement stays - but scrutiny increases 

Zero-hours workers still receive 5.6 weeks’ paid holiday per year (accrued proportionally). 

However, with guaranteed hours and record-keeping expectations increasing, incorrect calculations will be much easier to challenge. 

What Businesses Often Misunderstand 

The legislation is not really about contracts. 

It’s about predictability. 

If your business: 

• relies on the same casual workers regularly 

• runs predictable weekly rotas 

• expects availability 

• disciplines non-attendance 

You may already be operating closer to an employment relationship than you realise. 

The new law simply formalises that reality. 

What You Should Be Doing Now (2025–2026) 

This is where People Strategy matters more than HR admin. 

Here are the actions I am recommending to clients immediately: 

1) Audit your workforce 

Identify: 

• who is on zero-hours 

• who actually works regular hours 

• which roles are genuinely variable 

You may discover you already have de-facto fixed roles. 

2) Analyse your rotas 

Your rota patterns will determine your legal obligations. 

If someone works: 

• the same shifts 

• same days 

• for 12 weeks 

You should assume they will qualify for guaranteed hours. 

3) Train managers (this is critical) 

The biggest legal risks won’t come from directors. 

They will come from: 

• supervisors promising hours 

• inconsistent scheduling 

• informal conversations 

Line managers are about to become legally significant decision-makers. 

4) Prepare for cancellation cost 

Start planning: 

• staffing buffers 

• standby duties 

• training tasks 

• contingency scheduling 

Flexibility must become planned flexibility. 

5) Review your performance management 

With shorter dismissal timelines, documentation becomes essential. 

You will need: 

• recorded conversations 

• clear expectations 

• consistent processes 

Ignoring performance early will no longer be safe. 

My Strategic View 

Zero-hours contracts are not disappearing. 

But they are changing role. 

Historically they were a risk-free flexibility tool. Going forward they become a managed workforce model. 

Businesses that adapt early will benefit: 

• stronger retention 

• clearer workforce planning 

• fewer tribunal risks 

Businesses that ignore it will experience: 

• unexpected payroll cost 

• employee relations issues 

• legal exposure 

Final Thought 

This legislation is not anti-business. 

It’s anti-uncertainty. 

And honestly, organisations with clear workforce planning and good people management will barely feel it. 

The ones that will struggle are those running informal arrangements, verbal expectations and reactive scheduling. 

If you’re unsure where your business sits, this is exactly the right time to review your workforce structure. The earlier you act, the more choice you keep. 

As always, if you want me to review your current setup or sanity-check your approach, I’m happy to help you get ahead of this rather than react to it later.