GUEST COLUMN:
Marek Zemanik
Senior Public Policy Advisor for the UK nations
CIPD
Reforms to zero-hours contracts are expected to come into force in early 2027, so it’s important that employers in Wales start preparing for them now.
The changes are intended to improve job security for workers. However, many of the proposed measures may be challenging for some employers, particularly those in the hospitality and retail sectors that rely on flexible staffing to match fluctuating customer and seasonal demand.
When managed well, zero-hours contracts provide valuable flexibility for both employers and workers who cannot commit to fixed hours. These include carers and those managing health conditions, along with students who often value flexibility to balance their studies with paid work.
Under the new rules, organisations will have a duty to offer qualifying workers ‘guaranteed hours' based on an average of their usual working hours, along with a right to reasonable notice of shifts. Furthermore, compensation will become payable when shifts are cancelled, shortened or rescheduled at short notice.
These changes are likely to prove difficult for many employers, especially those that have fluctuating or seasonal demand, and caveats will be required to allow for issues like sickness absence.
What the reforms look like in practice
Let’s consider what these proposed reforms may mean for an employer running a care home, or someone running a chain of restaurants in Wales, both of which are likely to rely on a rota of part-time staff to manage fluctuating or seasonal demand.
Under the proposed reforms, both employers could be required to offer guaranteed hours to zero and low-hours workers at regular intervals, while cancelling an evening shift at short notice could trigger a compensation payment. As a result, both businesses may need to reconsider their staffing models and the number of employees they are able to employ and retain next year, to stay competitive and viable.
This is why it’s important that organisations do not wait for the final regulations around these proposed reforms. Businesses need to start preparing for them now by understanding how many zero-hours and agency workers they employ, reviewing their current working patterns, and considering how the proposed requirements could affect staffing costs, administration and operations.
Taking these steps will help employers identify any potential workforce issues and reduce the risk of unexpected costs, and compliance problems, when the reforms come into force in 2027.
Reforms must support growth and jobs
According to data from the Office for National Statistics (ONS) there are now 508,000 young workers aged 16-24 on zero-hour contracts – the highest level on record – and last year 637,000 women were on a zero-hours contracts in the UK, compared with 593,000 men.
However, a CIPD survey of over 2,000 UK employers revealed that a third (31%) of organisations expect to have to make redundancies1 because of the reforms to zero-hours contracts.
These findings highlight that young people and women could be disproportionately affected if employers respond to the reforms by reducing the number of zero-hours roles they offer.
In response, the CIPD has called on the UK Government to carefully consider its proposals to reform zero-hours contracts, to ensure they do not inadvertently reduce access to flexible jobs that many people rely on.
It’s important that there’s meaningful consultation on these new rights, including the reference period which will be used to decide the number of guaranteed minimum hours a worker will be entitled to.
Whatever the final details, the reforms must strike the right balance between improving job security and preserving access to flexible work.
