£2.9bn Zero-hours bill hits British retail, hospitality and leisure already on last orders
New analysis from a government impact assessment alleged that Labour’s policies on zero-hour crackdowns, guaranteed-hour contracts and paying working for cancelled shifts will cost UK businesses almost £3bn annually; representing another cost, compliance and paperwork burden for Britain’s retail, hospitality and leisure sector; already struggling with dwindling consumer demand.
Willorna Brock, senior HR consultant at accountancy and business advisory firm Menzies, says: “government proposals on guaranteed hours and reasonable notice of shift changes have been priced at around £2.9bn a year, and the largest component comes from paying for shifts cancelled at short notice rather than from guaranteed hours. In Britain’s retail, hospitality and leisure sectors, where trade differs daily, a notice requirement of up to a month asks employers to predict demand with little room to adjust when it shifts, turning the routine judgement to trim a rota for a quiet week into a legislated payment obligation. Greater security for workers is welcome, but these policies risk leaving employers carrying higher fixed staffing costs through quieter periods while running short-handed at their busiest, with the administrative burden of evidencing each change falling on businesses already short of time, resource and headspace.
Employers are therefore likely to become more cautious about recruitment, particularly for entry-level, part-time and seasonal roles. Certain groups of employees such as students and workers with caring responsibilities value and rely on flexible employment, so a move towards permanent contracts would mean fewer opportunities in sectors that have traditionally provided a financial lifeline for these groups.
For SMEs specifically, these proposals land alongside higher wage bills, National Insurance costs, skills shortages and supply chain pressures, and on top of preparations for the Employment Rights Act 2025 and the reforms that follow it. Where variable-hours workforces are large, additional employment costs could absorb most of the relief that permanently lower business rates multipliers are due to deliver from April.
With unemployment rates remaining high, the challenge for Whitehall is setting thresholds and exemptions that retain enough flexibility for businesses to meet consumer demand and seasonal trends without pricing employees out of work. Getting that balance right depends on continued and personal consultation with the businesses, people and sectors most affected by policy changes.”