UK retailers have warned that proposed reforms to zero-hours and low-hours contracts could put jobs at risk after government analysis estimated that the measures could cost UK employers up to £2.9bn a year. The British Retail Consortium (BRC) said the potential costs were "hugely disproportionate" to the benefits for workers and could make it harder for retailers to create jobs, particularly for younger people. The reforms, which form part of the Employment Rights Act 2025, are intended to give qualifying workers greater certainty over their hours and income.
They could have a significant impact on retailers, which often adjust staffing levels to match changing customer demand. Government analysis estimates that the reforms could cost UK employers between £350m and £2.9bn a year, depending on how the rules are designed and which workers qualify. The government's indicative central estimate is £1.1bn, while the £2.9bn figure represents the upper-cost scenario.
The proposed rules would give qualifying workers the right to be offered guaranteed hours based on their regular working pattern. They would also provide rights to reasonable notice of shifts and compensation when shifts are cancelled, shortened or moved at short notice. Compensation for cancelled shifts could account for a significant part of the cost.
Government analysis estimates that around £1.2bn of the potential annual bill could result from requirements to compensate workers when shifts are cancelled at short notice. The Department for Business and Trade is consulting on how the guaranteed-hours rules should operate. It is considering a qualifying threshold of between eight and 20 hours a week.
The government says an eight-hour baseline could reduce the risk of employers moving zero-hours workers onto contracts guaranteeing only minimal hours to avoid the new requirements. A threshold of up to 20 hours could extend greater security to more workers, but would also increase the number of employees covered by the rules. BRC chief executive Helen Dickinson questioned whether the potential costs could be justified.
"The scale of these costs raises serious questions about whether the Guaranteed Hours reforms will actually deliver value for workers," Dickinson said. The BRC also argues that the government analysis does not capture every cost retailers could face. Businesses may need to make substantial changes to HR and payroll systems to administer the new requirements.
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