The government’s own impact assessment for the Employment Rights Act 2025 puts a number on ending zero-hours contracts: around £3bn a year in extra cost to business, once the new guaranteed-hours rules take effect from around January 2027. On the same day, separate research found that 72% of workers currently on flexible arrangements say their setup actually suits their lifestyle. Put those two facts side by side and the policy starts to look less like protection and more like a cost that lands hardest on the people it’s supposed to help.
The sector sounding the loudest alarm is hospitality, and it’s not hard to see why. UKHospitality’s Allen Simpson pointed out this week that hospitality has already accounted for 45% of UK job losses since 2024 — before this reform even lands. Add in energy prices creeping up again on the back of Iran tensions and margins that were thin to begin with, and you get a sector with very little room to simply absorb another £3bn nationally. A small café, bar or events business run by a sole trader or through a limited company doesn’t have a large chain’s ability to restructure rotas or spread the cost across hundreds of sites. The instinct in a squeeze like that isn’t to convert casual staff onto guaranteed hours — it’s to run leaner and offer fewer shifts in the first place.
None of this is to say zero-hours contracts are beyond criticism. Some employers have genuinely used them to duck holiday pay, sick pay and any real commitment to staff, and that abuse is worth stamping out. But a blanket reform aimed at the worst offenders risks sweeping up the majority of small employers who use flexible contracts because that’s the only model that fits a seasonal, weather-dependent or event-driven business.
If the 72% figure is anywhere near right, most people on these contracts aren’t waiting to be rescued from them — they’re choosing them, often because it fits childcare, study or a second job. Forcing structural change onto that relationship doesn’t automatically upgrade their situation. It just as easily means fewer shifts get offered at all, which is a worse outcome dressed up as a better one.
Where do you land on this — is the £3bn cost a fair trade for better job security, or a hit that small employers can’t absorb without cutting the shifts people actually want?
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