Zero-hours reforms raise employer cost concerns

Planned reforms to zero-hours and short-hours contracts could increase employment costs and encourage greater use of temporary workers and contractors, according to new employer research from the CIPD.

A survey by the CIPD found that 65% of employers using zero-hours contracts expected the proposed rules to raise HR and management costs. Almost a third, 31%, expected to make redundancies, while 33% anticipated relying more heavily on self-employed contractors, temporary staff, or casual workers.

The reforms are intended to give people working zero or short hours greater access to predictable working patterns and form part of the Employment Rights Act 2025. Detailed implementation rules are still being developed ahead of the measures taking effect.

Ben Willmott, head of public policy at the CIPD, said: “There is a real risk that these regulations will disadvantage both businesses and workers.”

The professional body wants several elements of the proposed framework changed before implementation. It is calling for the reference period used to measure normal working hours to be increased from 12 weeks to 52 weeks and wants the threshold for guaranteed-hours rights set at eight hours.

It is also seeking greater flexibility around advance notice of schedules, particularly where an employee volunteers to accept a shift at short notice. The CIPD says its response draws on focus groups and interviews with HR professionals, an employer survey, and analysis of UK and international labour market data.

The policy debate centres on the boundary between flexibility and insecurity. Variable-hours contracts are widely used in retail, hospitality, social care, leisure, and other industries where staffing demand can change quickly. They can also suit workers balancing employment with study, caring responsibilities, or other commitments.

The same arrangements can create financial instability when hours change unexpectedly or workers cannot predict their income. The government’s reforms are designed to address that imbalance by creating stronger rights around guaranteed hours and scheduling.

The operational effect will depend heavily on the final technical rules. Reference periods determine how an employee’s regular hours are calculated, while thresholds influence which workers qualify for new rights. Notice periods and compensation requirements can also affect how quickly employers are able to respond when demand changes.

Those details become more significant when labour-intensive organisations are already managing weak recruitment demand and higher employment costs. Businesses operating on narrow margins may respond differently from organisations with greater scope to absorb additional administration. Potential responses include changes to recruitment, staffing levels, opening hours, outsourcing, and investment in automation.

The CIPD survey records employers’ expectations before the final regime is in force rather than confirmed changes to workforce numbers. The scale of any redundancies or increase in contractor use will only become clear once detailed regulations are settled and employers begin adjusting their staffing models.

The reforms also sit within a broader programme of employment law change. Organisations are preparing for measures covering areas including sick pay, parental rights, collective redundancy, trade unions, workplace harassment, and enforcement. Managing several changes at once can increase implementation work across HR, payroll, workforce planning, and line management.

Variable-hours work remains particularly important for younger employees. The CIPD says 479,000 people aged 16 to 24 are on zero-hours contracts, including around 250,000 students. That places the rules within a wider debate about maintaining entry-level opportunities while improving the security and predictability of work.

The final design will determine whether employers’ current concerns translate into measurable changes in staffing. Companies with significant numbers of variable-hours workers will need detailed records of actual hours, scheduling practices, cancellations, and voluntary shift changes so they can assess how the eventual rules affect workforce capacity and cost.