Part-time, casual and flexible working arrangements are now a permanent feature of the UK labour market. One of the most common, and most misunderstood, of these arrangements is the zero hour contract.
For employers, zero hour contracts can provide a practical way to manage fluctuating demand, seasonal work or short-term staffing needs. For workers, they can offer flexibility and choice over when work is accepted. However, zero hour contracts also carry legal, operational and reputational risks if they are not used carefully and lawfully.
The law does not prohibit zero hour contracts, but it does regulate how they operate. Employers must understand the limits of flexibility, the statutory rights that apply, and how employment status can evolve over time.
What this article is about
This guide explains what a zero hour contract is under UK employment law, whether it is legal, how it differs from other casual arrangements, and what employers must get right when using this type of contract. It also looks ahead to recent and forthcoming reforms under the Employment Rights Act 2025 and how these may affect the future use of zero hour contracts.
Section A: Zero hour contract meaning
A clear understanding of what a zero hour contract is – and what it is not – is essential before deciding whether this arrangement is appropriate for your business.
1. What is a zero hour contract?
A zero hour contract is an agreement between an organisation and an individual where the employer does not guarantee any minimum number of working hours.
The defining feature of a zero hour contract is that:
– the employer is not obliged to offer work, and
– the individual is not usually obliged to accept work when it is offered.
Work is offered on an ad hoc basis, often at short notice, and the individual is paid only for the hours they actually work.
Importantly, “zero hour contract” is not a legal term. It is a commonly used label that can describe a range of casual or flexible working arrangements. The legal rights that apply depend not on the label, but on the individual’s employment status and how the relationship operates in practice.
2. What a zero hour contract is not
A zero hour contract is not the same as:
– a part-time contract with guaranteed minimum hours
– a short-hours or minimum-hours contract
– a fixed-term contract with set hours
– agency work arranged through a temporary work agency
Unlike these arrangements, a zero hour contract involves no commitment to ongoing work and no promise of regular hours.
Employers should be cautious about using the term “zero hour” where, in reality, the individual is expected to work regular patterns or where availability is treated as mandatory. In those cases, the contract may not reflect the true nature of the working relationship.
3. Why employers use zero hour contracts
Zero hour contracts are most commonly used where workload is unpredictable or varies significantly over time. Typical examples include:
– retail and hospitality businesses managing fluctuating customer demand
– seasonal work or events-based staffing
– covering short-term absences or temporary peaks in work
For employers, the main attraction is flexibility and cost control, as labour is engaged only when required. However, this flexibility is not unlimited, and misuse can expose employers to legal challenge, particularly where regular working patterns develop.
4. Zero hour contracts and flexibility in practice
Although zero hour contracts are often described as “flexible for both sides”, the reality depends on how they are managed.
In principle, individuals on zero hour contracts can decline work. In practice, if refusing work leads to reduced future offers, pressure to accept shifts, or informal penalties, this may undermine the stated flexibility and increase legal risk.
How shifts are offered, accepted, cancelled and recorded will be highly relevant if the arrangement is later scrutinised by a tribunal.
Section A summary
A zero hour contract is a flexible working arrangement with no guaranteed hours and, typically, no obligation to accept work. It is not a legal category in its own right, and calling a contract “zero hour” does not determine the individual’s rights. Employers must ensure the contract reflects reality, particularly where work becomes regular or expectations around availability develop over time.
Section B: Is a zero hour contract legal in the UK?
Zero hour contracts are lawful in the UK, but they operate within a defined legal framework. Employers can use them, provided statutory rights are respected and the arrangement is not used to avoid legal obligations.
Understanding what the law permits and what it restricts is essential before engaging staff on a zero hour basis.
1. Are zero hour contracts allowed under UK law?
There is no general prohibition on zero hour contracts under UK employment law. Employers are permitted to engage individuals without guaranteeing work, and individuals can agree to work without guaranteed hours.
However, the law regulates how zero hour contracts operate through a combination of statutory rights, employment status rules and specific protections introduced to prevent abuse.
A zero hour contract cannot be used to:
- avoid paying statutory entitlements when work is performed
- deny rights that arise through employment status
- restrict an individual from working elsewhere
- disguise what is, in reality, regular employment
The legality of a zero hour contract therefore depends not only on the wording of the agreement, but also on how the relationship functions in practice.
2. Key legislation affecting zero hour contracts
Several core pieces of employment legislation apply to zero hour contract arrangements.
The Employment Rights Act 1996 governs fundamental rights such as the right to a written statement of terms, protection from unlawful deductions from wages, and (where employee status exists) rights relating to unfair dismissal and redundancy.
The Working Time Regulations 1998 apply to most zero hour contract workers, giving rights to paid annual leave, rest breaks, daily and weekly rest periods, and limits on average working time.
The National Minimum Wage Act 1998 requires that all qualifying hours worked under a zero hour contract are paid at least the applicable minimum wage rate.
In addition, the Small Business, Enterprise and Employment Act 2015 introduced specific rules prohibiting exclusivity clauses in zero hour contracts. Any contractual term preventing a zero hour worker from working for another employer is unenforceable.
Together, these laws mean that while flexibility is permitted, zero hour contracts are not unregulated.
3. Exclusivity clauses and second jobs
Employers cannot require zero hour contract workers to work exclusively for them.
Any term that prevents a zero hour worker from:
- taking work with another employer, or
- seeking additional employment elsewhere
will be legally unenforceable as a matter of law.
Further protections mean that a zero hour contract worker must not be subjected to any detriment or dismissal because they have worked for another employer in breach of an exclusivity clause. Any dismissal in these circumstances is treated as automatically unfair, and there is no qualifying service requirement. Claims can be brought regardless of length of engagement.
These rules are designed to address the imbalance created where an employer offers no guaranteed work but attempts to restrict the worker’s ability to earn elsewhere.
4. Recent reforms and the Employment Rights Act 2025
The legal landscape for zero hour contracts is changing.
The Employment Rights Act 2025, which received Royal Assent in December 2025, introduces reforms aimed at ending exploitative zero hour and low-hours working practices. Rather than an immediate blanket ban, the legislation provides for phased changes expected to take effect over the next two years.
Many of these provisions operate through regulation-making powers and are expected to be introduced in phases, rather than creating immediate automatic rights to guaranteed hours.
Key areas of reform include:
- rights for workers to request guaranteed or predictable hours
- protections linked to shift scheduling and cancellations
- measures to address one-sided flexibility
Detailed implementation dates and secondary legislation are expected to follow. Employers using zero hour contracts should monitor developments closely, as the reforms are likely to affect how casual labour is engaged, scheduled and managed.
Section B summary
Zero hour contracts remain legal in the UK, but they are subject to extensive regulation. Employers must comply with core employment legislation, respect minimum statutory rights and avoid restrictive practices such as exclusivity clauses. Recent reforms under the Employment Rights Act 2025 signal a clear policy direction towards greater security and predictability for individuals working without guaranteed hours.
Section C: Employment status on a zero hour contract
Employment status is one of the most important legal issues arising from the use of zero hour contracts. Many of the rights and obligations that apply depend not on the contract label, but on whether the individual is classed as an employee, a worker or genuinely self-employed.
For employers, getting employment status wrong can lead to claims for unpaid entitlements, unfair dismissal and tax liabilities.
1. Worker or employee – why status matters
Individuals engaged on zero hour contracts will usually fall into one of two categories under UK law: workers or employees.
Workers are entitled to a core set of statutory rights, including the National Minimum Wage, paid annual leave, rest breaks and protection from discrimination. Employees receive these rights plus additional protections, such as statutory redundancy pay, protection from unfair dismissal (subject to qualifying service) and family-related leave rights.
Zero hour contracts are commonly associated with worker status, but there is no legal rule that prevents a zero hour contract worker from being an employee. The label used in the contract is relevant, but it is not decisive.
2. How tribunals assess employment status
Employment tribunals look beyond the written contract to assess the reality of the working relationship.
Key factors commonly considered include:
- whether the employer is obliged to offer work
- whether the individual is obliged to accept work
- the degree of control exercised by the employer
- whether the individual can provide a substitute
- the level of integration into the business
A genuine lack of obligation on both sides will usually point towards worker status. However, where work is offered regularly and is expected to be accepted, this can indicate a higher level of mutual commitment.
3. Mutuality of obligation and zero hour contracts
The concept of mutuality of obligation is central to employment status.
Mutuality of obligation exists where the employer is required to provide work and the individual is required to perform that work when offered.
In theory, zero hour contracts lack mutuality because neither party is obliged to provide or accept work. In practice, this position can change over time.
If an individual works regular hours over a sustained period, or if there is an expectation that offered work will be accepted, a tribunal may find that mutuality exists. This can result in the individual being classified as an employee, even if the contract states otherwise.
4. When zero hour workers can become employees
Employment status is not fixed. A person engaged on a zero hour basis may move from worker to employee status if the relationship evolves.
Factors that may point towards employee status include:
- working the same shifts consistently over a long period
- being subject to disciplinary procedures
- being required to seek permission to refuse work
- being treated in the same way as permanent staff
Employers should regularly review zero hour arrangements to ensure that the contractual terms still reflect reality. Failure to do so increases the risk of misclassification and legal challenge.
Section C summary
Zero hour contracts do not determine employment status by themselves. Individuals may be workers or employees depending on how the relationship operates in practice. Regular working patterns, expectations around availability and mutuality of obligation can all lead to employee status arising over time. Employers should actively monitor and manage these arrangements to reduce legal risk.
Section D: Zero hour contract rights and employer responsibilities
Although zero hour contracts do not guarantee work, they do not remove an employer’s legal responsibilities. Once work is offered and performed, statutory rights apply. Which rights apply, and when, will depend largely on the individual’s employment status.
For employers, understanding which rights apply automatically and which depend on status or length of service is critical to compliance.
1. Day one rights for zero hour contract workers
Most individuals engaged on zero hour contracts will qualify as “workers” under UK law. As a minimum, workers are entitled to a core set of statutory rights from the first day they perform work.
These include the right to:
- receive a written statement of terms on or before their start date, setting out key contractual details
- be paid at least the National Minimum Wage or National Living Wage for all hours worked
- receive an itemised payslip
- accrue paid annual leave under the Working Time Regulations
- take statutory rest breaks and daily and weekly rest
- be protected from unlawful discrimination and whistleblowing detriment
These rights apply regardless of whether the individual works regularly or only occasionally.
2. Pay and minimum wage compliance
Zero hour contract workers must be paid for all hours worked at no less than the applicable statutory minimum wage rate.
Employers should ensure that:
- all working time is properly recorded
- time spent on required training, waiting time and preparatory work is correctly treated
- deductions do not reduce pay below the statutory minimum
Minimum wage rates change annually. Employers should always refer to current government guidance rather than relying on fixed figures set out in contracts or policies.
Failure to comply can result in claims before the employment tribunal and enforcement action by HMRC, including financial penalties and public naming.
3. Holiday entitlement and holiday pay
Zero hour contract workers are entitled to statutory paid annual leave under the Working Time Regulations 1998.
For workers with irregular hours, holiday entitlement accrues as work is performed. Recent reforms clarified how holiday entitlement and pay may be calculated for irregular-hours and part-year workers, including the use of an accrual-based approach.
Employers must ensure that:
- holiday accrues from the first assignment
- holiday pay reflects normal remuneration
- holiday records are accurately maintained
Employers should note that rolled-up holiday pay is only permitted in limited circumstances for irregular-hours and part-year workers and must comply strictly with statutory rules.
Errors in holiday calculations are a common source of claims, including unlawful deduction of wages and breach of contract.
4. Working time limits and rest breaks
Zero hour contract workers are protected by the Working Time Regulations.
This includes:
- a 20-minute rest break when working more than six hours
- 11 consecutive hours’ rest in each 24-hour period
- either a 24-hour uninterrupted rest period each week or 48 hours each fortnight
These rights apply even where work is irregular or offered at short notice. Employers should take care not to schedule shifts in a way that breaches minimum rest requirements.
5. Sick pay and absence
Zero hour contract workers may be entitled to Statutory Sick Pay (SSP) if they qualify as employees for SSP purposes and meet the eligibility criteria.
Entitlement will depend on factors such as:
- employment status for SSP purposes
- average earnings
- whether the individual has qualifying days and a period of incapacity for work
SSP entitlement for zero hour workers is assessed by reference to statutory SSP rules, including average earnings, qualifying days and the existence of a period of incapacity for work. Many zero hour arrangements will fall outside SSP eligibility despite work having been performed.
Employers should avoid assuming that zero hour status removes sick pay obligations.
6. Rights that depend on employee status
Where a zero hour contract worker is classed as an employee, additional rights will apply.
These may include:
- protection from unfair dismissal, subject to qualifying service
- statutory redundancy pay
- statutory maternity, paternity, adoption and shared parental leave
If an individual’s working pattern becomes regular or ongoing, employers should review whether employee status has arisen and whether these additional rights apply.
Section D summary
Zero hour contracts do not remove statutory rights. From day one, workers are entitled to core protections relating to pay, holiday, rest and fair treatment. Additional rights may arise where employee status exists. Employers must ensure that pay, holiday and working time obligations are met in practice, not just on paper.
Section E: Exclusivity clauses and second jobs
Exclusivity is a central compliance issue for employers using zero hour contracts. The law is clear that individuals who are not guaranteed work must not be restricted from earning elsewhere.
Failure to comply with exclusivity rules can expose employers to automatic unfair dismissal claims and unlawful detriment claims.
1. Prohibition on exclusivity clauses
Employers must not include exclusivity clauses in zero hour contracts.
An exclusivity clause is any contractual term that:
- prevents a zero hour contract worker from working for another employer, or
- requires the employer’s consent before the worker can take additional work
Such clauses are unenforceable as a matter of law. This applies regardless of how the clause is described or justified within the contract.
2. Protection from detriment and dismissal
The law provides specific protection for zero hour contract workers who take work with another employer.
A zero hour worker must not be:
- dismissed, or
- subjected to any detriment
because they have worked for another employer in breach of an exclusivity clause.
Any dismissal in these circumstances is treated as automatically unfair, and there is no qualifying service requirement. Claims can be brought regardless of length of engagement.
Employers should be aware that “detriment” is interpreted broadly and can include reduced work offers, unfavourable treatment or informal penalties.
You can read our extensive guide to Terminating Zero Hour Contracts here >>
3. Managing business risks without exclusivity clauses
Although exclusivity clauses are prohibited, employers are not left without protection.
Depending on the nature of the role, it may be appropriate to include:
- confidentiality obligations
- data protection requirements
- restrictions on conflicts of interest
Any such provisions must be reasonable, proportionate and tailored to the role. They should not be used as a disguised means of preventing the worker from taking other work.
Employers should also ensure that managers understand the legal limits on exclusivity to avoid informal practices that undermine compliance.
Section E summary
Zero hour contract workers must be free to work for other employers. Exclusivity clauses are unenforceable, and workers are protected from dismissal or detriment for taking additional work. Employers should focus on legitimate protections, such as confidentiality, rather than attempting to restrict outside employment.
Section F: Drafting and managing zero hour contracts in practice
A well-drafted zero hour contract is critical, but it is only effective if it reflects how the relationship operates in practice. Poor drafting or inconsistent management is one of the most common reasons zero hour arrangements fail under legal scrutiny.
Employers should approach zero hour contracts as a flexible tool, not a substitute for proper workforce planning.
1. Core terms to include in a zero hour contract
While contracts should always be tailored to the role, zero hour contracts should clearly set out:
- the individual’s employment status, whether worker or employee
- confirmation that there is no guarantee of work
- confirmation that the individual is not obliged to accept work
- pay rates and when payment will be made
- holiday entitlement and how it accrues
- how work will be offered and accepted
- notice provisions, if any
Clarity is essential. Ambiguous wording increases the risk that a tribunal will look past the contract and focus on how the relationship operates in practice.
2. Availability and acceptance of work
Employers should take care when setting expectations around availability.
Some zero hour contracts may lawfully include availability windows or patterns of work. However, if a contract requires availability at certain times, penalises refusal of work or implies that work must usually be accepted, this may undermine the zero hours nature of the arrangement and increase the likelihood of employee status arising.
Any availability expectations should be clearly expressed and must not amount to exclusivity or create an obligation to accept work.
3. Pay, records and payroll administration
Accurate record-keeping is particularly important for zero hour contracts.
Employers should ensure that:
- hours worked are accurately recorded
- pay is calculated correctly for each pay period
- holiday accrual and holiday pay are tracked reliably
- payroll systems can handle irregular working patterns
Administrative failures often lead to underpayment claims, particularly in relation to holiday pay and minimum wage compliance.
4. Ending a zero hour contract
Zero hour contracts often allow for immediate termination by either party. While this can provide flexibility, employers should still exercise caution.
If the individual is an employee, dismissal protections may apply. Even where worker status applies, ending an arrangement for an unlawful reason, such as discrimination or whistleblowing, can still result in liability.
Employers should avoid informal practices that give the impression of permanence, followed by sudden termination without explanation.
Section F summary
Zero hour contracts must be carefully drafted and consistently managed. Core terms should be clear, availability should not undermine the zero hours nature of the arrangement and administrative systems must support accurate pay and holiday calculations. Misalignment between contract wording and day-to-day practice is a key source of legal risk.
Section G: Managing zero hour contracts fairly and effectively
How zero hour contracts are managed in practice is just as important as how they are drafted. Even where contracts are legally compliant on paper, unfair or inconsistent management can undermine the arrangement and expose employers to legal and employee relations risks.
Good practice in this area is also increasingly relevant in light of reforms aimed at reducing one-sided flexibility.
1. Allocation of shifts and transparency
Employers should aim to allocate work in a fair and transparent way.
Although zero hour contracts do not guarantee work, good practice includes:
- clear processes for offering shifts
- avoiding favouritism or arbitrary allocation
- communicating expectations clearly
- keeping records of offers and acceptance
Inconsistent or opaque allocation of work can damage morale and may support arguments that an implied obligation or pattern of work has developed.
2. Short-notice working and cancelled shifts
Zero hour contracts often involve work offered at short notice. While this can be operationally necessary, excessive short-notice scheduling or frequent cancellations can create dissatisfaction and legal risk.
Employers should consider:
- providing reasonable notice of shifts where possible
- avoiding last-minute cancellations without good reason
- considering whether compensation or alternative work is appropriate
Future reforms under the Employment Rights Act 2025 are expected to introduce additional rights relating to predictable working patterns and compensation for cancelled shifts. Employers should begin reviewing their practices now to prepare for these changes.
3. Avoiding over-reliance on zero hour contracts
Zero hour contracts are not intended to be a default arrangement for core roles with ongoing, regular hours.
Where a role consistently requires the same hours week after week, employers should consider whether an alternative contract type would be more appropriate. Continued reliance on zero hour contracts in these circumstances increases the risk of employee status arising and may attract scrutiny under future reforms.
Section G summary
Fair and transparent management of zero hour contracts is essential. Clear scheduling practices, reasonable notice of work and restraint in the use of zero hour arrangements for regular roles can help reduce legal risk and improve workforce relations.
Section H: Pros and cons of zero hour contracts for employers
Zero hour contracts can be an effective workforce management tool when used appropriately. However, they also carry inherent disadvantages that employers must weigh carefully before relying on this type of arrangement.
A balanced assessment of the benefits and drawbacks is essential to deciding whether zero hour contracts are suitable for a particular role or business model.
For a discussion about the Advantages and Disadvantages of Zero Hour Contracts see here >>
1. Advantages of zero hour contracts
For employers, the primary advantage of a zero hour contract is flexibility.
Key benefits include:
- the ability to scale staffing levels up or down in response to demand
- reduced wage costs during quieter periods
- avoidance of paying for unworked hours
- access to a pool of workers who can be called upon as needed
This flexibility can be particularly valuable in sectors with unpredictable workloads, seasonal peaks or event-driven demand.
2. Disadvantages and operational risks
Despite their flexibility, zero hour contracts also create practical challenges.
From an employer perspective, disadvantages can include:
- lack of guaranteed worker availability
- difficulties in workforce planning
- higher turnover and reduced loyalty
- increased recruitment and training costs
Workers are free to decline work and to take roles with other employers. This can leave businesses short-staffed at critical times, particularly where reliance on zero hour labour is high.
3. Impact on engagement and retention
Zero hour contracts can affect worker engagement.
Uncertainty around hours and income may lead to:
- reduced commitment to the organisation
- lower morale
- decreased willingness to prioritise one employer over another
These factors can undermine service quality and continuity, particularly in customer-facing roles.
4. Reputational and compliance considerations
There is increasing public and regulatory scrutiny of how zero hour contracts are used.
Employers that are perceived to rely heavily on insecure working arrangements may face:
- reputational damage
- difficulties attracting talent
- increased scrutiny from regulators and trade unions
With reforms under the Employment Rights Act 2025 aimed at limiting exploitative practices, employers should consider whether continued reliance on zero hour contracts aligns with their long-term workforce strategy.
Section H summary
Zero hour contracts offer flexibility and cost control, but they also create risks around availability, engagement and retention. Employers should weigh these factors carefully and avoid using zero hour contracts where regular, predictable work exists.
Section I: Alternatives to zero hour contracts
Zero hour contracts are not the only way to achieve flexibility in workforce planning. In many cases, alternative contract types can offer a better balance between flexibility for the employer and security for the individual, while reducing legal and reputational risk.
Employers should consider whether a zero hour contract is genuinely the most appropriate arrangement for the role.
1. Minimum-hours and short-hours contracts
A minimum-hours or short-hours contract guarantees a small number of working hours each week, with flexibility to offer additional hours as needed.
This approach:
- provides greater income certainty for the individual
- reduces the risk of employment status disputes
- supports workforce planning and retention
It can be particularly suitable where there is a consistent baseline level of work, even if demand fluctuates.
2. Part-time contracts
Part-time contracts involve guaranteed hours that are fewer than full-time hours.
They may be appropriate where:
- work is required on a regular basis
- shifts follow a predictable pattern
- the role forms part of the organisation’s core workforce
Part-time contracts reduce the risk of misclassification and can improve engagement and loyalty.
3. Annualised hours arrangements
Under an annualised hours arrangement, an employee works a set number of hours over the year, with hours distributed unevenly to reflect busy and quiet periods.
This model:
- provides flexibility without removing contractual certainty
- allows employers to plan staffing over longer periods
- can reduce reliance on ad hoc labour
Annualised hours require careful drafting and monitoring but can be an effective alternative to zero hour contracts.
4. Fixed-term contracts
Fixed-term contracts can be used to cover:
- seasonal demand
- maternity or long-term absence cover
- time-limited projects
They provide certainty for both parties while allowing employers to meet temporary resourcing needs.
5. Agency workers
Agency workers can provide short-term flexibility, particularly for urgent or specialist needs.
However, employers should be aware that:
- agency workers acquire additional rights after a qualifying period
- costs are typically higher than direct engagement
- responsibility for compliance may be shared between the agency and hirer
Agency arrangements should be carefully managed to ensure legal obligations are met.
Section I summary
Zero hour contracts are only one of several flexible working options available to employers. Minimum-hours, part-time, annualised hours and fixed-term contracts may offer a more balanced and lower-risk alternative where work is regular or predictable.
FAQs: Zero hour contracts for employers
What is a zero hour contract?
A zero hour contract is a working arrangement where the employer does not guarantee any minimum number of hours and the individual is usually not obliged to accept work when it is offered. The individual is paid only for the hours they actually work.
Are zero hour contracts legal in the UK?
Yes. Zero hour contracts are currently legal in the UK, provided employers comply with employment law, including minimum wage, holiday entitlement, working time rules and the prohibition on exclusivity clauses. Reforms under the Employment Rights Act 2025 will affect how these contracts can be used over time.
Is a zero hour contract an employment contract?
A zero hour contract can be an employment contract, but it does not have to be. Individuals engaged on zero hour contracts may be classified as workers or employees depending on how the relationship operates in practice.
Can a zero hour worker refuse work?
In many zero hour arrangements, there is no obligation on the individual to accept work. However, this depends on the contract terms and the reality of the working relationship. Some zero hour contracts may lawfully include availability windows or patterns of work, provided these do not amount to exclusivity or give rise to employee status.
Do zero hour contract workers get holiday pay?
Yes. Zero hour contract workers are entitled to statutory paid annual leave under the Working Time Regulations. Holiday accrues as work is performed and holiday pay must reflect normal remuneration.
Are zero hour contract workers entitled to sick pay?
Zero hour contract workers may be entitled to Statutory Sick Pay if they qualify as employees for SSP purposes and meet the statutory eligibility criteria. Entitlement is assessed on a case-by-case basis.
Can I stop a zero hour worker from working for another employer?
No. Exclusivity clauses in zero hour contracts are unenforceable. Workers must be free to work for other employers and are protected from dismissal or detriment for doing so.
When does a zero hour worker become an employee?
A zero hour worker may become an employee if the working relationship develops into one involving regular hours, expectations of work and mutual obligations. Employment status is assessed based on reality, not contractual labels.
What are the risks of using zero hour contracts?
Key risks include misclassification of employment status, underpayment of holiday or wages, lack of worker availability, reputational damage and increased scrutiny under future employment law reforms.
Are zero hour contracts being banned?
There is no immediate blanket ban. However, the Employment Rights Act 2025 introduces reforms aimed at limiting exploitative zero hour and low-hours arrangements, with phased implementation expected.
Conclusion
Zero hour contracts remain a lawful and flexible staffing option for UK employers, but they are tightly regulated and increasingly scrutinised. While they can help businesses respond to fluctuating demand, they also carry significant legal, operational and reputational risks if used without care.
Employers must ensure that zero hour contracts accurately reflect the reality of the working relationship, particularly where work becomes regular or expectations around availability develop. Core statutory rights relating to pay, holiday, rest and fair treatment apply from the outset, and additional rights may arise where employee status exists.
The prohibition on exclusivity clauses is a critical compliance point, and employers must avoid both contractual and informal practices that restrict workers from earning elsewhere. Errors in holiday pay, minimum wage compliance and employment status assessment remain common sources of claims.
Looking ahead, reforms under the Employment Rights Act 2025 signal a clear policy shift towards greater predictability and security for individuals working without guaranteed hours. Employers relying on zero hour contracts should begin reviewing their workforce models, scheduling practices and contractual documentation now to prepare for phased changes.
Used sparingly and appropriately, zero hour contracts can still play a role in workforce planning. However, they should not be treated as a default solution where work is regular or ongoing. Careful structuring, transparent management and regular review are essential to staying compliant and avoiding costly disputes.
Glossary: Zero hour contract terms
| Term | Meaning |
|---|---|
| Zero hour contract | A working arrangement where the employer does not guarantee any minimum number of hours and the individual is usually not obliged to accept work when offered. |
| Worker | An individual who performs work personally under a contract but does not have full employee status. Workers are entitled to core statutory rights such as minimum wage, paid holiday and rest breaks. |
| Employee | An individual working under a contract of employment. Employees receive all worker rights plus additional protections, including unfair dismissal rights (subject to qualifying service) and redundancy pay. |
| Employment status | The legal classification of an individual as an employee, worker or self-employed person. Status determines which statutory rights apply and is assessed based on reality, not labels. |
| Mutuality of obligation | A key concept in employment status cases, referring to whether the employer is obliged to provide work and the individual is obliged to accept and perform it. |
| National Minimum Wage (NMW) | The statutory minimum hourly rate of pay for workers, set by law and updated annually. Applies to all qualifying hours worked under a zero hour contract. |
| National Living Wage (NLW) | The higher minimum wage rate applicable to older workers, forming part of the NMW framework. |
| Working Time Regulations 1998 | Legislation governing working hours, rest breaks and paid annual leave for workers and employees. |
| Holiday entitlement | The statutory right to paid annual leave, which accrues as work is performed, including for zero hour contract workers. |
| Exclusivity clause | A contractual term preventing an individual from working for another employer. Such clauses are unenforceable in zero hour contracts. |
| Statutory Sick Pay (SSP) | A statutory payment available to qualifying employees who are unable to work due to illness, subject to eligibility criteria. |
| Employment Rights Act 2025 | Legislation introducing reforms aimed at reducing exploitative zero hour and low-hours arrangements, with phased implementation. |
Useful links and references
| Source | Description |
|---|---|
| GOV.UK – Zero-hours contracts | https://www.gov.uk/contract-types-and-employer-responsibilities/zero-hour-contracts Official government guidance on zero hour contracts, employer responsibilities and worker rights. |
| ACAS – Zero-hours contracts | https://www.acas.org.uk/zero-hours-contracts Practical guidance for employers and workers on using zero hour contracts fairly and lawfully. |
| GOV.UK – Employment status | https://www.gov.uk/employment-status Guidance on determining whether an individual is an employee, worker or self-employed. |
| ACAS – Employment status | https://www.acas.org.uk/employment-status Detailed explanation of employment status tests and how tribunals assess working relationships. |
| GOV.UK – National Minimum Wage rates | https://www.gov.uk/national-minimum-wage-rates Current National Minimum Wage and National Living Wage rates and compliance guidance. |
| GOV.UK – Holiday entitlement | https://www.gov.uk/holiday-entitlement-rights Statutory rules on paid annual leave, including entitlement and calculation. |
| ACAS – Holiday entitlement and pay | https://www.acas.org.uk/checking-holiday-entitlement Employer-focused guidance on calculating and managing holiday entitlement. |
| GOV.UK – Statutory Sick Pay | https://www.gov.uk/statutory-sick-pay Eligibility rules, rates and employer obligations relating to SSP. |
| ACAS – Sick pay | https://www.acas.org.uk/sick-pay Practical advice on managing sickness absence and statutory sick pay. |
| GOV.UK – Working Time Regulations | https://www.gov.uk/maximum-weekly-working-hours Guidance on rest breaks, daily and weekly rest and working time limits. |
