Zero-Hour Contracts: UK Employer Legal Guide and Obligations

Zero-hour contracts remain a legitimate and widely used employment arrangement in the UK, but the legal landscape around them is shifting significantly. The Employment Rights Bill introduced in 2024 proposes substantial reforms that will affect how employers use these contracts, including rights to guaranteed hours and restrictions on short-notice shift cancellations.

This guide covers the current legal framework, your obligations as an employer, the rights your zero-hour workers already have, and how to prepare for the incoming legislative changes.

What is a zero-hour contract?

A zero-hour contract is an employment arrangement where the employer is not obliged to provide any minimum working hours, and the worker is not obliged to accept any work offered. The worker is called upon as needed and is paid only for the hours they actually work.

Despite what many employers assume, zero-hour workers are not freelancers or independent contractors. They are either employees or workers under UK employment law, and they hold significant statutory rights.

Current legal rights of zero-hour workers

Under existing law, zero-hour workers have the following rights regardless of how many hours they work:

The exclusivity clause ban

Since May 2015, exclusivity clauses in zero-hour contracts are unenforceable. You cannot require a zero-hour worker to work exclusively for you, and you cannot subject them to any detriment for working elsewhere. This was strengthened in 2022 to extend the protection to all workers earning below the Lower Earnings Limit (£123 per week in 2025/26), regardless of contract type.

Holiday pay calculations for zero-hour workers

Calculating holiday pay for zero-hour workers is one of the areas employers most frequently get wrong. The standard approach is the 12.07% method:

Holiday pay accrual = 12.07% of hours worked

This figure comes from dividing 5.6 weeks of statutory entitlement by 46.4 working weeks (52 weeks minus 5.6 weeks of holiday). You can either accrue holiday hours and let workers book time off, or pay a rolled-up holiday supplement on top of each payment.

For full details on holiday calculations, see our statutory holiday entitlement guide and use our PTO Calculator to check your figures.

The Employment Rights Bill: what is changing

The Employment Rights Bill, introduced in October 2024, contains several provisions that will significantly affect zero-hour contracts. While the exact implementation dates are still being confirmed through secondary legislation, employers should be preparing now.

Right to guaranteed hours

The most significant change is a new right for zero-hour and low-hour workers to request a contract that reflects the hours they regularly work. After a qualifying reference period (expected to be 12 weeks), workers who have been working regular hours will be able to request — and employers will be required to offer — a contract guaranteeing those hours.

This does not ban zero-hour contracts outright. Workers can still choose to remain on zero-hour arrangements. But if a pattern of regular work has been established, the employer must offer a guaranteed-hours contract.

Reasonable notice of shifts

The Bill introduces a requirement for employers to give reasonable notice of shifts and shift changes. Workers will also be entitled to compensation if shifts are cancelled, moved, or curtailed at short notice. The exact notice period and compensation rates will be set in secondary legislation.

Right not to be unfairly dismissed

The Bill proposes removing the two-year qualifying period for unfair dismissal claims, replacing it with a day-one right. This will affect zero-hour workers who are employees, making it harder to simply stop offering shifts as an informal dismissal.

Best practices for using zero-hour contracts

Even under the current rules, there are practical steps that reduce your legal exposure and improve your relationship with casual workers:

Provide a written statement of terms from day one, clearly stating that hours are not guaranteed. Never use exclusivity clauses or informally discourage workers from taking other work. Pay holiday pay correctly — either as accrued leave or as a clearly itemised 12.07% supplement. Include zero-hour workers in auto-enrolment pension assessments. Track hours worked to identify patterns that may trigger future guaranteed-hours obligations. Treat shift cancellations with professionalism — give as much notice as possible and consider goodwill payments for last-minute changes.

Review our employment contract essentials guide to make sure your zero-hour contract template covers all the required written statement particulars.

When a zero-hour contract is not appropriate

Zero-hour contracts work well for genuinely variable demand — event staffing, seasonal peaks, or cover for unpredictable absence. They should not be used as a way to avoid employment obligations for workers who are, in practice, working regular and predictable hours.

If a worker has been consistently working 30+ hours per week for several months, you should seriously consider whether a permanent or fixed-term contract is more appropriate. Apart from the incoming legislative changes, employment tribunals can already look through the label of a contract to the reality of the working relationship.

For guidance on correctly classifying your workforce, see our employee vs contractor guide.

Key takeaways

Zero-hour contracts are legal and useful for genuinely variable work, but the workers on them have far more rights than many employers realise. Holiday pay, minimum wage, pension auto-enrolment, and day-one written statements all apply. The upcoming Employment Rights Bill will add guaranteed-hours rights and shift cancellation protections, so start tracking working patterns now. Use our PTO Calculator to verify your holiday pay calculations, and review our managing sickness absence guide for SSP obligations.