Employment Rights Act 2025: What Transport and Logistics Employers Need to Do Before 2027

The Employment Rights Act 2025 has the potential to have a significant impact on the way transport and logistics businesses manage their workforces.

The logistics sector depends on flexibility. Customer volumes can change from week to week, peak activity can require several times the warehouse headcount of a quieter February, driver cover often comes from agencies and shifts may need to change at short notice when forecasts move.

The Employment Rights Act 2025 will affect the legal and commercial consequences of many of those arrangements.

For businesses that rely on flexible labour, the changes are about more than employment law compliance. They could affect workforce planning, labour costs, customer contracts, agency arrangements and the way operational changes are implemented.

So, what should transport and logistics employers be thinking about before the main provisions take effect in 2027?

Guaranteed hours will change how logistics businesses use agency labour

One of the most significant changes under the Employment Rights Act 2025 is the introduction of rights to guaranteed hours for workers on zero-hours contracts or contracts with a low guaranteed minimum.

Where workers consistently work more than their contractual minimum over a reference period, they will be entitled to be offered a contract that reflects the hours they actually work.

The length of the reference period has not yet been confirmed. A Government consultation opened in June 2026 and remains ongoing. For planning purposes, employers may wish to model the potential impact using a 12-week reference period, but this should be treated as a planning assumption rather than a confirmed requirement.

What does this mean for agency workers?

The guaranteed hours provisions will also extend to agency workers, with hirers – rather than the employment agencies – carrying key responsibilities.

The qualifying test will focus on the hours the individual actually worked under the hirer’s supervision and direction.

For transport and logistics businesses, the practical consequences could be significant.

A distribution centre with a standing agency workforce, much of which works full-time hours week after week, could face guaranteed-hours offer obligations for a significant proportion of that workforce.

Roles that are permanent in substance but have continued to be staffed flexibly out of habit may be among the first to qualify.

Businesses may also need to think carefully about how their workforce is deployed. Moving individuals between sites, agencies or payroll entities to interrupt a reference period is unlikely to provide a reliable solution and may be visible through workforce data.

Genuine seasonal demand can still be met through appropriate temporary arrangements where the temporary nature of the work is genuine and can be explained.

The question for many logistics businesses will therefore be whether their current use of agency labour remains commercially sustainable under the new framework.

Shift notice and cancellation payments could change the economics of flexible working

The Employment Rights Act 2025 introduces a right to reasonable notice of shifts and a right to payment where a shift is cancelled, moved or curtailed at short notice.

For logistics operators, this could have a direct impact on the cost of responding to changing customer demand.

Standing a warehouse shift down because a customer has reduced its forecast may currently be a routine operational decision. Under the new framework, that decision could result in compensation being payable to affected workers.

There are two important commercial consequences.

First, discussions with customers about forecast accuracy and notice periods may need to recognise that last-minute changes could create additional employment costs.

Operators may therefore want to consider whether their customer contracts adequately deal with changes in volume, notice periods and the additional costs associated with short-notice operational changes.

Second, businesses will need to consider whether their systems can actually evidence what happened.

Most warehouse management and time-and-attendance systems record what someone worked. Fewer record:

• What shift the worker was originally offered.
• When the worker was told about the shift.
• When the shift was subsequently changed.
• Whether the shift was cancelled or shortened.
• How much notice the worker received.

Without this information, it may become considerably more difficult to demonstrate compliance or accurately model the financial impact of the new rules.

Voluntary collective agreements could become a strategic option

The Employment Rights Act 2025 will allow guaranteed hours and certain shift-related rights to be excluded where an employer and an independent trade union agree written terms that expressly exclude and replace the statutory provisions.

Those terms will be incorporated into the worker’s contract, with workers required to be notified in writing of their incorporation and effect.

For some transport and logistics businesses, this could provide an opportunity to create a framework that offers greater operational flexibility.

However, that flexibility comes with a trade-off: increased trade union involvement.

The transport and logistics sector is already one where trade union activity can be significant. Changes to the statutory recognition process and new workplace access rights may also increase union visibility and activity.

This means operators may need to consider whether engaging with unions voluntarily at an early stage could provide a more suitable framework for guaranteed hours and shift arrangements than simply relying on the statutory default.

That is a commercial and industrial relations decision as much as it is a legal one.

For some businesses, it may be better to decide what their approach to trade unions will be before a recognition application forces the issue.

Fire and rehire restrictions will make contractual changes more difficult

Some logistics businesses may respond to the new guaranteed hours requirements by reviewing annualised hours, rota patterns or contractual flexibility.

If those reviews identify a need to change existing employment contracts, timing will be important.

Restrictions on dismissal and re-engagement are expected to take effect in January 2027. After that point, dismissing employees and re-engaging them on new terms will be automatically unfair in most circumstances.

Contractual change programmes that might previously have been implemented over a relatively short period will therefore require more careful planning.

Businesses may need:

• A clear consultation strategy.
• More time for employee engagement.
• A realistic approach to negotiation.
• Consideration of how to deal with employees who do not agree to proposed changes.
• Early legal advice on the proposed changes and the process for implementing them.

If changes to contractual arrangements are likely to be necessary, delaying the conversation until 2027 could significantly reduce an employer’s options.

The six-month qualifying period will change recruitment and probation

The qualifying period for ordinary unfair dismissal is expected to reduce from two years to six months from January 2027.

For transport and logistics businesses that recruit large numbers of employees, this could have a particularly significant impact.

Businesses that have historically relied on early attrition to identify whether a recruit is suitable will need to review that approach.

Probation periods should be structured so that decisions are made well before the six-month point. Managers will need to conduct reviews on time, address concerns promptly and keep appropriate records of performance and decision-making.

A probation period should not simply be allowed to expire because nobody has taken ownership of the decision.

For businesses recruiting at scale, effective recruitment, onboarding and performance management processes will become increasingly important.

Enforcement will reach further than many logistics businesses expect

The Fair Work Agency is being established to bring together existing labour market enforcement functions and is expected to have broad enforcement responsibilities.

The complexity of the transport and logistics sector can create particular compliance challenges.

Multiple shift patterns, overtime, travel-based allowances, different categories of worker and complex arrangements involving agencies and subcontractors can all increase the risk of errors.

Areas such as National Minimum Wage and holiday pay will remain important areas of compliance.

For logistics businesses, the ability to produce accurate records will therefore be critical.

It is worth asking now whether your business could respond quickly and confidently if an enforcement body asked for evidence of:

• Hours worked.
• Pay and deductions.
• Holiday entitlement and payments.
• Shift arrangements.
• Agency worker arrangements.
• Employment status.
• Contracts and contractual changes.

Good record keeping is not simply an administrative exercise. It can become an important part of managing employment risk.

What should transport and logistics employers do now?

The Employment Rights Act 2025 is still being implemented and important details remain subject to regulations and consultation.

That does not mean businesses should wait.

Transport and logistics employers should consider:

• Model your agency and zero-hours workforce. Use the proposed reference period as a planning assumption and identify which workers could potentially qualify for guaranteed hours.
• Review your scheduling systems. Check whether you can evidence when shifts were offered, changed, cancelled or curtailed.
• Review your contracts. Identify whether existing working arrangements provide the flexibility your business will need under the new rules.
• Consider contractual changes early. If changes to working patterns or terms are likely to be necessary, understand how and when those changes could be implemented.
• Review your approach to trade unions. Consider how your business would respond to increased union activity or a recognition application.
• Understand workforce sentiment. Consider whether employees feel they have an effective voice and whether there are existing areas of concern.
• Review customer contracts. If customers expect your business to absorb significant last-minute changes in volume, consider whether those arrangements remain commercially appropriate.
• Review agency agreements. Make sure your arrangements with labour supply agencies clearly reflect the changing legal landscape and allocation of responsibilities.
• Prepare your management teams. Line managers will play an important role in implementing changes to recruitment, probation, working patterns and shift arrangements.
• Make sure your board understands the commercial impact. These reforms go beyond compliance. They have the potential to affect labour costs, operational flexibility and the competitiveness of the business.

The Employment Rights Act 2025 is a workforce planning issue, not simply a compliance exercise

For transport and logistics businesses, the biggest question is not simply whether existing practices comply with the new legislation.

It is whether the current operating model remains commercially viable once the new rules are fully implemented.

A workforce model built around extensive agency labour, flexible shifts and last-minute changes to staffing may need to evolve.

That does not necessarily mean abandoning flexibility. It means understanding where flexibility is commercially important, what it costs and how it can be achieved within the new legal framework.

Businesses that start that process now will have more time to assess their options and make informed decisions.

How Prettys can help

Our Employment Law team advises employers on the practical and commercial implications of changes to employment legislation, helping businesses understand how new requirements could affect their workforce and wider operations.

Matthew Cole, Partner, specialises in employment law and advises businesses on a wide range of workforce issues, including employment contracts, employment disputes, redundancies and restructuring.

For transport and logistics businesses, the Employment Rights Act 2025 requires employers to look beyond individual changes to employment law and consider how those changes interact with their wider operating model.

Whether you are reviewing your use of agency workers, considering changes to working patterns, preparing for changes to unfair dismissal rights or assessing the potential impact of increased trade union activity, Matthew can provide practical, commercially focused advice tailored to your business.

If you are reviewing your workforce arrangements ahead of the Employment Rights Act 2025, contact Matthew Cole to discuss how the changes could affect your business.

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Frequently Asked Questions

What is the Employment Rights Act 2025?

The Employment Rights Act 2025 introduces a wide range of changes to employment law, including reforms affecting guaranteed hours, agency workers, shift arrangements, unfair dismissal, trade unions and employment rights enforcement.

When will the Employment Rights Act 2025 come into effect?

The reforms are being introduced in stages, with many of the changes affecting workforce arrangements expected to take effect during 2027. Employers should therefore begin preparing before the relevant commencement dates rather than waiting until the new rules are in force.

Will the Employment Rights Act 2025 affect agency workers?

Yes. The guaranteed hours provisions will extend to qualifying agency workers, with important responsibilities falling on hirers. This could have significant implications for logistics businesses that rely heavily on agency labour.

Will employers have to pay workers when shifts are cancelled?

The Employment Rights Act 2025 introduces a right to compensation where qualifying shifts are cancelled, moved or curtailed at short notice. The detailed requirements, including what constitutes reasonable notice, are subject to further regulations and consultation.

What does the Employment Rights Act 2025 mean for unfair dismissal?

The qualifying period for ordinary unfair dismissal is expected to reduce from two years to six months from January 2027. Employers that recruit at volume should review their probation, performance management and dismissal processes in advance.

How will the Employment Rights Act 2025 affect logistics businesses?

The impact will depend on how each business operates, but potential areas of change include agency labour, shift scheduling, workforce costs, employment contracts, recruitment, trade union relationships and customer arrangements.

Should logistics businesses prepare for the Employment Rights Act 2025 now?

Yes. Although some details are still subject to consultation and regulations, businesses that rely on flexible workforces should begin assessing the potential impact now. Early preparation provides more time to review workforce models, contracts, systems and commercial arrangements before the main changes take effect.