UK New Employment Law: A Headache for Small Business Owners

The landscape of UK employment law has shifted in 2025 with a series of changes designed to better protect workers, particularly those on zero-hour contracts. These changes are particularly relevant for the millions of workers in the UK who rely on flexible work arrangements. And we know, students are not exempt from zero-hour contract. But what do these changes mean for zero-hour workers, and how will employers need to adjust?

In this post, we’ll break down the key updates to UK employment law, the impact on zero-hour workers, and what these changes could mean for both employees and employers moving forward.

What Is a Zero-Hours Contract?

A zero-hour contract is a type of employment agreement where an employer is not obliged to provide a set number of hours of work, and the worker is not guaranteed a minimum amount of work either. This arrangement is often used in industries such as hospitality, retail, and logistics, where demand for staff can fluctuate.

While zero-hour contracts offer flexibility for employers and workers alike, they also come with significant downsides, including job insecurity, unpredictable income, and a lack of guaranteed hours. Critics have long argued that this kind of employment leaves workers vulnerable to exploitation and poor working conditions.

What Are the Key Changes in UK Employment Law?

In 2025, the UK government introduced new legislation aimed at improving job security and working conditions for workers, particularly those on zero-hour contracts. These changes are part of a broader movement to modernize the employment laws to reflect the realities of the modern workforce, especially the gig economy.

Here are some of the most important changes for zero-hour workers:

1. Right to Request a Fixed Contract
   Zero-hour workers now have the legal right to request a fixed or guaranteed hours contract after 26 weeks of employment. This new right allows workers to secure more stability in their employment situation after proving their commitment to the employer.
2. Ban on Exclusivity Clauses
   Previously, many zero-hour contracts contained exclusivity clauses that prevented workers from taking on other jobs or earning income elsewhere. Under the new law, employers can no longer impose exclusivity clauses on zero-hour workers. This means workers can now seek additional income from other employers or pursue freelance work without fear of legal consequences.
3. Better Protection from Dismissal
   Zero-hour workers now enjoy greater protection from unfair dismissal. If a worker has been employed for a certain period, they can no longer be dismissed without cause or adequate justification. This change reduces the potential for employers to terminate workers arbitrarily, providing greater job security for those in precarious employment situations.
4. Transparency in Pay and Working Hours
   Employers are now required to provide more transparent information about pay rates, working hours, and expectations upfront. This helps workers make more informed decisions when accepting job offers and ensures that zero-hour workers are not subjected to hidden terms or unfair practices.
5. Right to Regular Hours after a Period of Work
   In certain cases, zero-hour workers who have been employed for over 12 months may have the right to request regular working hours. This provision aims to eliminate the uncertainty of fluctuating schedules and create a more predictable working environment. It will no longer be lawful for employers to only pay staff when they’re needed. They will also be required to give “reasonable notice” and compensation if an employee’s shift is changed or cancelled.

How Will These Changes Impact Zero-Hours Workers?

The changes in the law represent a significant step forward in improving the working conditions of zero-hour employees. But what do these changes mean for workers on the ground?

1. Greater Job Security and Stability
   The right to request a fixed contract and the ban on exclusivity clauses should provide greater job security for zero-hour workers. Workers who rely on inconsistent hours can now ask for more predictable schedules, helping them plan their finances and personal lives more effectively.
2. Increased Income Potential
   By removing the exclusivity clause, workers can now seek additional work with other employers. This is particularly beneficial for those in industries where hours are unpredictable and insufficient to meet financial needs. This change empowers zero-hour workers to take control of their income and reduce reliance on a single, potentially unreliable source of employment.
3. Better Work-Life Balance
   Zero-hour workers often face challenges in balancing work with personal life due to irregular hours. With increased transparency and the right to request regular hours, workers are more likely to find a balance that works for them. This also helps reduce the stress and anxiety that often comes with uncertain work schedules.
4. Improved Protection Against Exploitation
   By strengthening protections against unfair dismissal, the new law helps shield zero-hour workers from exploitation. Workers will now be better protected from arbitrary firing, which is especially important for those who have been working for an employer for a prolonged period without a formal contract.

What Do Employers Need to Know?

Employers who rely on zero-hour contracts will need to adapt to the new regulations to ensure compliance with the updated employment law. Here’s what employers should be aware of:

1. Updated Contracts
   Employers will need to review their zero-hour contracts to ensure they comply with the new regulations, particularly regarding the right to request a fixed contract and the ban on exclusivity clauses. Transparency will also be key, so employers should provide clear information about pay rates, working hours, and expectations from the outset.
2. Handling Worker Requests
   Employers should prepare to handle requests from workers seeking fixed hours or more predictable contracts. Employers should also be mindful of their obligations regarding unfair dismissal and the need to justify any termination of employment that takes place.
3. Financial and Operational Adjustments
   With workers able to seek additional employment and request more stability in their hours, employers may need to adjust their workforce management strategies. This could include offering more fixed-term contracts or finding ways to accommodate more predictable schedules without sacrificing flexibility in staffing.

A Step Forward for Zero-Hour Workers

The changes to UK employment law in 2025 are a positive step for zero-hour workers, who have long struggled with job insecurity and unpredictable incomes. These legal reforms aim to create a fairer, more transparent, and more secure work environment for those in flexible employment arrangements. While the full impact of these changes will unfold over time, it is clear that the new regulations are designed to balance the needs of workers and employers while promoting fairer treatment across the board.

As these changes continue to take effect, both workers and employers must stay informed and adapt to the evolving legal landscape. For workers, these new rights offer greater control and stability in their careers, while employers must ensure they are meeting their legal obligations to foster a productive and fair workplace.