In our latest employment law update blog, we delved deeper into the Employment Rights Bill, paying particular attention to new laws regarding unfair dismissals, dismissal and rehiring practices and collective layoffs.

Obviously, these are not the only things that will change in 2026, and it is essential that businesses know which laws are likely to impact them, in order to prepare for them.

If you want to learn more about how the bill could impact your business, keep reading.

Limit the use of zero-hours contracts and reduced-hours contracts

The Employment Rights Bill will limit the use of zero hours contracts and reduced hours contracts as part of the Government’s commitment to ensuring all jobs provide “a basis of security and predictability so so that workers can better plan their lives and their finances.”

The government said there should also be more clarity and notice on working arrangements, which would help workers by making it easier to arrange transport and childcare, as well as fulfilling other commitments family and care responsibilities.

The provisions of the new labor law do not specifically prohibit the use of zero-hours or reduced-hours contracts, but will require employers to provide these workers with a guaranteed number of hours, and will otherwise make the use of these contracts less attractive to employers.

The new labor laws are complicated but will work something like this:

• Employers will be required to offer workers a guaranteed hours contract that reflects the hours that eligible workers have regularly worked during a reference period. The length of the reference period will be specified in the regulations and subject to consultation, but the government has suggested in its Next Steps document that it should be 12 weeks.
• An employer’s obligation to offer guaranteed hours to an eligible worker will apply after the end of each reference period.
• To be an eligible worker who will be entitled to guaranteed hours, workers must have a current guarantee of hours below a certain number which will be set in the regulations. In other words, they must currently be on zero or reduced hours contracts.
• The obligation to offer guaranteed hours after each reference period will continue to apply until the worker no longer meets the definition of a qualified worker, which will be the case when their contract guarantees a number of hours greater than the minimum number of hours set by regulations. In other words, the duty will continue until the worker is no longer considered to be engaged under a zero hours contract or a reduced hours contract.

To explain how this is likely to work in practice:

• Let’s assume that the regulations stipulate that an eligible worker is someone who is guaranteed to work less than 20 hours per week and that the reference period for assessing guaranteed hours is 12 weeks.
• Suppose an employer hires a worker on a zero hours contract offering no guaranteed hours of work, or perhaps a low number of guaranteed hours (e.g. 5 hours per week).
• During the 12-week reference period after starting work, the worker ends up working an average of 10 hours per week.
• The employer will then be required to offer the worker a guarantee of 10 hours of work per week from that point on.
• If during the next 12-week reference period their schedules do not change, they will still be entitled to the same number of guaranteed hours.
• But suppose their hours increase to 15 hours per week during the next reporting period, then this will become the new number of guaranteed hours they should be offered.

This process will continue indefinitely, but if in a 12-week reference period the employee’s hours exceed on average 20 hours per week (if this is the number of hours that ends up being fixed in the regulations), then the employee must have the guarantee for this number of hours to come. After this period, there will no longer be an obligation to value their hours over additional reference periods or to modify their number of guaranteed hours, because they will no longer be considered to be on a zero-hours contract or on an hourly contract. reduced.

There will, however, be a minimum threshold of hours (again to be determined by regulations) which must be worked for the guaranteed hours obligations to come into force. For example, if this minimum threshold is set at three hours per week, then an employee who works less than this number of hours over the reference period will not be entitled to any guaranteed hours offer.

UK law makes it clear that a worker is free to accept or not the offer of guaranteed hours. If they wish to remain on zero hours or reduced hours contracts, they will be able to do so. It will also allow fixed-term contracts to be used as an alternative to guaranteeing continuous working hours in certain circumstances, for example where it was reasonable to hire a worker for a defined period to carry out a particular task.

The ongoing requirement to measure hours worked over a rolling 12-week period will be onerous for employers and the requirement to offer guaranteed hours could stifle productivity and flexibility.

It is also unclear how the new rules will affect employers of seasonal workers who have hired a worker to cover a busy period, but who may not want to provide the same amount of work outside of that busy period. This is an issue that could be addressed as part of the consultation process.

Obligation to provide reasonable notice before shifts

Another key change in the Employment Rights Bill that has not received much attention so far is the new requirement for employers to give reasonable notice to the worker before a shift that the employer asks a worker to work. To remain UK compliant, employers must specify:

• The date of the change
• Start time
• The number of hours to work.

Employers will also be required to provide reasonable notice of shift changes or cancellations. Workers will be entitled to compensation if their shift is canceled or changed at short notice.

Much of the detail of these provisions, including what is considered reasonable notice and the level of compensation that must be paid, will be set out in the regulations following a consultation period.

Many businesses rely on the ability to change and cancel shifts based on demand, and the reduced flexibility and additional costs for businesses if they need to change a shift are likely to pose a challenge for industries such as l hospitality and retail. It will become increasingly important for businesses to accurately assess demand in advance.

Sexual harassment

Following recent changes to labor legislation relating to sexual harassment already in force, the Employment Rights Bill proposes to further strengthen employers’ obligations by requiring them to take “all reasonable steps” to prevent sexual harassment of their employees, rather than settle for “reasonable” measures.

Employers will also have a duty to take “all reasonable steps” to prevent sexual harassment from third parties.

Although the Equality and Human Rights Commission (EHRC) considers that existing law covers the prevention of sexual harassment by customers and other third parties, and can take enforcement action in In the event of a violation, there is currently no opportunity for an employee to take legal action. action against their employer for failing to prevent sexual harassment by a third party, or for the employer to pay compensation under the Equality Act.

This will change with new labor laws, which will give employees the right to file a complaint against their employer and receive compensation if they are sexually harassed by a third party at work.

Conclusion

Employment laws will always be confusing and complex, but the risks of non-compliance are too great to bury your head in the sand. If you would like to find out more about the Employment Rights Bill, our final blog in this series will cover:

• Equality Action Plans
• Dismissal during pregnancy or during or after legal family leave
• Rights from day one to family leave
• Flexible working
• Statutory sick pay from day one; removal of the lower income threshold

For further assistance, speak to one of our HR consulting specialists.