New cost of employment rights revealed

14 August 2026

Businesses could face costs of up to £2.9bn a year because of a crackdown on zero hours contracts, according to the Government’s own analysis.

Labour’s employment reforms are set to cut the number of hours staff can work before they must be offered guaranteed time.

Official analysis released on Wednesday showed it could cost employers between £350m and £2.9bn, based on the eventual threshold of hours the policy impacts.

Kate Shoesmith, Director of Policy at the British Chambers of Commerce, said: “The increased cost to businesses of the proposed changes to zero hours contracts will be a further hammer blow for many firms struggling to keep their heads above water. 

“The Government had previously claimed that the cost of the entire Employment Rights Act for business would be £1bn but this research clearly blows that out of the water. 

“Businesses have seen their costs due to Government policy increase by 70 per cent in the last decade, and their ability to absorb more is extremely limited.  

“We are already facing a youth unemployment crisis – now is not the time to make it even more costly for employers to hire. 

“It’s also disappointing that this research has been released so late in the consultation process for zero hours.  

“This severely limits the opportunity for businesses to properly scrutinise the evidence and respond to the Government’s proposals. 

“SMEs have repeatedly raised concerns on the potential impact of these changes on recruitment, flexibility and business confidence. 

“We need to see a full reset in the dialogue between government and business. This means an extension to the consultation and proper tripartite negotiation with unions on how to implement proposals in a fair and practical way.”

More information on the proposed reforms to zero hours contracts can be found here, this includes links to the new research.