The government is currently consulting on the implementation of reforms to zero hours and low hours contracts. The consultation is part of the wider “Make Work Pay” agenda and follows the Employment Rights Act 2025, which became law on 18 December 2025. Importantly, the relevant zero hours reforms have not yet taken effect. The government is now seeking views on the best way to implement the regulations before they are drafted and finalised.
The consultation closes at 11:59pm on 25 August 2026. Agencies, umbrella companies, end clients and workers should use this opportunity to express their views on how the proposed rules may operate in practice, and any unintended consequences.
The proposals focus on three core areas:
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a right to guaranteed hours;
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a right to reasonable notice of shifts and changes to shifts; and
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a right to payment where shifts are cancelled, moved or curtailed at short notice.
These measures are intended to address what the government describes as “one-sided flexibility”. However, in the umbrella and agency sector, additional regulation risks creating unnecessary complexity where existing contractual arrangements already provide a baseline level of security.
1. Guaranteed hours
The first proposed right is a requirement to offer guaranteed hours to qualifying workers. The number of hours offered would reflect the hours worked during a reference period. The government has indicated that this will be based on a qualifying worker’s actual working pattern, with the detailed rules to be set out in regulations.
Government is asking for views on how this right can be implemented for agency workers, since this is naturally more complicated in the typical supply chain. Agency workers are usually supplied by an agency, employed and paid by an umbrella company, and work under the direction and control of an end client.
In the consultation, the government indicates their preference to set the threshold within the range of 8 to 20 hours per week, and furthermore, that the initial reference period is set at 12 weeks long. If therefore we have an agency worker, which includes an umbrella employee, working below the hour’s threshold across the reference period, government suggests that the end client will have a legal obligation to offer that worker a contract with guaranteed hours.
This is a crucial point that the industry needs to understand and respond to in the consultation.
Interestingly, FCSA accredited umbrella contractors are already offered a contractual guarantee of 336 hours per annum in their employment contracts. That guarantee gives a baseline level of contractual security, while preserving the flexibility required by contractors, agencies and end clients. Approximately, 336 hours equates to 6-7 hours per week, across the year.
Moreover, workers are protected under robust employment contracts. It also permits them to work multiple assignments for a range of clients. As explained, the client will need to offer a guaranteed hours contract to the worker where they fall below the threshold over a reference period, but what other protection will that contract afford them?
Against that background, further regulation should be approached with extreme caution. A rigid guaranteed hours regime may not improve protection for umbrella contractors in practice, and it may add cost, complexity and uncertainty for businesses operating in already heavily regulated supply chains.
Monitoring hours and offering necessary contracts will involve manual and systematic changes to business. Government suggest implementation by Spring 2027, which is an exceedingly short period of time to make that level of change to policies, procedures and processes.
When we looked at our data in Quarter 2 (2026), we found that our average contractor assignment length was 15 months, with an average of 33 weekly hours.
Why are government trying to fix a problem that does not exist in the professional agency market?
2. Reasonable notice of shifts
The second proposed right is the right to reasonable notice of shifts and changes to shifts. The government’s stated aim is to give workers greater certainty about when they will be working, how many hours they will work, in order to allow them time to plan travel, arrange childcare and other commitments.
The principle is understandable. Workers should not face unnecessary uncertainty where shifts can reasonably be planned in advance.
However, this is far from straightforward in the agency sector, working across multiple sectors and bringing flexibility greatly valued by clients. The definition of “reasonable” will be set out in regulation, which we expect will be a tricky task in itself!
The consultation proposes that responsibility for providing reasonable notice could rest with both the agency and the client, with an employment tribunal able to apportion liability depending on responsibility for the unreasonable notice. The worker will be compensated for any financial loss incurred.
That approach illustrates the complexity. If liability is divided across multiple parties, businesses will need to revisit contracts, operational processes, indemnities, data flows and notification procedures. That creates an administrative and legal burden which may be disproportionate, particularly where employment tribunals are already close to breaking point. Claims lodged at the Employment Tribunal are up 39% year on year, and the backlog is an astonishing 64,000.
The final point to note is that the right to reasonable notice of shifts only applies where the worker is a zero hours worker, or below the hours threshold we explain above. Therefore, its crucial the guaranteed hours threshold is sensible and workable in the agency worker sector; its vital that you have your say in the consultation.
3. Shift cancellation, curtailment and short-notice changes
The third area is the proposed right to payment where shifts are cancelled, moved or curtailed at short notice.
The policy aim is to prevent workers from bearing all the financial risk where they have accepted work, planned around it, incurred travel or childcare costs, or turned down other work, only for the shift to be cancelled or shortened at short notice.
In the consultation, government propose that agencies should be responsible for paying cancellation or curtailment payments to agency workers, in line with their responsibility for wage payments. However, it also recognises that agencies may need to recoup those costs from the client where the client was responsible for the cancellation or curtailment.
This point is critical. If a hirer cancels a shift at short notice, the cost should sit with the party responsible for the cancellation. Without a clear and workable recoupment mechanism, agencies and umbrella companies could be exposed to liabilities they did not create and could not prevent.
That would be a significant additional burden on business. It could also lead to more cautious engagement models, increased pricing, more contractual disputes, and reduced willingness to support flexible assignments. In sectors that rely on responsive staffing, over-regulation may reduce opportunities rather than improve them.
Why the agency sector need to respond
The government has already acknowledged that agency work is complex. That complexity must be reflected in the final rules.
For umbrella contractors, additional regulation may not be necessary where contracts already provide a guaranteed minimum of 336 hours per annum. Rather than imposing further blanket obligations, the government should focus on targeted measures addressing genuinely exploitative arrangements.
A proportionate approach would avoid duplicating existing protections, avoid unnecessary cost, and preserve the flexibility that many contractors actively choose.
Political and implementation landscape
Although the Employment Rights Act 2025 is now law, many of its measures are being implemented in phases across 2026 and 2027. The government suggest that the right to guaranteed hours, reasonable notice and short notice payments are expected to take effect by Spring 2027.
However, this does seem ambitious, and may be further impeded by the wider political landscape. A change in Labour leadership could result in a delay, reprioritisation or further review of implementation, particularly where business concerns remain unresolved.
Businesses should not assume the reforms will disappear, but they should recognise that the detail and timing may still shift.
Call to action: have your say!
The consultation is open now and closes at 11:59pm on 25 August 2026. Responses can be submitted online, by email to zerohours.consultation@businessandtrade.gov.uk, or by post to Zero Hour Contracts Policy Team, Employment Rights Directorate, Department for Business and Trade, Old Admiralty Building, Admiralty Place, London, SW1A 2DY.
Businesses should not leave this solely to trade bodies or advisers. Agencies, umbrella companies, clients and contractors all have practical experience of how labour supply chains operate. That experience is essential if the final regulations are to be workable.
