When Seamus Foley took a job on a zero-hours contract at a board games bar in London two years ago, the flexibility it offered was appealing. Now, it is a deal so bad he is prepared to walk out on strike.

“It’s exhausting. You’re constantly living your life on the back foot,” says the employee at Draughts, which has bars in Stratford and Waterloo. There, workers fed up with last-minute rota changes and a lack of basic protections are staging industrial action.

“It feels like all the power is in the hands of the employer. Like [the contract] is designed to keep you desperate, hungry and uncertain as to what your next week or two weeks look like,” Foley said.

Almost 1.2 million workers in the UK are on zero-hours contracts. Despite the preparations being made by Keir Starmer’s government to ban the use of exploitative arrangements, a key manifesto promise, the zero-hours ranks have swelled since Labour’s election victory, rising by more than 100,000 to close to a record high.

Big employers with hundreds of thousands of zero-hours staff between them include McDonald’s, Burger King, Dominos and Mike Ashley’s Frasers Group, and the contracts are still routinely used in social care, hospitality and logistics.

Workers’ rights have been a long-running battle between the government and employers – a row that will intensify this autumn once MPs return from their summer break amid fierce lobbying to water down Labour’s employment rights legislation.

A flashpoint will come in a showdown between ministers and Conservative and Liberal Democrat peers, after the Lords imposed amendments in the final days before the summer recess to drastically curtail the bill.

Justin Madders, the employment minister, said Labour would face down the critics. “We have got a democratic mandate to introduce this bill and the measures. Our starting point is we would continue with it. We’ll see where we end up [with the Lords], but I don’t think at the moment we’ll be looking to resile from things that were clearly in our manifesto.”

Business groups say the cost of hiring staff has soared under Labour after the chancellor Rachel Reeves’s £25bn increase in employer national insurance contributions (NICs) and rise in the “national living wage” were introduced from April.

Firms say too many changes are being made at once when Britain’s economy is weak and the jobs market cooling. Unemployment has risen, partly due to Reeves’s tax rises. Businesses say adding to their costs further would drive joblessness higher, highlighting a £5bn price tag for the workers’ rights policy in the government’s own impact assessment.

Jane Gratton, the deputy director for public policy at the British Chambers of Commerce, said: “You’ll have seen from the figures that the labour market is loosening. If you make it more difficult and costly to employ people, it’s likely to impact on opportunities for people. It will drive business behaviour. We know the government’s own assessment is £5bn. We think that’s probably an underestimate.”

A Federation of Small Businesses survey found 67% of small firms would recruit fewer staff. Firms also say many zero-hours workers like the flexibility the contracts offer, including students in particular.

“These measures will just tie businesses in knots and will have real negative impacts on workers too, such as stopping people swapping shifts. It shows what goes wrong when there is such an out-of-touch approach to policymaking,” said Tina McKenzie, the lobby group’s policy chair.

Some lobbyists believe Labour is more likely to cede ground on workers’ rights than on tax and spending before a tough autumn budget. Unlike a costly and embarrassing U-turn on employer NICs, any changes would be fiscally neutral, and it would sit well with Reeves’s wider deregulatory agenda.

However, party insiders say this would underestimate Reeves’ and Starmer’s commitment to stronger workers’ rights. Both are also under pressure to stick to the policy after disappointing many core Labour voters since coming to power.

The bill’s chief proponent, the deputy prime minister, Angela Rayner, said the government wanted to work closely with businesses to make the details of the bill work, including a consultation on the zero-hours ban this autumn, but that changes were vital after years of workplace exploitation.

“Zero-hours contracts are leaving far too many people without the security they deserve – working hard but left waiting for shifts, unsure what their pay will be month to month. We are tackling this head-on,” she said.

Under Labour’s planned changes, zero-hours workers will get the right to a guaranteed-hours contract reflecting their hours over a 12-week reference period. This comes alongside other measures including day-one protections against unfair dismissal and rolling back trade union restrictions.

To overcome business concerns over the breadth of the policy changes, the government has planned to introduce each step gradually, with the ban on zero-hours contracts coming last in late 2027.

However, critics on Labour’s left say this is glacial change and warn that allowing continued use of zero-hours contracts does not constitute a ban and leaves too much power in the hands of bad bosses.

Madders said Labour had sought to strike a balance that recognised how some workers appreciate the flexibility of zero hours, while tipping the balance to stop bad employers forcing staff to stay on those terms against their will.

“What we have done is find a pretty sweet spot where, actually, people who want some certainty and security at work will be able to have that. The bill is done in a way that can make sure that people who do not want to be on a zero-hours contract will not be forced,” he said.

Official figures show 60% of zero-hours workers do not want more hours. About a quarter are in full-time education and more than half are under the age of 35. Those on the contracts work about 19 hours a week on average, compared with 32 hours for other workers. As many as 10% of zero-hours workers have been on such an arrangement with their employer for more than 10 years.

Working conditions have long been an early casualty of straitened economic conditions in Britain. Zero-hours contracts first rose to prominence in the febrile climate after the 2008 financial crisis as employers sought a way to flexibly ramp up their labour capacity to meet slowly returning consumer demand, with the get-out clause that they could reduce staff hours to cut their costs if things turned south again.

Mike Ashley, the billionaire retail tycoon, and his Sports Direct chain became a target for public anger over its use of the contracts and its wider employment practices after a Guardian investigation found workers at its main warehouse in Shirebrook, Derbyshire, were receiving an effective hourly pay rate below the minimum wage.

As the contracts became near synonymous with worker exploitation, some firms dropped them, including the pub chain JD Wetherspoon. McDonald’s moved to allow workers to choose a guaranteed-hours contract. However, about 90% of McDonald’s 135,000 UK staff are still on zero-hours terms and the fast food chain has faced accusations of harassment and sexual assault by managers. McDonald’s did not respond to a request for comment.

Unions say warnings over the hit to the jobs market resemble the same arguments used in the 1990s against Labour introducing the minimum wage, which were shown to be false. They highlight that strengthening workers’ rights is a vote winner, backed by most of the electorate, and that more job security is key to boosting workforce productivity.

Tim Sharp, the head of employment rights at the TUC, said: “We’ve had this long experiment with zero hours and other forms of precarious contract for too long. There is no incentive for employers to train and develop their workers and we pay the economic price for that.”

However, analysis by the Resolution Foundation suggests the changes will have neither a massive negative impact nor a huge positive one. Even if the government’s £5bn cost to businesses transpires, it would equate to just 11,000 job losses.

It said: “This is tiny – cutting the employment rate by just 0.02% – in the context of changes that will give millions of workers new protections at work.”

For Foley and his striking co-workers on the picket line at Draughts, efforts to negotiate guaranteed-hours contracts have so far run into a dead end. “Thus far it seems to be something they’re not willing to entertain,” he said.

Represented by the United Voices of the World union, it is the first time the bar worker has been involved in industrial action. He said Draughts’ managers had sought to reassure staff they would be treated fairly regardless of their contracts, but this amounted to very little. “You can’t take a verbal agreement. Ultimately, if we don’t have something written into our contracts, we can’t enforce upon it when it’s breached.”

He added: “I don’t feel like they’ve given us any sort of solid response that isn’t a platitude.” Draughts did not respond to a request for comment.

Despite fearing employers could still “game the system” under Labour’s proposals, Foley said the changes could still be very attractive. “It would definitely be better than what we have now,” he said.

The UK exchequer is chasing about £90m in unpaid taxes after a temporary staffing business was rescued from insolvency proceedings in an £18m deal that reimbursed private funders in full.

The main assets of Challenge Recruitment Group, which counted Tesco, Sainsbury’s and Co-op among its top customers, were acquired from administration in July by the US website swipejobs, in what appears to be the second time the British staffing business has emerged from insolvency while owing tens of millions of pounds to the exchequer.

The levels of debt owed by Challenge to HM Revenue and Customs has emerged as the chancellor, Rachel Reeves, is under pressure to announce tax rises in her autumn budget in order to shore up the public finances.

Swipejobs paid £4.9m as part of a “pre-pack” administration deal for the pick of Challenge’s contracts supplying staff to a series of huge UK brands, as well as £12.7m to the collapsed group’s secured lenders, Close Brothers and Praetura Asset Finance, according to a report by administrators FRP.

A pre-pack administration is a restructuring deal agreed in advance of a company entering insolvency – a staged process that frees the acquired business of debt and leaves administrators to use receipts to at least partly pay creditors.

Challenge’s remaining creditors, including HMRC, will probably be repaid a fraction of what they are owed.

When the deal to acquire Challenge assets from administration was announced on 12 July, a statement by the UK group made no mention of the company’s difficulties. It said: “We’re proud to announce that Challenge-trg Group has been acquired by swipejobs … Together, we are in an even better position to deliver exceptional results and enhanced operational efficiency; all underpinned by market-leading technology.”

Four Challenge businesses in administration owe HMRC about £34m, according to the administrator’s report.

A fifth company, TLR White Trading, owes a further £56m to HMRC relating to “five months of VAT and four months of PAYE” incurred by the wider Challenge business. TLR White Trading entered a separate insolvency process in April 2025, six months after being spun out of the Challenge Recruitment Group in October 2024. The new standalone company had the sole function of providing “temporary staffing and payroll services” to the wider Challenge group and was funded by the larger business in order to settle its “payroll costs”.

The latest Challenge insolvency comes after the same recruitment business, then called IF Trade Co, transferred its main contracts to Challenge-trg in 2022, before entering administration with debts to HMRC of about £34m, according to further documents filed with Companies House. Two brothers, Richard and Thomas Cropper, were directors of both IF Trade and Challenge-trg.

The siblings then sold a 75% stake in Challenge to an employee ownership trust for an undisclosed sum in October 2024, nine months before the group companies entered administration.

Swipejobs said it had acquired Challenge assets on a “go-forward basis” and that the brothers have been given a six-month consultancy contract. The Croppers did not respond to efforts to contact them.

HMRC estimates that “phoenixism” – the art of liquidating a company and allowing the directors to rise from the ashes in a new entity, free of debts – cost the exchequer about 22% of the £3.8bn of tax losses reported in 2022 to 2023.

An HMRC spokesperson said: “As the chancellor announced in her spring statement, the government is taking action to improve collaboration between HMRC, Companies House and the Insolvency Service to tackle those using contrived corporate insolvencies and dissolutions – so-called ‘phoenixism’ – to evade tax.”

Tax calculations can be, well, taxing, so a message from HMRC saying that there’s been a mistake may not ring too many alarm bells. Some bring good news: you have overpaid and are owed a refund, but others claim you owe money. In both cases there’s an imminent deadline to act – sometimes with the threat of legal action, or penalties if you don’t.

Scammers are taking advantage of people’s fears over bills to steal personal and banking information. Automated phone calls, and messages sent by text and email, typically tell you that you need to click on a link and log in to make a payment or claim a refund.

In the year to 31 July, HMRC received more than 170,000 reports of scams, of which more than 47,000 involved fake refunds. These happen year-round, but often catch people out around the time of deadlines for self-assessment tax returns.

HMRC says it will never contact you in that way to ask you to claim a refund, or give personal details, and that it never leaves voicemail messages threatening legal action or arrest.

What the scam looks like

Messages can be very convincing and bear the logo and details of HMRC.

They will tell you to act quickly so you feel panicked into responding.

There will be a link, and the website it takes you to may also be very convincing. However, check the URL and it won’t be an official gov.uk address.

Caller ID can be spoofed so it appears that it is genuinely HMRC getting in touch.

What to do

If you think you may genuinely be owed a refund, or are concerned that you have underpaid, you can find out via your tax account.

HMRC lists the areas that it may want to contact people about, and the ways in which it may do so. You can check this list to find out what details appear on genuine messages.

Report scam messages to HMRC. You can forward emails to phishing@hmrc.gov.uk and texts to 60599.

Do not trust caller ID. Put the phone down and call back later, or check your account online.