Zero Hours Contracts: What UK Employers Need to Know in 2026

Zero hours contracts are still legal. But the Employment Rights Act 2025 is introducing changes that will fundamentally alter how they work in practice. The right to guaranteed hours is coming, and if your business relies heavily on zero-hours or low-hours workers, you need to understand what is changing, when, and how to prepare.

This guide covers what the current rules allow, what the ERA 2025 is changing, and what practical steps to take now.

What Is a Zero Hours Contract?

A zero hours contract is a type of employment arrangement where:

The employer is not obliged to offer any minimum number of working hours
The worker is not obliged to accept any hours that are offered
Pay is only received for hours actually worked

Zero hours contracts are widely used across sectors including hospitality, retail, care, education, and logistics. According to the Office for National Statistics, approximately 1 million workers in the UK were on zero hours contracts in 2025, though actual reliance on them varies enormously by sector.

Despite the name, "zero hours contract" is not a legal term. The actual employment status of the individual depends on the working relationship in practice, not just what the contract says. Someone on a zero hours contract may be a worker or, in some cases, an employee depending on how the arrangement operates.

What Is Currently Legal

Zero hours contracts are permitted under UK law. There is no prohibition on offering them or using them. However, there are rules you must follow.

Exclusivity Clauses: Banned

The most important restriction: exclusivity clauses in zero hours contracts have been banned since 2015. An exclusivity clause is one that prevents a worker from working for other employers or that penalises them for doing so.

Specifically, it is unlawful to:

Include a clause in a zero hours contract that prevents the worker from working for another employer
Dismiss or subject to detriment a worker who breaches such a clause (even if you tried to include one)

If your zero hours contracts still contain exclusivity clauses, remove them. They are unenforceable and expose you to claims.

Employment Rights Still Apply

Workers on zero hours contracts are not exempt from employment rights. Depending on their status (worker vs employee), they are entitled to:

National Living Wage / National Minimum Wage for all hours worked
Paid annual leave (calculated on the basis of hours actually worked)
Rest breaks and rest periods under the Working Time Regulations
Protection from discrimination under the Equality Act 2010
Protection from detriment for whistleblowing or asserting statutory rights
Statutory sick pay if they meet the eligibility criteria (and from April 2026, the lower earnings limit no longer applies)

If a worker has accrued sufficient employment status to be classified as an employee, they are also entitled to unfair dismissal protection (currently after two years, though this is changing in 2027), redundancy pay, and parental leave rights.

Written Statement of Particulars

All workers and employees must receive a written statement of employment particulars from day one of their engagement. For zero hours workers, this must state:

That there is no guaranteed minimum of hours
How the worker will be informed of available hours
The notice required to cancel shifts (see below)

Shift Cancellation and Notice: New Rules Already in Force

The Employment Rights Act 2025 also introduces rules about short-notice shift cancellations and shift changes. These rules are part of the broader zero hours contract reform package.

Employers must provide reasonable notice of shifts and, where shifts are cancelled or curtailed at short notice, workers must receive reasonable compensation for the loss of expected earnings. The government is consulting on what "reasonable" means in practice, and the specific regulations are expected to be confirmed in 2026 ahead of the full guaranteed hours rollout.

If you regularly cancel shifts with little or no notice, start building more notice into your scheduling processes now. The specific details of what notice is required and what compensation is due will be set out in regulations, but the direction of travel is clear: casual workers need more predictability, and the law is moving to enforce it.

What Is Changing: The Right to Guaranteed Hours

The big change is coming. The Employment Rights Act 2025 will give workers on zero hours and low hours contracts the right to be offered guaranteed working hours that reflect the number of hours they have regularly worked.

When Is This Happening?

Based on the government's implementation timeline, the guaranteed hours right is expected to come into force in 2027, following a period of government consultation on the detailed regulations. The consultation is underway in 2026, but the full legal right is not expected before 2027.

This is relevant to you now because the regulations will require you to look back at a reference period to determine what hours your zero hours workers have been consistently working, and then offer them a contract reflecting those hours. How long that reference period is, and exactly how the calculation works, will be set out in the regulations.

What the Guaranteed Hours Right Will Mean in Practice

Under the proposed framework:

1. Employers must offer guaranteed hours. If a zero hours or low hours worker has been working consistent hours over a reference period, you will be required to offer them a contract guaranteeing those hours.

2. Workers can decline the offer. If a worker prefers to remain on a zero hours basis, they are free to do so. The right is to receive the offer, not to be forced onto a guaranteed hours contract.

3. The reference period. The government is consulting on the length of the reference period. The intention is to use a pattern of actual hours worked to determine what constitutes "regular" hours. If a worker has reliably worked 20 hours per week for several months, that is likely to become their guaranteed hours baseline.

4. Low hours contracts are also covered. The right is not limited to zero hours workers. Workers on low hours contracts (those guaranteed only a small number of hours that does not reflect reality) are also within scope. The government will set a threshold in regulations.

5. Agency workers. The rules extend to agency workers in some circumstances. Agencies and hirers will need to work out their respective obligations. This is subject to ongoing consultation.

Which Sectors Are Most Affected

If you operate in any of the following sectors, this is a high-priority issue for your business:

Hospitality and food service: Restaurants, bars, cafes, and hotels rely heavily on flexible staffing models. Workers who consistently work the equivalent of full-time hours but on a zero hours basis will need to be offered contracts reflecting that.

Retail: Large and small retailers use zero hours workers extensively, particularly for evenings, weekends, and seasonal peaks. Patterns of regular weekend and evening work may become guaranteed hours obligations.

Social care: The adult care sector is one of the largest users of zero hours contracts in the UK. The combination of high turnover, irregular care packages, and tight margins makes this one of the most challenging sectors to comply with.

Education and universities: Supply teachers, lecturers on sessional contracts, and support staff on zero hours arrangements are common. Term-time patterns may complicate the reference period calculation.

Logistics and warehousing: Particularly relevant for depot and warehouse operations with fluctuating volumes but consistent use of the same pool of workers.

Construction and trades: Subcontractors and casual operatives, though many of these individuals are self-employed rather than workers.

How to Calculate What Guaranteed Hours Might Look Like

Until the regulations are published, you cannot run a definitive calculation. But you can start to model the potential impact now.

Practical exercise to run today:

List all your zero hours and low hours workers
Pull their average weekly hours worked over the past 12 weeks
Identify anyone who is regularly working the equivalent of a part-time or full-time pattern
Consider what offering those hours as a guaranteed contract would mean for your cost base and operational flexibility

For example: a care worker who has been working 25-30 hours per week consistently for six months would likely be entitled to a guaranteed 25-hour contract under the new rules. If you have 15 such workers, that is 15 new contractual obligations to manage.

What to Do Now to Prepare

You do not have to wait for 2027 to start. The businesses that prepare early will find the transition far smoother. Here is what to do now:

1. Audit your zero hours worker population. Understand how many workers you have on zero hours and low hours contracts, what their average hours are, and how consistent those patterns are.

2. Review your zero hours contracts. Remove any exclusivity clauses. Ensure the contract accurately reflects the arrangement and includes a clear statement of rights. Check that PAYE is applied correctly.

3. Build notice into your scheduling. Start giving workers more notice of shifts and shift cancellations. When the regulations come into force, short-notice cancellations without compensation will be prohibited. Building the habit now is easier than changing processes overnight.

4. Engage with the consultations. The government is consulting on the detail of these rules. Trade associations in your sector will be submitting responses. If you are not a member of one, now is a good time to join.

5. Consider your staffing model. Some businesses may need to rethink their workforce structure. If the core of your business relies on workers who are effectively working a fixed pattern on zero hours, those workers may be better served (and less legally risky) on formal part-time contracts now, before the law requires it.

6. Seek advice on employment status. Some businesses using zero hours arrangements are at risk if workers are misclassified as workers rather than employees. Misclassification can expose you to claims for employment rights that employees hold but workers do not.

What Will Not Change

It is worth being clear on what the ERA 2025 zero hours changes are not doing:

Zero hours contracts will not be banned. Some commentators have suggested a blanket ban is coming. It is not. The right is to be offered guaranteed hours, not to be forced onto one.
Workers can still choose flexibility. If a worker prefers zero hours, they can decline the guaranteed hours offer.
The changes do not affect genuinely irregular work. If a worker only works ad hoc, genuinely variable hours with no discernible pattern, the guaranteed hours obligation may not apply (depending on how the regulations define the reference period threshold).

Frequently Asked Questions

Q: Are zero hours contracts still legal in 2026?

Yes. Zero hours contracts are legal. There is no ban. The rules are changing to give workers the right to be offered guaranteed hours, but that change comes into effect in 2027, not 2026.

Q: What is the difference between a zero hours contract and a casual worker arrangement?

The terminology varies. A zero hours contract is a written contract offering no guaranteed minimum hours. A "casual worker arrangement" is often an informal version of the same thing. Both are likely to be covered by the guaranteed hours rules once they come into force, depending on the worker's pattern of actual hours.

Q: If a worker declines the offer of guaranteed hours, do we need to offer it again?

This will be set out in the regulations, but the expectation is that employers will need to make periodic offers (likely after each reference period) so that workers have the option to convert at different points in their employment.

Q: Our business is seasonal. Will we still need to offer guaranteed hours?

This is one of the areas being consulted on. Seasonal workers whose hours vary dramatically between seasons may be treated differently from workers with consistent weekly patterns. The government has indicated that genuinely seasonal work may be excluded or treated differently, but the details are not yet confirmed.

Q: We use agency workers. Does the guaranteed hours right apply to them?

Potentially. The Act extends to agency workers in some circumstances, with obligations falling on both the agency and the hirer. The detail is subject to consultation. If your business uses agency workers heavily, follow the consultation closely.

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Last updated: April 2026