UK zero-hours contract reforms could cost businesses up to £2.9bn annually

Government impact assessments regarding proposed reforms to zero-hours contracts suggest the changes could cost businesses up to £2.9 billion annually. The reforms, part of the Employment Rights Act 2025, would require employers to offer staff a guaranteed number of hours based on workload and provide reasonable notice for shifts. Additionally, workers would be entitled to compensation for shifts that are cancelled, curtailed, or moved at short notice.

The estimated annual cost to employers ranges from a minimum of £350 million to a maximum of £2.9 billion, depending on the scope of the implementation. A central baseline estimate sits at £1.1 billion. While the government acknowledges potential negative impacts such as increased administrative burdens and reduced flexibility for employers, officials argue the measures will support economic growth by improving worker wellbeing, engagement, and productivity.

Industry representatives have expressed concern. The British Retail Consortium warned that the costs could impact job prospects for young people, while hospitality and retail sectors are expected to be among the most heavily affected. The government is currently consulting on specific thresholds for the reforms, including whether to apply them to all workers or only those below certain hour thresholds.