Zero hour and low hour contract workers

Claire Treacy, Senior Associate

In our November leisure bulletin Claire Treacy, Senior Associate in our Employment Team, explained the Labour Government’s intended employment law changes relating to zero hour and low hour workers. If you want to read this article again you can access it here. In summary the changes announced by the Government back in October 2024 were:

1. An obligation to offer a “guaranteed hours contract” to qualifying workers to reflect the hours they actually work.
2. A new obligation on employers to have to give reasonable notice of shifts and any changes to shifts.
3. A new right for qualifying workers to receive a payment from their employer if they have their shift cancelled, moved or cut short at “short notice”.

In March the Government published a response to its consultation on extending these changes  to agency workers, in addition to them applying to zero hour and low hour contract workers.

The response confirms that the changes will be extended to agency workers. The purpose of this is to prevent businesses from switching from using zero hour and low hour contract workers to agency workers to avoid the new laws. The announcement confirmed that:

• The hiring business rather than the agency will have the responsibility for offering guaranteed hours contracts to eligible agency workers.
• No changes will be made to the current systems of transfer fees or extended hire periods.
• The responsibility for providing qualifying agency workers with reasonable notice of shifts and any changes to shifts will be shared by both the agencies and the hiring business.
• The agency will be responsible for paying agency workers compensation for any short notice cancellation, curtailment or movement of shifts. However, agencies will be able to recoup those costs from the hiring business in some circumstances.

The hospitality industry is already an industry that is going to be hugely impacted by the changes to zero hours and low hour contract workers because of the number of staff members on these types of contracts in the industry. The Government’s recent confirmation that these changes will also now apply to agency workers is only going to further impact the industry because of the use of agency workers in a lot of hospitality businesses.

If you had intended to move from engaging zero hour contract and low hour contract workers to agency workers in order to avoid the need to offer a guaranteed hours contract for example and to avoid the repercussions of the new legislation when it comes into force, this announcement confirms that will no longer be worthwhile.

Instead, if your business uses agency workers or zero hour or low hour contract workers you should take the time now to review your current arrangements with these workers by looking in particular at their contractual hours in comparison to what hours they actually work each week.  Similarly, if you make use of agency workers it will be important to ensure that your contract with the agency reflects the change in legislation. These steps will help you to prepare for the changes.

It is currently anticipated that these changes will come into force no later than Autumn 2026 giving businesses plenty of time to prepare.

In addition, other changes have been announced which indicate it may be possible to contract out of the requirement to offer guaranteed hours by way of collective agreement, and replace them with something else, so long as the new terms are contractual. However, we await further clarity on this.

If you would like more information about the recent announcements made by the Government in other areas of employment law, including the changes to statutory sick pay and unfair dismissal rights, please follow this link. You can also contact a member of our employment team on 0161 832 3434 and sign up to our monthly HR bulletins following this link.