Contingent and shift workers: audit usage and get ready to be able to track individual working patterns
Next year, the Employment Rights Act 2025 is due to introduce significant new rights for many zero-hour, low-hour, and agency workers. A recently published government consultation is a timely reminder to employers who rely on these workers to start their preparations for these potentially burdensome changes.
Background
The Employment Rights Act 2025 (the Act) will introduce three significant rights for contingent (zero hours, low hours and agency) workers:
- Guaranteed hours offers (GHOs) reflecting hours actually worked. Broadly speaking, this will be an obligation on employers to offer guaranteed hours to an eligible worker, calculated by reference to hours worked in a reference period. The worker will be free to decline the GHO. However, the employer may have to make further GHOs after subsequent reference periods.
- Reasonable notice of shifts.
- Payment for shifts that are cancelled, curtailed, or moved at short notice.
These rights are billed to be introduced at some point in 2027. However, highly important detail remains to be decided, not just around the mechanics of the rights but also more fundamental issues concerning their scope. By way of example: (i) What will count as low hours? This decision could significantly affect the number of in-scope workers. The government has stated a preference for somewhere in the range of eight to 20 hours a week. (ii) What is short notice? The Act permits the government to set this as high as seven days; however, it could be set much lower at, say, only one day. The final decision on this point will dictate the level of flexibility permitted to change shift allocations.
The government committed to consult on these issues and, on 2 June 2026, duly published its consultation paper — Ending One-Sided Flexibility: Reforms of Zero Hours and Similar Contracts. Responses are invited until 11:59pm on 25 August 2026.
What should employers be doing now?
Employers can take steps now to prepare for the introduction of the new rights, notwithstanding the fact that much of the detail and scope is yet to be decided. Broadly, these steps break down into three areas:
a) Audit usage of all contingent workers.
b) Assess whether your systems will be able to accurately record and calculate the hours worked by each contingent worker over a defined period, as well as ensuring that shifts are arranged / re-arranged in accordance with minimum notice periods.
c) Review commercial terms with staffing agencies to ensure data can be shared with you (e.g. around hours worked for you via the agency, length of notice of shifts etc.) and identify potential liabilities for temp-to-perm fees. Liability for shift notification-related rights for an agency worker might be shared or sit with the agency rather than the hirer.
We discuss these actions in more detail below.
Audit usage
As a very first step, employers should audit their usage of all zero-hour, low-hour and agency workers and identify who those people are.
Identifying actual people is important in order to check whether you are regularly engaging the same person, as it is only such people who are likely to qualify for a GHO.
Identifying numbers will assist in determining, at a broad-brush level, whether the new rights are likely to have a significant impact on future workforce planning.
Calculating the potential costs of the new rights is currently challenging, due to the range of options the government is considering. Nevertheless, it could still be beneficial to estimate “worst-case” costs. In relation to payments for shifts that are cancelled, curtailed, or moved at short notice, the government is suggesting that this would be calculated as a percentage either of what the worker would have actually earned for the original shift, or only as a percentage of what they would have earned if paid the national minimum wage level. In either case, the consultation suggests anything between 10% and 80% as the relevant percentage.
Ensure systems can track individual working patterns
The new right to a GHO will be dependent on existing contractual working requirements, actual hours worked in defined reference periods, regularity of work and averaging calculations. Shift notification-related rights will also be based on existing contractual working requirements, as well as the timing of shift notifications or changes to allocated shifts. We list below the key things that employers should ensure their workforce planning systems can do, in readiness for the rights coming into force next year:
- Identify how many hours a worker is already contractually guaranteed, if any. This is because the new rights will only apply to zero-hour, low-hour or agency workers (the consultation recognises that agency workers do not usually have any guaranteed hours) The threshold of what will count as low hours is subject to the current consultation. For the purposes of the right to receive a GHO, as mentioned earlier, the government’s stated preference is somewhere in the eight to 20 hours a week range. The consultation envisages that the threshold could be different for the purposes of shift-notification rights. The government has not expressed a preference in this regard.
- Calculate how many hours the worker has actually worked in a reference period. The government is consulting on the length of the reference period, with a stated preference for 12 weeks for the initial reference period.
- Identify the regularity of work within the reference period. The government gives as an example that, if the reference period is 12 weeks, the worker would have had to have worked in at least eight of those 12 weeks.
- Identify hours worked in excess of any contractually guaranteed hours, in the relevant reference period. This is less certain as a requirement, but the current consultation shows that the government might impose an excess hours requirement, in addition to the regularity of work requirement mentioned above. (As an aside, at the time of writing, the maths in the government’s example on this point appears to be incorrect – “Option B” on p.31 of the consultation paper.)
- Apply different reference periods for different workers. As mentioned above, the initial reference period for a worker is likely to be 12 weeks. This will start at the same time for all existing workers when the GHO right comes into force. However, after that date, new joiners’ initial reference periods will start on their own individual start date. Subsequent reference periods (which could potentially be as long as a year) will also depend on individual trigger points.
- Calculate the average hours in the reference period, this being the amount that the employer will have to offer under the GHO regime. The government is expressly consulting on whether this should be a mean or median average.
- Ensure that reasonable notice of shifts is given. The government is considering fixing an amount that would be presumed as reasonable, potentially in the range of one to four weeks. Accordingly, employers might, for example, want to have systems that will generate a warning if a manager attempts to schedule a worker on to a shift with less than the presumed amount of reasonable notice. Unhelpfully, from the perspective of certainty, reasonableness in a given case could vary, subject to a range of factors that are yet to be confirmed. However, keeping to the time that is presumed reasonable will lower risks.
- Ensure that changes to allocated shifts comply with minimum notice requirements. The purpose of this would be to avoid the costs of payments for shifts that are cancelled, curtailed, or moved at short notice. Alternatively, or in addition, employers may want systems that will automatically process the required payment if short notice of cancellation, curtailment or movement is unavoidable.
It is worth noting that the shift notification-related rights are unlikely to be triggered by workers requesting a shift or shift change at short notice, or voluntarily swapping shifts between each other.
Agency worker specific considerations
The new rights will apply to agency workers too. In short, this means that employers will need all the data and tracking abilities mentioned above for these workers too, except potentially for shift notification-related notifications (for the reasons explained below).
The agency-specific considerations boil down to auditing the commercial terms you have with your staffing agency providers for the following issues:
- Can you obtain hours-related data from the agency, if necessary, in the absence of adequate internal records? The government is considering requiring sharing of the information (usually from agencies to hirers) that is needed to comply with duties under the zero hours measures. However, if this does not make it into the final set of rules on GHOs, employers will want to ensure commercial terms cover information-sharing adequately.
- What are the terms around giving notice of shifts to an agency worker? Liability for giving reasonable notice will be shared between the hirer and agency.
- Are there any provisions relating to short notice payments? Given that this is a new right, not yet in force, commercial terms might not yet address it. However, the new rules deal with this up to a point. Liability for payments for shifts that are cancelled, curtailed, or moved at short notice will fall on the agency under the new legislation. However, as an initial default position, an agency might be able to recoup these costs from the hirer where there are pre-existing arrangements between them that were entered into prior to 18 February 2026 and which have not subsequently been modified. This right to recoupment will be to the extent that the hirer was responsible for the shift cancellation, movement or curtailment. In all other cases, liability will sit with the agency, but they are free to seek to include recoupment provisions in commercially agreed terms with the hirer.
- Are temp-to-perm fees payable? These fees are a common feature of commercial terms, the validity of which is underpinned by longstanding legislation (the Conduct of Employment Agencies and Employment Businesses Regulations 2003). The new rules under ERA 2025 do not modify the rules around such fees. As it stands, therefore, there is a chance that an agency worker accepting a GHO could trigger liability to make a temp-to-perm payment, despite the hirer being legally required to make the GHO. This risk makes it all the more important for employers to be able to track their agency worker usage, either to avoid triggering the GHO system, or to be able to properly factor in the costs.
Final considerations
There are some final points worth noting:
- The application of all three sets of rights can be excluded by a collective agreement with an independent trade union.
- There may be some exclusions from the rights. Most significantly, genuinely seasonal work arrangements might be excluded from the GHO regime.
- The government is considering giving enforcement powers to the new Fair Work Agency in relation to short notice payments.
Next steps and how we can help
The key takeaway is to take this opportunity to get ahead of the curve and ensure that your organisation will be ready to deal with these incoming changes. Please reach out to your normal Stephenson Harwood contact if you would like any further guidance or assistance on these issues.
We would also encourage any organisation that is likely to be significantly affected by these new rights to respond to the consultation. The range of options reflected in the consultation paper demonstrates that there is still potential to significantly shape the scope and complexity of the rights.
