Zero-Hours Contracts in 2026: What the Employment Rights Act Changes

Zero-hours contracts have been a fixture of the UK labour market for years, and the Employment Rights Act 2025 is changing the rules around them substantially — though it's worth being precise about what's actually changing, since "zero-hours contract ban" is a common but inaccurate shorthand for what the legislation actually does.

What the Employment Rights Act 2025 actually changes

Rather than an outright ban, the Act introduces limits on zero-hours and low-hours contracts, with employers required to make guaranteed-hours contract offers in defined circumstances, replacing purely zero-hours arrangements for workers who meet the relevant criteria. There are notable exemptions built into the legislation, including specific considerations for the employment agency sector, reflecting how differently zero-hours arrangements function there compared to, say, retail or hospitality.

A significant part of the detail — specifically the rules governing exactly when a guaranteed-hours offer has to be made in place of a zero-hours contract — is left to secondary legislation the Secretary of State is required to produce. As of this year, that detailed implementing guidance had not yet been finalised, meaning employers are working with the Act's broad principles while more specific operational rules are still being worked out.

Why the "ban" framing is misleading

Media coverage and even some employer-facing commentary have often shorthanded this reform as a "zero-hours contract ban," which overstates what the legislation actually does and risks employers either overreacting (assuming zero-hours arrangements will disappear entirely) or underreacting (dismissing the reform as exaggerated media noise once they realise it isn't a full ban). The more accurate description — a limit on zero-hours contracts, with a guaranteed-hours offer requirement in defined circumstances and sector-specific exemptions — matters because it changes what actual compliance preparation looks like: this is about redesigning contractual offers for qualifying workers, not eliminating flexible working arrangements from UK employment altogether.

Why this matters for employers now

Even with implementation details still emerging, employers using zero-hours or low-hours contracts need to be actively tracking this legislation rather than waiting for every detail to be finalised before engaging with it. Workforce planning, budgeting for guaranteed-hours commitments, and updating contract templates all take lead time, and businesses that wait until the secondary legislation is fully in force risk a compressed, disruptive compliance scramble rather than a planned transition.

For finance and HR functions working together, this has real budgeting implications: guaranteed-hours contracts change the predictability and structure of staffing costs compared to pure zero-hours flexibility, and businesses with large zero-hours workforces — hospitality, retail, and care sectors in particular — should be modelling the cost impact of likely guaranteed-hours obligations now, even before every detail is confirmed and stress-testing at least one high-level scenario now — a middle case that assumes moderate guaranteed-hours obligations — rather than waiting for perfect certainty before any planning begins.

What employers should be doing now

Sensible preparation includes: auditing current zero-hours and low-hours arrangements to understand how many workers and what proportion of the workforce would likely be affected; engaging with sector bodies and updates from organisations like Make UK, the CIPD, and specialist employment law advisers as the secondary legislation develops; and beginning early conversations about how guaranteed-hours offers would be resourced and communicated, rather than treating this as a purely legal compliance exercise disconnected from operational and financial planning.

Why this matters for CPD

For HR, payroll, and finance professionals, the zero-hours reforms are a live example of legislation landing in phases — broad principles set in primary legislation, with significant operational detail deferred to secondary legislation that follows later. Understanding how to track and prepare for this kind of phased implementation, rather than treating "the law hasn't fully landed yet" as a reason to wait, is a genuinely transferable compliance skill that applies well beyond this specific reform. A phased-implementation model like this also tends to reward employers who engage early: those already tracking guidance updates and modelling scenarios will have a genuine head start once the secondary legislation lands, compared with those who treat the wait for full detail as a reason to do nothing in the meantime.

Frequently asked questions

Does the Employment Rights Act 2025 ban zero-hours contracts entirely?
No — it introduces limits and requires guaranteed-hours offers in defined circumstances, with exemptions in some sectors, rather than banning zero-hours arrangements outright.

When do the zero-hours provisions take full effect?
Key operational detail depends on secondary legislation the Secretary of State is required to produce, which had not been finalised as of this year — employers should track official guidance for confirmed implementation dates.

Are all sectors affected equally?
No — the Act includes specific exemption considerations, notably for the employment agency sector, reflecting how zero-hours arrangements function differently there compared to other industries.

Understanding evolving employment legislation like this is core to Learnsignal's CPD courses, and our broader Employment Rights Act 2025 guide is a useful companion read covering the wider set of changes beyond zero-hours contracts specifically.