Employers in certain sectors will have been concerned to read reports from the UK government that the costs of promised reforms to “zero hours contracts” under the Employment Rights Act 2025 may be anything up to 2.9 billion.
The changes, due to be implemented in early 2027, are designed to redress what are seen as “one-sided” working arrangements under which workers bear all the financial risk of fluctuations in demand for their labour.
In December 2025, the number of people working under zero hours contracts as their only or main employment was 1.23 million, with young workers and all workers in the retail and hospitality sectors being disproportionately represented in those figures.
The term “zero hours contract” first appeared in academic literature in 1997, but even then, it was still seen as a shorthand description for a collection of employment practices that had been developing from the 1980s onward.
The term was not used or defined in UK legislation until 2015. The use of zero hours contracts expanded significantly after 2008, as businesses sought flexible ways to manage employment arrangements in the aftermath of the global financial crisis. The flexibility offered to both employers and workers to plan for fluctuations in demand for and supply of labour is still seen as the primary advantage of zero hours contracts.
Zero hours contracts have been controversial from the outset. Worker representatives view “flexibility” as synonymous...
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