Labour's jobs nightmare before Christmas: Businesses warn crackdown on zero-hours contracts will mean fewer flexible seasonal jobs

By MARTIN BECKFORD, POLICY EDITOR Published: 23:04, 2 June 2026 | Updated: 23:15, 2 June 2026 Jobseekers face missing out on Christmas work as a result of the Government's crackdown on zero-hours contracts, it is feared. Under the latest stage of Labour's flagship Employment Rights Act, drawn up by Angela Rayner, bosses must offer a guaranteed number of hours to regular workers. Ministers say the new requirement will give people security and financial stability by ending the 'exploitative' system under which they could not be sure when they would next be needed or how much would be in their next pay packet. But details revealed in a new consultation published on Tuesday reveal that the Department for Business and Trade wants to base the contracts on how many hours workers put in over just 12 weeks on the job. Business leaders said this so-called initial reference period needs to be far longer – as much as 26 weeks – otherwise they will no longer be able to offer flexible seasonal work at busy times. They say the proposed rules would mean they would have to offer staff hired in the busy run-up to Christmas the same hours after the New Year slump. And they have warned that piling further red tape and costs on bosses risks worsening Britain's jobs crisis, with unemployment already at a five-year high and more than a million young people not in employment, education or training. Labour's former Deputy Leader Angela Rayner, pictured addressing a trade union conference in 2023, was the architect of the Employment Rights Act  John Foster, Chief Policy & Campaigns Officer at the CBI, said: 'The reality of peak demand periods means a 12-week reference period would be wholly unworkable, and the possibility of provisions coming into effect as early as January 2027 falls short of government's commitment to workable implementation timelines. 'If taken forward as suggested, these changes risk reducing work opportunities, making overtime non-viable, and discouraging employers from offering shifts that many workers actively want.' Helen Dickinson, Chief Executive of the British Retail Consortium, said: 'With over a million young people out of work or education, government cannot afford to get this wrong. Crack down on bad employers by all means, but not by adding costs and rules that deter good employers from hiring in the first place.' The BRC said a reference period below 26 weeks would mean retailers reducing flexible roles in busy periods such as the run-up to Christmas. Kate Nicholls, Chairman of UKHospitality, agreed that 26 weeks would be fairer and take into account the seasonal nature of her sector. She warned: 'There is a danger that over-regulating flexible work actually increases work instability, rather than decrease it, which would undermine the government's agenda to get people back into work.' Shadow Business Secretary Andrew Griffith warned: 'This consultation risks ending the role of seasonal and temporary workers in the labour market. Faced with more costs and employment red tape, many employers will simply offer fewer flexible roles.' The Government consultation says that employers can use 'limited-term contracts to manage periods of increased demand – for example, due to seasonal fluctuations'. It says these short-term contracts will be deemed 'reasonable' if workers are only needed for specific tasks, such as a fruit picker only needed until the end of the harvest, or until a one-off event like a conference takes place. A Government spokesman insisted: 'Employers can still hire seasonal workers. There is plenty of flexibility already built into the Employment Rights Act to support businesses affected by seasonal demand, for example by using fixed or limited term contracts. 'Our consultation will look into how the right to guaranteed hours should work where there is seasonal change in demand. We look forward to working with businesses in these sectors to deliver a change that benefits both them and their workers.' Business leaders also raised concerns about the Government's proposals to class contracts of up to 20 hours a week as 'low hours', and including overtime in the calculations of how many hours workers do. Tina McKenzie, Policy Chair of the Federation of Small Businesses, said: 'Ministers have consistently said these reforms are about tackling one-sided flexibility in zero-hours and low-hours contracts. 'Extending them to employees more broadly by undermining paid overtime blurs the lines between insecure work and the day-to-day flexibility many employers value.' Under the plans, workers will also be entitled to compensation if their shifts are cancelled at short notice – with unions demanding they receive their full pay. Business Secretary Peter Kyle said: 'It's not right that people can work regular hours but still have no certainty about their pay from week to week. These vital changes will mean more certainty for millions of people and will save the lowest paid workers hundreds of pounds.' No comments have so far been submitted. Why not be the first to send us your thoughts, or debate this issue live on our message boards. By posting your comment you agree to our house rules. 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