The Employment Rights Bill and the End of Zero-Hours Contracts

The landscape of UK employment law is on the cusp of one of its most significant changes in years. With the Employment Rights Bill nearing Royal Assent, SMEs across the country are facing a shift in how they engage and support their workforce – particularly when it comes to zero-hours contracts.

For many small businesses, flexible staffing has long been a practical solution to fluctuating demand. But as we move towards a more predictable and protective employment framework, practices like exploitative zero-hours arrangements are being firmly challenged. With phased implementation expected from 2026, now is the time to understand what’s changing and how to prepare.

What Is the Employment Rights Bill?

The Employment Rights Bill is a comprehensive piece of legislation designed to modernise UK employment law and strengthen protections for workers. Introduced in response to long-standing concerns around job security, fairness, and predictability, the Bill reflects a clear direction of travel: towards more stable and equitable employment practices.

While it contains several important provisions, a central focus is ending the misuse of zero-hours contracts and ensuring that workers – including agency staff – are treated fairly, with greater clarity about their hours, rights and expectations from day one.

Key Provisions: A Snapshot

The Bill brings in a suite of reforms that SMEs need to be aware of. Among the most significant:

• Banning exploitative zero-hours contracts: Employers will be required to offer contracts that reflect actual working patterns. Staff on irregular hours will gain the right to request a more predictable schedule based on the hours they typically work.
• Introducing day-one rights: New protections – such as the right to request flexible working or protection from unfair dismissal in certain cases – will apply from the first day of employment.
• Ending fire-and-rehire tactics: Employers will face stricter requirements when attempting to change terms and conditions through dismissal and re-engagement.
• Reforming flexible working: Employees will be able to request flexible arrangements from day one, and employers will need to respond more swiftly and transparently.

These measures aim to balance flexibility with fairness – especially for workers in hospitality, retail, care and other sectors that have historically relied on casual labour.

Zero-Hours Reform: What's Actually Changing?

For SMEs, the most pressing shift will be around zero-hours arrangements. While the Bill doesn’t ban all forms of casual work, it introduces robust protections against abuse and introduces new obligations for employers.

From 2026 onwards, workers on variable hours will have the right to request a contract with guaranteed hours, based on their actual average hours worked over a set reference period – likely 12 weeks. If someone has been consistently working 20 hours a week, for example, they can formally request a contract that reflects that pattern.

Employers will also need to provide reasonable notice of shifts – reducing the practice of calling staff in at the last minute – and may be required to pay compensation if shifts are cancelled without adequate notice.

Importantly, agency workers will be included in these protections, further broadening the scope of the reforms. Businesses using agency staff will need to ensure those individuals receive clear, fair terms and are not left without work or pay due to poor planning.

Timeline and Implementation

As of October 2025, the Employment Rights Bill is approaching its final stages in Parliament, with Royal Assent expected before the end of the year. Once passed, the reforms will be rolled out in phases:

• 2026: Initial provisions likely to begin, including day-one rights and flexible working reforms.
• 2027: More complex elements, such as zero-hours contract changes, will come into force. This gives businesses time to prepare — but the clock is ticking.

Waiting until implementation deadlines is risky. Reviewing your practices now will not only put you ahead of the curve but help you avoid potential disruption and non-compliance down the line.

How This Impacts SMEs

For small businesses, these changes bring both opportunities and challenges.

On the positive side, more predictable contracts can improve morale, reduce staff turnover, and strengthen your reputation as a fair employer. Clearer expectations on both sides can lead to better planning and smoother team management.

However, there may also be increased administrative pressure, particularly for businesses with limited HR support. Reviewing contracts, tracking average hours, managing shift notice periods and handling flexible working requests – these all take time and know-how. There may also be cost implications, especially if you rely heavily on last-minute scheduling to keep staffing lean.

That said, with the right preparation, these changes can be managed smoothly – and in a way that aligns with your business values.

What You Should Do Now

If you’re using zero-hours or variable-hour contracts, now is the time to take stock. Start by auditing your current working arrangements. Who’s on flexible terms? What hours are they actually working? Are any of your current contracts at risk of non-compliance?

Next, review your policies and templates. Contracts, shift rotas, cancellation protocols, and flexible working procedures may all need to be updated. You don’t need to rewrite everything overnight – but you do need a plan.

Just as important is communication. Keep your team informed about what’s changing, why it matters, and what it means for them. Transparency builds trust – and helps avoid unnecessary anxiety or speculation.

Training for managers is also crucial. Those on the ground will be handling most of the queries, so make sure they’re equipped to respond appropriately and know when to escalate.

How The HR Dept Can Help

Navigating employment law reform is no  small task – especially when you're running a business and wearing multiple hats. That’s where we come in.

At The HR Dept, we specialise in supporting SMEs through change. Whether you need to review your current contracts, design new ones that comply with the law, or train your team on how to manage requests for predictable hours, we’re here to help.

We offer tailored solutions based on the needs of your business, sector and workforce. No off-the-shelf templates – just practical advice that works in the real world.

Need support preparing for zero-hours contract reform? We’ll guide you through the legal changes, help you prepare your HR documentation, and give you confidence that your practices are fair, clear and compliant – all while supporting a smooth transition for your team.

Get in touch with your local HR Dept today to review your contracts and policies, and ensure your business is ready for what’s next.