Employment Rights Bill: New rights for zero-hour, low-hour and agency workers

Zero hour and agency workers are common in the catering industry. The Employment Rights Bill (the “Bill”) is expected to become the Employment Rights Act shortly and contains several new rules for these workers. These changes are part of the government’s aim to tackle what they describe as ‘one-sided flexibility’ in the workforce, i.e. situations where employers have all the flexibility in deciding when and how much someone works. 

As you might know the Bill is still being debated by parliament, in the last few weeks changes were made to the proposals for zero hours workers by the House of Lords. The Commons rejected these changes and reinstated the original wording of the Bill. We are now waiting for the Lords to discuss these again. This means that we are still waiting for a final version of the rules that will apply here, and the information below is a summary of content of the Bill as of 6th November 2025. 

Once the Bill is passed and becomes the Employment Rights Act detail will then be needed as to how all this will work in practice, we are expecting the government to consult on this shortly and then produce some secondary legislation setting out the detailed requirements of the new laws. 

Which workers will be affected?

Zero-hour contracts are a type of contract with no guarantee of hours, where the employer is under no obligation to provide any work at all. Instead, the relationship is very much ad-hoc. Low hour workers will also be caught by the new legislation, although we do not yet know how many hours a week will count as low hours. Agency workers were also added to the Bill earlier this year, to prevent employers using agencies to avoid these new rules.

What are the key changes?

Workers on zero hours and low hours contracts, and agency workers will have the right to:

• Guaranteed hours reflecting the number of hours regularly worked. 
• Reasonable notice of shifts.
• Payment for short-notice cancellations or changes to shifts. 
• Engage in other work as any exclusivity clauses you have in zero hours contracts, ensuring workers cannot engage in other work without your consent, will become void.

Guaranteed hours

Employers will have to make workers an offer of guaranteed hours. These guaranteed hours will reflect the usual hours that the worker has worked over a specific look back reference period, which we expect to be 12 weeks.  

Where the offer is to an agency worker then the end user, and not the agency, has to make the offer. If the agency worker accepts, they would then become directly engaged with the end user as a worker, and not as an employee. Importantly, this does not necessarily end the agency relationship between the recruitment agency and the worker. You should also note that the offer you make cannot be on less favourable terms (as a whole) and agency staff are often better paid. Whilst we anticipate that this can be offset with other benefits it will be important to consider the rates you offer to agency workers once these rules are in force.

Of course, the worker can choose whether or not to accept the proposal. If they do not respond within a specified time, which we expect to be one week, you can treat your offer as rejected. The government has recognised that zero-hour work suits the preferences of many workers, particularly those that value a great deal of flexibility.

If the worker rejects the offer of guaranteed hours, their existing arrangement continues. The Bill requires the employer to continue making new offers of guaranteed hours at the end of each reference period. It also makes allowance for these offers of guaranteed hours to be temporary where there is genuinely a reason for them to be fixed term, but again we need more detail from the secondary legislation to understand how this would work in practice.

Notice of shifts and shift changes

The Bill creates a right for workers to receive reasonable notice of shifts and shift changes, along with compensation payments if that notice is not given in time.

For agency workers, both the agency and the end client (employer) will share responsibility for ensuring reasonable notice is given. This differs to zero or low hour workers where the obligation sits solely on the employer.

Agencies will be required to make the cancellation payments to their workers. They will have the right to recoup costs from the employer but only if the agreement between the employer and agency was entered into within two months of the Bill passing. After that the rules agreed between the parties will apply, so expect to see terms added to your agency agreements around clawbacks and notifications procedures which you will need to consider. 

We do not yet know what ‘reasonable notice’ will be, or the compensation to be paid, as this detail is set to be defined following further consultation.

Next steps

Using zero or low hour workers will be more complex once these new rules are in force. As we do not expect that to happen until 2027, we have time to prepare. There are some things that you can do now to put yourself in the best position: 

• Review your workforce and your workforce planning. Consider when your peaks and troughs occur. Do you engage people on zero-hours contacts who might be more suitable for part-time or fixed-term contracts? Do you often give very short notice of changes or cut a shift short, if so, can you make any changes to reduce this happening?
• Consider whether your HR information systems can track all these moving pieces, as you will need this information to comply with the rules. 
• Review your agency contracts to make sure they comply with the final regulations. You will also need to think about any fees that might be payable to the agency if you engage their worker directly after an offer of guaranteed hours.

As we often say when reporting on the Bill, much of the detail is still to be fleshed out in future regulations following further consultation. Zero-hours and agency workers are clearly within the government’s plan to make work pay for individuals. We had expected the government to ban these types of contracts outright, and while they have not done that, from 2027 the rules around using them will become much more complex.

Our employment lawyers specialise in working with clients in the Leisure and Hospitality industry. For more information get in touch with our employment team.