Ministers are facing criticism from unions and employers after laying out details of plans for a guaranteed regular working week as part of a ban on zero-hours contracts.

Under rules poised to come into force next year, employers will have to offer staff on zero hours or “short hours” contracts, including agency workers, a minimum number of hours each week based on their regular working hours.

In a consultation launched on Tuesday on how to implement the changes, the government said its preference was that workers would be guaranteed a minimum of between eight and 20 hours a week if their current contracts are at or below that level.

Businesses should determine a worker’s regular hours over a 12-week reference period under the government’s preferred option.

It will be possible for workers to choose to be on a zero-hours contract but they will be eligible for compensation if their shifts are changed at short notice.

More than 1 million people in the UK are working on a zero-hours contract basis – where a worker is not guaranteed a minimum number of working hours – in areas ranging from working in pubs and restaurants to warehouses and hospitals.

The changes are part of Labour’s Employment Rights Act, which came into law late last year. The package of workers’ rights faced significant opposition from the Conservatives and business groups.

Peter Kyle, the business secretary, 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.

“We’re consulting because we need to get the detail right to ensure these reforms work in practice and guard against unintended consequences from this major change to the labour market.”

Unions said they were disappointed that the government was backing the right to guarantee no more than 20 hours a week – which could be less than half the regular working hours of some currently on zero-hours contracts.

Joanne Thomas, the general secretary of the shopworkers’ union Usdaw, said: “It is deeply disappointing that the government is intending to not give all workers the right to a guaranteed hours contract, despite that being the very clear manifesto commitment.

“Many of our members are employed on short-hours contracts, routinely working significantly more hours than they are contracted. Those additional hours can be removed at the discretion of the employer, leaving workers without stability or security.”

She said young people, women, disabled workers and those from minority communities were disproportionately affected by zero and short-hours contracts.

The Trades Union Congress warned the government that listening to some of the “bad faith scaremongering” on guaranteed hours could leave many workers facing ongoing job insecurity.

Paul Nowak, general secretary of the TUC, said: “Workers should know how much they’ll be earning from week to week instead of being at the whim of a bad employer who could cut shifts last minute.”

However, employer groups warned that over-regulation could put jobs at risk, especially for young people who are already facing an employment squeeze. They called for a longer reference period and asked to retain the right to use zero-hours contracts in some circumstances.

Kate Nicholls, the chair of the UKHospitality trade body which represents thousands of restaurants, cafes, pubs and hotels, said retaining access to zero-hours contracts was “crucial”.

She said that a 26-week reference period would be “a fairer and more accurate reflection of a team members regular work pattern”, that would take into account the seasonal nature of working in hospitality.

“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,” she said.

Helen Dickinson, the chief executive of the British Retail Consortium (BRC), which represents most major retailers, 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 that a 12-week reference period could give retailers little choice but to reduce the number of part-time workers they took on during busier periods, such as Christmas. It added that classifying contracts of up to 20 hours as “low-hours” would be “disproportionate” and that requiring up to four weeks’ notice for shift changes would be “out of step with the realities of retail”.