UK retailers warn jobs at risk over zero-hours costs
UK retailers warn proposed zero-hours contract reforms could risk jobs due to £2.9bn annual costs, threatening employment growth.
The British Retail Consortium warned that proposed reforms to zero-hours and low-hours contracts could threaten jobs after government analysis estimated the measures might cost UK employers up to £2.9 billion annually.
Retailers raise concerns over £2.9bn cost estimate
The consortium called the potential costs “hugely disproportionate” to the benefits for workers. Helen Dickinson, its chief executive, stated the changes could make it harder for retailers to create jobs.
Government figures suggest the annual cost to employers could range from £350 million to £2.9 billion, with a central estimate of £1.1 billion. The reforms, part of the Employment Rights Act 2025, would grant qualifying workers the right to guaranteed hours based on their regular working patterns, along with compensation for last-minute shift cancellations or changes.
Shift cancellations alone could account for £1.2 billion of the total cost. The Department for Business and Trade is still consulting on the qualifying threshold, which may be set between eight and 20 hours per week. A lower threshold might prevent employers from offering minimal guaranteed hours to avoid the rules, while a higher one could extend protections to more workers but also raise compliance costs.
Related: C&S Buys Majority Stake in Winn Dixie
Dickinson questioned whether the potential costs could be justified. The BRC also warned retailers might face “hundreds of millions of pounds” in additional costs to update HR and payroll systems.
Flexibility and security in a seasonal sector
Retail depends on flexible staffing to handle fluctuating demand, particularly during seasonal peaks like Christmas. Many businesses hire students and part-time workers who may value variable hours, and the BRC argues the reforms could disrupt these arrangements.
The reforms don’t ban zero-hours contracts but aim to address one-sided flexibility by giving workers more control over their schedules. Employers would need to offer guaranteed hours to qualifying workers, though employees wouldn’t be forced to accept them. The final impact will depend on the consultation’s outcome, particularly the qualifying threshold and compensation rules for cancelled shifts.
The sector is already dealing with rising employment costs. The BRC estimates UK retailers have faced a £6.5 billion increase in such costs over the past two years, driven by higher employer National Insurance contributions and increases in the National Living Wage. Dickinson said the timing was poor, as businesses have already had to absorb these expenses.
The potential impact of the guaranteed-hours reforms is particularly significant for retail because staffing requirements can change sharply throughout the year.
Unions challenge cost concerns
The government says the reforms could deliver wider economic benefits. The Department for Business and Trade is consulting on how the guaranteed-hours rules should operate.
Dickinson urged ministers to separate exploitative employment practices from flexible arrangements that benefit both businesses and workers. “The scale of these costs raises serious questions about whether the Guaranteed Hours reforms will actually deliver value for workers,” Dickinson said.
The final regulations will shape how the reforms affect retailers. A high qualifying threshold could cover more workers, while a lower one might limit protections to a smaller group. Compensation requirements for cancelled shifts will also influence the cost burden.
Retailers have already seen significant cost increases in recent years. Performance highlights from major chains show how rising expenses have pressured profit margins, making additional regulatory costs harder to absorb.
