Zero Hours Contract Reform: A key consultation for recruiters, employers and contractors is finally here

A long-awaited consultation on Zero Hours Contracts (ZHCs) and “similar contracts” has now landed, and the relief is widespread.

What’s the title of the new zero hours contract reform consultation?

Even lawyers are happy to finally see the 80-plus pages from the Department for Business and Trade (DBT), entitled “Make Work Pay: ending one-sided flexibility – reforms of zero hours and similar contracts.”

The June 2nd-published consultation may even get a recruitment body closer to the more “meaningful” impact assessment of the ‘ZHC ban,’ which it has told ContractorUK is needed.

What is glaringly less widespread is analysis of what the ‘zero hours consultation’ means for contractors, writes leading legal adviser Chris Bloor, compliance director at Sapphire.

What are the zero hours consultation’s key questions for contractors?

For example, how will the consultation’s proposed right to guaranteed hours (which was raised as a concern for umbrella companies back in 2024) affect contract work?

And what do the consultation’s proposed rights to reasonable notice and short-notice payments mean for recruitment agencies and employers?

After all, the latter often need to hire personnel yesterday.

Will this zero hours reform affect contract availability?

Here, exclusively for ContractorUK, I will tackle these questions and more, including sharing my concern that an overcorrection on ZHCs could reduce IT contractor job opportunities.

If you haven’t caught my drift by now, let me say it plainly — this zero hours consultation represents one of the most consequential potential shifts to flexible labour models in recent years.

Where do Labour’s changes to zero hours contracts come from?

Framed as part of “Make Work Pay” and making good on Labour’s manifesto promise (see p45), which was later echoed by Peter Kyle MP vowing to offer a ‘new deal to working people,’ the consultation aims to “end” what the government calls “one-sided flexibility.”

What is one-sided flexibility?

Based on my 20+ years in the contract labour space, I’d define one-sided flexibility as where businesses benefit from agility, but workers carry all the financial and scheduling risk.

The DBT says in the consultation’s opener: “The government’s manifesto committed to end one-sided flexibility and ensure all jobs provide a baseline of security and predictability.”

Is the government getting rid of 0-hours contracts?

Crucially, and despite the government’s 2024 pledge (“banning exploitative zero hours contracts”), the consultation makes clear that there will be no ban on 0-hours contracts.

The consultation’s officials state in the document: “We recognise that some workers need and value the flexibility that a zero hours contract can provide, for example some students and people with caring responsibilities. We are not banning zero hours contracts as we do not want to take away flexibility for these groups.”

What’s the government’s stance on zero hours in 2026/27?

The direction of travel here is therefore clear: greater security, predictability and accountability, but no outright ban.

Importantly, the detail — and ultimately the real-world impact — remains very much in play.

To that end, this zero hours consultation is open for your response until August 25th 2026.

What are the key Employment Rights Act proposals of the zero-hour consultation?

At the heart of the reforms are three new rights introduced under the Employment Rights Act 2025.

They are:

1. A right to guaranteed hours based on actual working patterns
2. A right to reasonable notice of shifts
3. A right to compensation where shifts are cancelled or changed at short notice.

Taken together, these proposed measures are designed to:

1. reduce income volatility
2. provide workers with greater certainty over when they will work
3. provide workers with greater certainty over how much they will earn.

This three-fold policy intent is understandable.

But the application is far from straightforward, particularly in the recruitment agency worker and freelance contractor market, which is where I specialise.

How do agency contractors typically operate?

Unlike traditional employment, agency contractor arrangements typically operate through a three-party relationship — between worker, agency, and hirer. So, applying uniform rules around guaranteed hours, shift notification, and cancellation payments within this structure introduces immediate practical and commercial challenges.

What will the new zero hours job rules need to do to be contractor-friendly?

Positively, there is already a growing expectation that the final framework from the DBT will need to differentiate rather than standardise.

This differentiation is likely to involve:

• adjusting eligibility thresholds,
• reconsidering how responsibility is allocated between agencies and employers/end-clients
• ensuring that notice and payment rules reflect the shorter lead times and reactive nature of contingent labour.

What approach to ZHCs must the government resist?

As the UK’s most flexible workers, contractors will probably sense based on their current engagement or recent roles that a rigid, ‘one-size-fits-all’ approach to implementation risks failing to reflect how the contingent labour market operates, day-to-day.

One critical point that must not be lost in the consultation process is the reality ‘on the ground’ for the UK’s contractor population.

Is flexibility a strength at work?

While some flexible arrangements can create imbalance, for a large proportion of contractors, flexibility is a deliberate and informed choice.

Practically and on the ground in the UK workplace, this flexibility often looks like and includes:

• IT contractors choosing project-based engagements to command higher day rates, even without (and in exchange for an absence of) long-term guarantees
• Interim finance professionals moving between assignments to retain independence and avoid permanent employment structures
• Construction and engineering specialists accepting variable hours, across multiple projects, to maximise earnings during peak demand
• Working parents or semi-retired professionals opting for ad-hoc work to align with personal commitments
• Multi-assignment contractors maintaining the ability to accept or reject work across different clients, preserving control over workload and income.

In each of these typical atypical work scenarios, flexibility is not imposed.

Rather, flexibility is actively leveraged as a strength, and is part of a conscious decision about how, when and where to work.

What is the right to guaranteed hours, and does it affect contractors?

It is important to recognise that, under the proposals in the zero hours consultation, contractors will generally retain the ability to decline any offer of guaranteed hours, and therefore can continue operating within flexible arrangements (should they choose to do so).

However, this does not eliminate the potential impact of the reforms.

The more significant issue lies in the imposition of the underlying obligations across the supply chain.

According to the consultation, businesses /employers will be required to:

• assess eligibility
• calculate average working patterns
• make formal guaranteed hours offers at defined intervals.

In addition, there will be a need for employers/ businesses to determine where responsibility sits between the agency and the hirer, while also managing the potential shift toward direct engagement in certain scenarios.

Even where a contractor chooses not to accept a guaranteed hours offer, these processes must still be followed.

What are the disadvantages of guaranteed hours?

This procedural necessity introduces additional administrative burden, cost, and legal complexity, all of which may influence behaviour across the market. Over time, organisations may take a more cautious approach, potentially:

1. reducing reliance on flexible labour
2. limiting assignment structures
3. avoiding situations where obligations are more likely to be triggered.

The impact of the guaranteed hours proposal, therefore, extends beyond individual choice.

It has the potential to reshape how opportunities are created and offered in the first place.

What is the over-correction risk of new rules on zero hours work?

Now, let’s turn to where the policy challenge for the Department of Business and Trade becomes more nuanced.

If the reforms in the zero hours reform consultation are based on the assumption that all variable arrangements are inherently problematic, there is a risk of over-correction.

Over-correcting could reduce opportunities for contractors who actively value flexibility.

How might over-correction hurt a contractor?

In the professional freelance and contingent labour market, over-correction could also introduce friction into project-based working models and disincentivise businesses from using contingent labour altogether.

Flexibility itself is not inherently exploitative.

The real issue arises where it is one-sided, lacks transparency, or is imposed without meaningful choice.

The success of the reforms will depend on maintaining that distinction.

What does the zero hours consultation say about the right to guaranteed hours?

The proposed right to guaranteed hours in the consultation could prove to be the most structurally significant element of the reforms.

According to the consultation, organisations will be required to proactively offer contracts that reflect the hours actually worked over a defined reference period, which is expected to be around 12 weeks. Within agency models, the default expectation appears to be that the end client will make this offer, with acceptance potentially resulting in direct engagement.

This raises fundamental questions about how the agency model will operate in practice, particularly where work is intermittent, project-based, or subject to fluctuating demand.

Our view is that the right to guaranteed hours proposal is a structural pressure point.

What about the proposed right to reasonable notice?

The proposed rights to reasonable notice and short-notice payments are likely to be equally impactful in the UK workplace.

Workers stand to benefit from increased certainty around when they are expected to work, as well as financial protection where shifts are cancelled or changed at short notice.

However, within contractor and agency markets, work is often offered at short notice by design, with demand driven by client requirements that can change rapidly. Contractor recruitment agencies frequently act as intermediaries rather than decision-makers, which complicates the allocation of responsibility. While a shared responsibility model between agency and hirer appears likely, the detail will be critical to ensuring that the framework remains workable.

The rules that DBT settles on must not undermine the responsiveness that these models depend on.

With this zero hours consultation, is the government’s mind already made up?

What is clear at this stage (June 10th 2026 ) is that the government is not presenting a fully fixed model.

There is a strong sense that DBT officials are prepared to listen and engage meaningfully with contractor industry stakeholders, creating a platform for dialogue and input as the regulations are developed.

This approach reflects recent experience in other areas of reform, where collaboration between government and industry has played an important role in shaping practical outcomes.

There is every indication that a similar approach will be taken here, with consultation responses, roundtables and ongoing engagement all set to refine how these measures will operate, in practice and in law.

Therefore, the zero hours consultation presents a genuine opportunity for the professional freelancing and contractor sectors to influence a framework governing flexible work that must balance fairness with functionality.

Are unintended consequences a risk of the zero hours consultation?

If not carefully calibrated, my fear is that the three main proposed reforms in the consultation could lead to unintended outcomes.

Specifically, there is a real possibility of:

• reduced use of flexible labour
• increased compliance costs
• disruption to established supply chains.

For UK contractors, these unintended yet possible consequences could each feed into the production of fewer contract opportunities.

This risk of the pool of contractor assignments narrowing would be heightened at those businesses that would seek to simplify or de-risk their engagement models.

The challenge, then, will be ensuring that reforms designed to improve protections at work do not inadvertently restrict access to the very flexibility that many workers (and employers and agencies) value.

What areas in the zero hours consultation can contractors offer input on?

As implied earlier, it’s important to remember that many of the key elements remain unresolved, hence the consultation calling for “input.”

Can you help?

Keep in mind, the government is consulting on critical aspects of the framework, including:

• hours thresholds
• reference periods
• notice requirements
• payment structures
• the allocation of responsibility between different parties.

So contractors, this is not a finished regime—it is actively being shaped.

A Call to Action for Agencies and Clients

This consultation vowing to ‘end one-sided flexibility’ brings with it a critical moment for the contingent labour and contractor industry.

Be in no doubt. If you operate within recruitment, contracting, umbrella company and/or contingent workforce models, the proposals in “Ending one-sided flexibility – reforms of zero hours and similar contracts,” will have direct and material implications for how you operate or engage talent.

To staffing companies in particular, I believe it is essential that agencies take the time to assess the operational and commercial impact of the DBT’s reforms.

Likewise, employers should consider how these changes could affect workforce planning, cost and flexibility.

There’s a clear need for joint engagement, too. Where responsibilities and liabilities may shift, agencies and employers/end-clients should work together to ensure that their collective voice is heard. And to respond to the consultation, you can email: zerohours.consultation@businessandtrade.gov.uk

What’s the key takeaway for the UK contractor sector of the zero hours consultation?

Above all else, please take away this — the now-open zero hours consultation is not a process to observe from the sidelines.

The consultation, including its 64 questions, should be read in full, responses should be grounded in real-world experience, and the sector must ensure that it is properly represented.

Just make sure to send your answers and comments by August 25th 2026.

What is Sapphire’s view of the zero hours reform consultation?

The government’s ambition to improve fairness and predictability is both clear and necessary.

But flexibility is not the problem.  For many contractors, it is a deliberate, informed and highly valued choice.

The real question is whether the proposed reforms can address genuine imbalance without introducing complexity that fundamentally reshapes the market for the worse.

Encouragingly, there is a clear opportunity for industry to help shape that outcome.

The outcome is not yet fixed. This is your opportunity to influence it.