Zero-hours reform: what the consultation could mean for recruitment businesses

The Government’s consultation on zero-hours and similar contracts is now open.

It was published on 2 June 2026 and closes on 25 August 2026. The consultation looks at how key parts of the Employment Rights Act 2025 will work in practice, including new rights around guaranteed hours, notice of shifts and payments where shifts are cancelled, moved or cut short at short notice.

At headline level, this is being talked about as “zero-hours reform”. For recruitment businesses, however, the impact could be wider than the label suggests.

Why this matters for recruitment businesses

There is no single, simple legislative definition of a “zero-hours contract” that covers every arrangement people may be referring to when they use that phrase.

Traditionally, when people talk about zero-hours contracts, they often mean an employment contract where the individual is engaged by an employer but there is no guaranteed minimum number of hours. The employer is not required to offer a set amount of work, and the individual is only paid for the work they actually do.

Many recruitment businesses will not recognise that description as the usual model for their temporary workers. Temporary workers are often engaged under contracts for services, although some may be engaged under zero-hours contracts or other arrangements.

However, the label on the contract is not the end of the story.

The reforms are broad. They are aimed at zero-hours and similar arrangements, including low guaranteed hours arrangements. Agency workers are also expressly included under the Employment Rights Act 2025.

That means recruitment businesses should not assume the reforms are only relevant to employers using traditional zero-hours employment contracts.

What is the consultation looking at?

The consultation looks at how the new rights should operate in practice.

The main areas include:

• the right to be offered guaranteed hours;
• reasonable notice of shifts;
• reasonable notice of shift changes or cancellations; and
• payments where shifts are cancelled, moved or cut short at short notice.

The guaranteed hours duty is one of the most significant parts of the reform. In broad terms, qualifying workers may become entitled to an offer of guaranteed hours based on the hours they have worked during a set period.

That set period is known as a reference period.

A reference period is simply the look-back period used to assess what has happened in practice. For example, if the reference period was 12 weeks, the business would look at the worker’s hours over that 12-week period to decide whether they qualify for a guaranteed hours offer and, if so, what that offer should reflect.

The exact detail is still to be decided through regulations. That is why the consultation is important.

The challenge for temporary labour supply

For recruitment businesses, the real question is what this will mean in practice.

Temporary supply does not always involve a simple two-party relationship. At its simplest, there is usually a worker, a recruitment business and a hirer. But many supply chains are more complex than that.

There may be an umbrella company involved. There may be more than one recruitment business in the chain. In some arrangements, responsibility and control may not sit neatly with one party.

That makes the practical detail important.

The reforms could raise questions such as:

• How will working hours be tracked where a worker is supplied to a particular hirer?
• Who is responsible for making a guaranteed hours offer?
• If a shift is cancelled at short notice because the client no longer needs cover, who carries the cost?
• How will this work where an umbrella company or another recruitment business is involved in the chain?
• Will there be enough flexibility for genuinely temporary, seasonal or reactive work?

These are exactly the kinds of points the regulations will need to deal with.

What happens next?

The consultation closes on 25 August 2026. After that, the Government will need to consider the responses and prepare the regulations that will set out how the rights work in practice.

At this stage, there are still important unanswered questions. That is not unusual where an Act creates a framework and regulations are needed to fill in the detail.

For recruitment businesses, the sensible step now is to understand what is being proposed and where the pressure points are likely to be.

This is not just about whether zero-hours contracts should continue. It is about how new rights around guaranteed hours, shift notice and short-notice cancellation payments will operate in real working arrangements, including temporary labour supply.

Over the next few posts, I will be breaking down the consultation in more detail, with a particular focus on what it could mean for recruitment businesses, temporary labour supply and agency workers.

Next in the series: the guaranteed hours duty, and why the definition of “low hours” could make a significant difference.