Under Labour’s “Make Work Pay” agenda, a series of reforms are being introduced to strengthen protections for workers, particularly those in insecure, low-paid, or casual roles.

For employers in sectors like hospitality, retail and care; where zero-hours and low-hours contracts are common; these changes bring new obligations and a need to rethink workforce management.

This blog highlights some key reforms that employers need to prepare for now ahead of the upcoming changes from Labour’s ‘New Deal for Working People’.

Zero-Hours Contracts Under Pressure

One of Labour’s headline proposals is to clamp down on what it calls “exploitative” zero-hours contracts. They want workers to have a right to a contract that reflects the hours they typically work, based on a 12-week reference period.

Labour therefore expects employers to provide reasonable notice of shift changes or cancellations. This will apply to zero-hour workers but will also likely cover low-hour workers too. Where shifts are cancelled at short notice, compensation soon may become payable by law.

For employers, this means rethinking how shifts are allocated, how much notice is given, and whether more stable contracts should be offered to regular staff.

These proposals are also expected to be backed by a new enforcement body, the Fair Work Agency. The FWA would have powers to bring Employment Tribunal claims on behalf of workers, even where the worker hasn’t initiated a complaint, and to pursue employers for unpaid holiday or sick pay.

While the agency has not yet been formally created, its introduction would mark a significant shift in how employment rights are enforced, particularly in sectors where casual work is common.

Statutory Sick Pay: A Bigger Bill for Employers

Another key area of reform is Statutory Sick Pay (SSP). Labour has proposed removing the Lower Earnings Limit, currently at £125 per week, which prevents lower-paid workers from receiving SSP if their earnings are below this threshold.

Labour also plans to remove the three-day waiting period, meaning SSP could soon be payable from the first day of absence, instead of starting on day four as it currently does.

While these changes are still at an early policy stage, the government has already modelled their potential impact. According to a recent policy paper, extending SSP in this way could capture over 1 million workers, making them eligible for SSP, rather than having to seek an alternative state benefit like ESA.

Tipping Practices Under Scrutiny

The Employment (Allocation of Tips) Act 2023 has already made it unlawful for employers to withhold tips from staff, but further obligations are on the horizon. Potentially as early as April 2026, employers will be required to consult with workers on how tips are distributed.

This means businesses will need to formalise their tipping policies, involve staff in the decision-making around this, and maintain clear records of how tips are collected and shared.

Unfair Dismissal: Protection from Day One

Currently, employees need two years of continuous service before they can bring a claim for unfair dismissal. Labour intends to remove this qualifying period and introduce unfair dismissal protection immediately upon employment.

This is a central part of Labour’s employment law agenda and could take effect as early as Autumn 2026. There are also plans to extend the deadline for bringing a Tribunal claim from 3 months to 6 months, giving more time to employees to seek advice and bring claims.

Taken together, these reforms mean employers must be more mindful of their workforce and the enhanced protections workers are likely to gain.

Time to Prepare

While these changes are not all law yet, they reflect Labour’s policy direction, which is prioritising stronger protections for workers.

For employers, the message is clear, don’t wait for the legislation to land. Start preparing now.

That means reviewing contracts, updating policies, training managers, and budgeting for potential cost increases. Businesses that act early will be best placed to adapt and avoid the legal and reputational risks that come with falling behind.

If your business relies on casual or low-hour workers and you’re unsure how these changes could affect you, our employment law team is here to help. We can support you in reviewing your workforce strategy, updating your documentation, and staying ahead of the curve.

Get in touch today to speak with one of our employment specialists on 0845 287 0939, contact us by email, or use the online chat below.