Zero hours crackdown could cost firms £2.9bn a year

It said hospitality and retail companies, many of which rely heavily on zero hours workers, would be most affected by the change.

The document was released as part of a consultation into how many hours should eventually fall under the new rules.

Baroness Smith told Sky News the government will “look very carefully” at how it brings in the changes.

“I don’t think it’s fair for somebody to be on a contract where they literally don’t know whether or not they’re going to be working at all, and yet they’re bound by that contract.”

But business groups said the costs were more than had originally been forecast.

Kate Shoesmith, director of policy at the British Chambers of Commerce, said it would be “a further hammer blow” for companies that are struggling.

“We are already facing a youth unemployment crisis – now is not the time to make it even more costly for employers to hire.”

Helen Dickinson, the chief executive of British Retail Consortium, questioned whether the reforms would “actually deliver value for workers” because of the cost to businesses.

She added that retailers would also have to pay “hundreds of millions of pounds” to update their payroll systems.

The Trades Union Congress said most of the extra costs would only come if businesses cancelled workers’ shifts at the last minute.

A spokesperson for the TUC said: “The aim of this legislation is to stop this practice and give variable hours workers security and stability – so good employers have nothing to fear.”