Exploitative Zero Hours Contracts to Be Phased Out by 2027

The UK Government has unveiled a sweeping new roadmap to implement its landmark Employment Rights Bill, marking the most significant overhaul of workplace legislation in a generation. The reforms aim to raise living standards, deliver fairness for employees, and provide much-needed clarity for businesses adapting to post-pandemic economic challenges.

The End of Exploitative Zero Hours Contracts

At the heart of the reform is the long-debated issue of zero-hours contracts. While not outlawed outright, their current usage will be phased out by 2027. Employees will gain the legal right to request guaranteed hours, helping to end the precariousness of work for many. However, those who wish to retain flexible arrangements will still have access to such contracts—a key compromise championed by UKHospitality.

This move is a direct response to years of concern around insecurity in the labour market, particularly within the hospitality and retail sectors. Trade unions and workers’ rights groups have long argued that such contracts deny workers stability and predictability; now, the Government has taken a definitive step towards resolving this issue.

Key Reforms: A Phased and Consultative Approach

The new roadmap, announced on 1st July 2025, sets out a phased introduction of over a dozen reforms. Many will come into force between 2026 and 2027, giving both employers and employees time to adapt. Highlights include:

• October 2026: Introduction of mandatory consultation on tipping practices to ensure fairer tip distribution, a ban on controversial fire-and-rehire tactics, and protections against third-party sexual harassment.
• April 2026: A host of family-friendly and inclusive measures, such as day-one rights to unpaid parental and paternity leave, extended whistleblowing protections, and the creation of a new Fair Work Agency to enforce compliance.
• 2027: The final wave includes enhanced dismissal protections for pregnant workers, bereavement leave, and the abolition of exploitative zero-hours contracts as standard practice.

Balancing Progress with Practicality

The Government has stressed the importance of balancing ambition with reality. Deputy Prime Minister Angela Rayner called the reforms “a promise delivered” and part of the administration’s broader “Plan for Change,” intended to kick-start economic growth and reduce inequality.

The phased timeline was shaped by over 190 engagements with business leaders, trade unions, and policy experts. Organisations like Acas and the CIPD welcomed the clear roadmap and signalled their readiness to support employers in navigating the changes.

Kate Nicholls, Chief Executive of UKHospitality, praised the government’s decision to introduce timelines for the most complex reforms, particularly those affecting shift predictability and guaranteed hours in the hospitality sector. She emphasised the need for tailored guidance to ensure businesses can implement the changes effectively without unintended consequences.

A New Agency and a New Ethos

A key structural change is the establishment of the Fair Work Agency, which is set to launch in early 2026. This body will serve as a watchdog for employment law compliance, promoting fair treatment across all sectors. It represents a strategic shift toward preventing exploitation before it arises rather than reacting after the fact.

Furthermore, the repeal of specific provisions of the Trade Union Act 2016 and the Strikes (Minimum Service Levels) Act 2023 will foster a less adversarial relationship between employers and unions. With added protections for workers taking industrial action and the simplification of the union recognition process, the Government aims to foster more democratic and cooperative workplaces.

Business and Union Reactions: A Rare Moment of Consensus

The reaction from stakeholders has mainly been positive. The Confederation of British Industry (CBI), major trade unions including the TUC and GMB, and business leaders such as Co-op CEO Shirine Khoury-Haq have all expressed support. Many emphasised the long-term economic benefit of treating employees with respect and fairness.

Paul Nowak, General Secretary of the TUC, called the bill a “long overdue” step in ending the era of insecure work. At the same time, Mike Clancy from Prospect noted that the timeline struck the right balance between speed and thoroughness.

Yet, many stakeholders, including the Recruitment and Employment Confederation, cautioned that flexibility—particularly in changing economic climates—must not be lost. They urged continued dialogue to ensure the new regulations work for both workers and businesses.

Looking Ahead: Clarity, Guidance, and Action

With the Government pledging to release clear and comprehensive guidance ahead of each deadline, the next two years will be crucial for preparation. Acas, the advisory body on workplace relations, is expected to play a central role in supporting employers.

The Employment Rights Bill presents a generational opportunity to redefine the social contract between employers and employees in the UK. Its phased, measured approach offers hope that the transition will not only be smooth but also transformational—moving the country towards a more secure, equitable, and productive working future.