Zero hours law change is a threat to jobs, trade bodies tell Government

Four of the UK’s most prominent trade bodies have written to the Government to urge a rethink on upcoming changes to zero-hours contracts. 

Part of the Employment Rights Act and set to come into force in 2027, the reforms will see a guaranteed hours rule enforced alongside stipulations that shifts cannot be changed or cancelled without notice. 

The reforms have been lauded by many as offering workers long-overdue protection from exploitation. But there has also been pushback from trade bodies, notably in recruitment and hospitality, which argue that the measures will have damaging consequences for firms.

Substantial threat

In a letter addressed to Peter Kyle, the Secretary of State for Business and Trade, the British Retail Consortium, Food and Drink Federation, Recruitment and Employment Confederation, and UKHospitality have all urged the Government to rethink its move.

As well as calling for more engagement, the letter warns that “…concern is deep and growing that the current approach risks stripping flexibility from the labour market at precisely the wrong moment.” 

They argue that the guaranteed hours model should not apply to workers who are employed for fewer than eight hours a week, as it will hit businesses hard and force them to pay for time they do not need. They also say this will take flexibility away from employees and, in the worst-case scenario, stop businesses from employing workers at all. 

“With demand already weakened, poorly designed guaranteed hours measures could become a tipping point, pushing employers to reduce hiring, limit hours or withdraw flexible roles,” they write, as reported by This Is Money. 

Young people impacted

The trade bodies argue that it is young people who will be hit disproportionately by the changes. “To avoid the double whammy of increasing unemployment and fewer young people entering the labour market, we would like to see the government send an urgent and clear message to businesses that they should continue to hire with confidence,” they write. 

They point to consistently high levels of unemployment among people under 25. BBC News reported last November that almost one million young people are not in work or education (NEET). According to the Office for National Statistics, between July and September 2025, there were 946,000 NEETs, down slightly from 948,000 in the three months before. 

This equates to one in eight young people, and has been consistently above 900,000 since early 2024. More recent figures suggest the youth unemployment rate is as high as 15.8%. 

The trade bodies argue that the zero-hours rules will compound this issue, as it is young people who are often looking for flexibility from work as they juggle studying or are looking to decide where their career future lies. They also contend that carers will be among those severely impacted, as they too need flexibility on a weekly basis. 

The changes will hit hospitality and food production businesses particularly hard, as they are a go-to for many young people looking for part-time or seasonal jobs. 

Sweeping changes

The trade bodies suggest that the Government needs to look at the specifics for different industries. As Personnel Today reports, they argue that many industries are built upon flexible working models, especially those with lots of entry-level roles. This needs to be taken into account, and a balance found between protecting employees and protecting businesses. 

They also suggest that the reference period for assessing regular hours should be a minimum of six months, but ideally 12 months.

Whatever the specifics, a balance must be sought that facilitates better job security for workers while ensuring that businesses aren’t shouldering extra costs. In the long run, of course, businesses stretched to the limit will end up creating fewer jobs, and at a time when young people in particular are already struggling to get into the workplace, this isn’t a good outcome either.