Business groups have warned that a “chaotic” jobs reform could cost employers around £3bn as the government presses ahead with a zero-hours crackdown. The concern centres on the Employment Rights Bill, the biggest overhaul of workers’ rights in a generation, and specifically the parts that force employers to offer guaranteed hours, give proper notice of shifts, and pay staff when shifts are cancelled at short notice.
If you run a cafe, a care agency, a shop, a warehouse or any business that flexes its staffing week to week, here is the short answer: the reforms do not ban zero-hours contracts outright, but they do make casual, last-minute rostering more expensive and more admin-heavy. You will likely need to offer regular workers a contract that reflects the hours they actually do, warn them of shifts in advance, and compensate them when plans change. This piece explains what is coming, what the numbers mean, and the practical steps a small employer can take now.
What the zero-hours reforms actually do
The Employment Rights Bill introduces several linked changes aimed at what ministers call “one-sided flexibility”. The headline measures are:
- A right to guaranteed hours. Workers on zero-hours or low-hours contracts would gain the right to be offered a contract that reflects the hours they regularly work, measured over a reference period. The idea is that if someone routinely does 25 hours a week for months, they should be able to have that in writing rather than living shift to shift.
- Reasonable notice of shifts. Employers would need to give staff advance warning of when they are expected to work, and of changes to those shifts.
- Payment for cancelled or curtailed shifts. If you cancel or cut a shift at short notice, you may have to pay the worker for it. This is the change that worries employers with unpredictable demand most, because a quiet Tuesday could still carry a wage bill.
The full detail, including reference periods and what counts as “reasonable” notice, is being settled through consultation and secondary legislation, so exact rules are still moving. You can follow the primary source on the Employment Rights Bill page and the government’s own explainer on gov.uk. Because hospitality is so exposed, the sector has been especially vocal: we covered the trade body’s push in UKHospitality’s call for operators to respond before the consultation deadline.
Where the £3bn figure comes from
The cost estimates around the Employment Rights Bill are contested, and you should treat any single number with caution. Government impact assessments have put the overall cost of the package to business in the billions of pounds a year, with a large share landing on the smallest firms as a proportion of turnover. Employer groups have gone further, arguing that the administrative burden of tracking hours, issuing new contract offers and managing shift-notice rules is being underestimated, and that the real drag on hiring could be higher.
The word “chaotic” reflects a specific complaint: that the rules are arriving in stages, with key details filled in later, so employers are being asked to prepare for something whose final shape is not yet fixed. For a small business without an in-house HR team, that uncertainty is itself a cost. It is worth remembering the wider hiring picture too, including the proposed National Insurance changes for younger workers, which pull in the opposite direction on employment costs.
What this means for a small business
The practical impact depends on how you use flexible staff today.
If you rota casually by text message or WhatsApp, you are the most exposed. Once notice-of-shift and cancellation-payment rules bite, informal last-minute changes stop being free. A seaside cafe that stands down two staff on a rainy morning may find it has to pay them anyway if the notice was too short.
If you already give staff settled patterns, the changes are less dramatic. You may simply need to formalise what you already do: put the regular hours in a contract, keep a clean record of shifts offered and worked, and set a house rule for how much notice you give.
If you rely heavily on genuinely unpredictable demand, expect to rethink the mix. Some employers will shift toward a small guaranteed-hours core plus a smaller flex layer, rather than a large pool of zero-hours workers. Getting your scheduling and record-keeping right is the difference between a manageable adjustment and a compliance headache. Many owners are already turning to software, as we noted in our look at how UK small businesses lean on affordable HR tools.
Software that helps you cope with the new rules
The reforms reward employers who can prove what hours they offered, when they notified staff, and what was actually worked. That is a data problem, and it is where rota and HR tools earn their keep. Below is a shortlist of options a UK small employer might realistically compare. The big names in workforce scheduling are worth knowing, but so are the smaller British specialists that often suit a single site or a growing chain.
| Tool | Best for | What it does well | Indicative pricing |
|---|---|---|---|
| RotaCloud | UK SMEs wanting simple rotas | British-built shift scheduling, timesheets and leave, with per-employee billing | Priced per employee per month |
| Deputy | Hospitality and retail with hourly staff | Shift scheduling, clock-in, demand-based rostering and mobile shift alerts | Priced per user per month |
| Bizimply | Multi-site hospitality | Scheduling tied to attendance and labour cost tracking across sites | Subscription, quote-based |
| BrightHR | Owners wanting HR plus advice | Staff records, holiday, shift and document management with employment-law support | Tiered monthly plans |
| Breathe HR | Small teams new to HR software | Lightweight UK HR system for records, holiday and documents | Tiered monthly plans by headcount |
Two of these deserve a special mention because owners often overlook them: RotaCloud and Bizimply are both built around UK shift work rather than adapted from a US payroll product, which matters when the whole point is recording notice periods and cancelled shifts cleanly. If you also need to run wages off those hours, pair your rota tool with a payroll package, and our guide to the best payroll software for UK small businesses compares the likes of BrightPay, Xero Payroll and Sage. Pricing across all these tools moves regularly, so check each vendor’s site for current figures before you commit.
The hidden admin cost, and how to contain it
The real expense of the zero-hours crackdown for many firms will not be extra wages, it will be time. Working out average hours over a reference period, generating contract offers, logging shift notice and handling disputes all take hours that a small team does not have spare. That is exactly why record-keeping software pays for itself: a clean audit trail is your best defence if a worker challenges what they were offered.
Keep it simple. Record every shift you offer, every acceptance, every cancellation and the notice given. Store contracts and any guaranteed-hours offers in one place. If you already use an HR system as part of your wider small business software stack, use it rather than spreadsheets, because a spreadsheet cannot timestamp a notification the way an app can.
Frequently asked questions
Are zero-hours contracts being banned?
No. The reforms do not outlaw zero-hours contracts. They give workers new rights, chiefly the right to be offered guaranteed hours that reflect what they regularly work, plus reasonable notice of shifts and payment when shifts are cancelled at short notice. You can still offer casual work, but it comes with more obligations.
When do the changes take effect?
They are being introduced in stages, with many of the detailed rules set through later consultation and secondary legislation rather than switched on all at once. That phased timetable is part of why business groups have called it chaotic. Watch the Employment Rights Bill’s progress and the government updates on gov.uk for confirmed dates before you change contracts.
Will I have to pay staff for shifts I cancel?
Under the proposals, cancelling or cutting a shift at short notice could mean paying the worker compensation for it. The exact notice thresholds are being finalised, so the safe approach is to firm up your rotas earlier and give staff as much warning as you realistically can.
Does this apply to very small businesses?
The measures are aimed at protecting workers regardless of employer size, so micro and small businesses are not automatically exempt. Because the admin lands harder on firms without an HR department, small employers often feel the burden most as a share of turnover.
What records should I start keeping now?
Keep a dated log of shifts offered, accepted, changed and cancelled, along with the notice given each time, and store your contracts centrally. A rota or HR app such as RotaCloud, Deputy or BrightHR will timestamp this automatically, which is stronger evidence than a spreadsheet if a dispute arises.
What to do next
- Audit your flexible staff. List who is on zero-hours or low-hours contracts and work out the average hours each has done over recent months, so you can see who might qualify for a guaranteed-hours offer.
- Tighten your rota process. Move off WhatsApp and text. Adopt a scheduling tool such as RotaCloud, Deputy or Bizimply that records when shifts are offered, changed and cancelled.
- Set a notice house rule. Decide now how much advance warning you give for shifts and stick to it, so short-notice cancellations become the rare exception rather than the norm.
- Respond and stay informed. Follow the Employment Rights Bill on gov.uk, take part in any consultation relevant to your sector, and take advice from your accountant, an HR provider or a body like the Federation of Small Businesses before rewriting contracts.
