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Zero-hours crackdown could cost employers up to £2.9bn yearly

The government analysis puts the expected middle-case cost at £1.1bn, with hospitality and retail flagged as the most affected sectors.

Reported · Written up by our desk · Sectors

Businesses in the UK could face costs of up to £2.9 billion per year if the government carries out a crackdown on zero-hours contracts, according to an official analysis cited by BBC Business.

The report estimates the policy could cost employers between £350 million and £2.9 billion, depending on the eventual hours threshold that triggers guaranteed time, and it highlights potential trade-offs including more administrative work and less flexibility to respond to demand changes.

At the upper end of the estimate, about £1.2 billion in costs would come from employers who must pay compensation for cancelled shifts. The analysis also sets a middle-case overall cost of £1.1 billion.

Government officials argue the reforms could deliver a £10 billion boost through improved wellbeing and productivity, which would reduce the net average cost to between £300 million and £1.4 billion. The analysis says hospitality and retail, which rely heavily on zero-hours workers, would likely be hit hardest, and it notes the number on such contracts reached a record 1.23 million last December, up 91,000 year-on-year.

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