Zero‑Hour Contracts: New Reforms, Rights & Employer Duties

Zero-hour contracts have long been a staple for businesses with shifting demands or irregular work patterns. From retailers covering seasonal peaks to startups testing the waters before making permanent hires, this model offers flexibility on both sides. But with upcoming regulatory changes on the horizon, it’s more important than ever to understand what a zero-hours contract is, how the law is changing, and what your duties are as an employer. If you’re running a business or considering a flexible hiring arrangement, this guide will walk you through the current legal landscape, workers’ rights, and what’s next for zero-hour contracts in the UK. Let’s make sure your business is legally protected-and your workers are treated fairly-every step of the way.

What Is A Zero-Hour Contract?

Let’s start with the basics. A zero-hour contract (sometimes written as “0 hour contract” or “zero hours contract”) is an agreement between an employer and a worker that doesn’t guarantee any minimum number of working hours. Instead, you offer work when it’s available, and the worker can usually choose whether or not to accept the shifts you offer.

• There is no obligation for you to provide work on a regular or predictable schedule.
• There’s also no obligation for the worker to accept every shift.
• These contracts are common in hospitality, events, care work, retail, and among startups and new businesses that can’t always predict staffing needs.

This kind of flexibility can benefit both employer and worker, especially when used fairly. But remember, a lack of guaranteed hours doesn’t mean a lack of legal obligations. There are still important rights and responsibilities on both sides.

Are Zero-Hour Contracts Legal In The UK?

Yes, zero-hour contracts are legal in the UK. However, regulators keep a close eye on how they are used to ensure fair treatment of workers. Under current law, you can use a zero-hour contract if it in fact reflects the nature of the job-i.e. work is genuinely irregular, and both sides want that flexibility. But the government has increasingly moved to prevent abuse and ensure that workers aren’t left with all the uncertainty and none of the benefits. Most importantly:

• Exclusivity clauses are banned. You cannot stop a zero hours worker from taking other jobs or working elsewhere (read more about worker rights).
• You must pay at least the National Minimum Wage (NMW) or National Living Wage (NLW) for any time worked.
• Discrimination laws apply - you cannot treat zero-hours workers less favourably on protected grounds (such as age, race, sex, disability).

In summary, while zero-hour contracts are legal, the way you use them (and what’s in the written agreement) must comply with key employment laws. With reforms on the way, this area is set for significant changes-so it’s crucial to stay up-to-date.

What Should A Zero-Hour Contract Include?

Every zero-hour contract should be clear and comprehensive. This helps avoid disputes and makes sure everyone knows where they stand. Here’s what you’ll typically need to cover:

• Worker Status: Specify whether the person is a “worker” or “employee”. The status affects statutory rights (like redundancy pay or statutory sick pay).
• Pay Rate: Confirm pay rates, frequency (weekly/monthly), and that pay will never fall below legal minimums.
• Hours Of Work: Set out how shifts will be offered, procedures for accepting/rejecting work, and policies for short-notice cancellation.
• Holiday Entitlement: Zero-hours workers are still entitled to paid holiday, usually calculated based on hours they end up working. More info in our holiday entitlement guide.
• Rest Breaks & Working Time: Clarify break entitlements in line with the Working Time Regulations.
• Notice Periods: While not always required for casual work, it’s best practice to set out any notice required for ending the contract or cancelling pre-booked shifts (notice period advice).
• Exclusivity: Make it clear workers are free to take other work, in line with the legal ban on exclusivity clauses.
• Health & Safety: Reference your health and safety policy and your duties under the Health and Safety at Work Act 1974.
• Data Protection & Confidentiality: Include a section to comply with GDPR and protect both business and worker information.

Avoid using cheap templates or DIY solutions-your contract should be tailored to your business and the nature of the work. If you need support, our lawyers can help draft or review your zero-hour contracts so you’re fully compliant.

What Rights Do Zero-Hours Workers Have?

Just because a worker is on a zero-hour contract doesn’t mean they’re left without protections. They have a range of key statutory rights. The exact rights depend on the worker’s legal status (worker vs. employee), but typically include:

• National Minimum Wage/National Living Wage for all hours worked.
• Paid annual leave (calculated based on hours worked).
• Rest breaks and limits on maximum weekly working hours under Working Time Regulations 1998.
• Protection from discrimination under the Equality Act 2010.
• Right to work elsewhere-no exclusivity clauses can be enforced.
• Written statement of terms (provided on day one for workers and employees since April 2020).
• Statutory Sick Pay (SSP) if they meet the eligibility criteria (average earnings at least £123 per week over the previous 8 weeks). For more, see our guide to sick pay on zero-hours contracts.
• Protection from unfair dismissal or detriment for asserting statutory rights (for “employees” who meet qualifying service).

It’s important to regularly review contract practices and ensure you’re not inadvertently misclassifying workers or preventing them from accessing statutory rights. If you’re not sure, check our guide on employment status or have a lawyer review your agreements.

How Are Zero-Hour Contracts Changing? Key Reforms For 2024–2026

Public concerns about job insecurity on zero-hour contracts have led to major policy discussions and recent announcements signal sweeping reforms ahead. Here’s what you need to know about the upcoming changes:

Labour’s Employment Rights Bill & Upcoming Reforms

• Ban (or restriction) on zero-hour contracts: The government is moving towards banning abusive use of zero-hour contracts, or tightening restrictions so that ‘genuine’ casual work is protected but ongoing needs result in guaranteed hours.
• Right to predictable hours: If a worker regularly works a pattern of hours, they will soon have the right to request a contract with guaranteed (predictable) hours. Employers may have to offer these after a reference period (details pending, but suggested to be around 12 weeks).
• Compensation for shift cancellation: If an employer cancels a shift at short notice, workers will be entitled to compensation.
• Application to agency workers: Many of these reforms are expected to include agency as well as zero-hours workers, closing existing loopholes in the law.

These changes are expected to come into effect by 2026, though some details (e.g. qualifying workers, precise compensation rates, definition of a “regular work pattern”) are still under consultation. You can read more about the employment law changes and UK government consultation processes here.

What Does This Mean For Your Business?

• You’ll need systems to track working patterns and proactively offer more secure contracts if a worker’s pattern becomes regular.
• Pay close attention to rotas-avoid relying on short-notice cancellations and plan for compensation costs if you do have to cancel shifts.
• Keep updated written contracts reflecting changing laws (and avoid outdated terms that could make your business non-compliant).
• Consult a legal expert ahead of 2026 to ensure your business won’t fall foul of the new regulations, especially if you have a large casual workforce.

When Are Zero-Hour Contracts Appropriate?

Zero-hour contracts are best used when the work genuinely can’t be predicted. Some examples:

• Covering staffing needs in a small cafe or retail business that experiences sudden spikes and quiet periods.
• Events businesses with work that depends on irregular bookings.
• Startups that need temporary help for project-based work but aren’t ready for permanent hires.
• Health and care providers managing sickness cover.

They are not appropriate for regular, ongoing roles that actually require a fixed number of hours every week. Under the upcoming reforms, if someone works a reliable pattern, you’ll need to offer them the correct contract with guaranteed hours. Failing to do so could expose your business to legal disputes and even fines.

What Are The Employer’s Duties With Zero-Hour Contracts?

1. Pay And Holiday Entitlements

You must pay at least the legal minimum for all work done, plus the correct holiday pay. For more, check out our guide to legal holiday calculations.

2. Health And Safety

All workers-regardless of contract-are protected by health and safety law. Make sure your workplace (including remote work) is safe and risk-assessed.

3. Written Statement Of Terms

Since April 2020, all workers (not just employees) must receive a written statement of terms on or before their first day. If you haven’t updated your onboarding process, now’s the time. See our onboarding guide for practical tips.

4. Record-keeping

Keep robust records of:

• Hours worked (for pay and benefits calculations)
• Holidays accrued and taken
• Shifts offered, accepted, and cancelled

This will not only help with compliance, but also with defending your business if there is ever a dispute.

How Can Businesses Prepare For The Changes?

With the landscape for zero-hour contracts in the UK shifting rapidly, here are the steps you should take:

1. Review Your Existing Contracts

• Check all zero-hour agreements for compliance (no banned exclusivity, accurate pay terms, correct notice periods, etc.).
• Update any out-of-date or template contracts-use a professional drafting or contract review service like ours (contract review).

2. Track Working Patterns

• Start recording hours worked and any regular patterns now, so you’re ready to offer guaranteed hours contracts if required.

3. Update Policies On Shift Cancellations

• Draft or revise your staff handbook and rota management policies to reflect the new laws on shift cancellation compensation and minimum notice periods.

4. Stay Informed On Legal Developments

• Employment law is changing-don’t get caught off guard. Keep an eye on legislative updates or subscribe to updates from legal specialists like Sprintlaw.

5. Train Managers & HR Staff

• Make sure anyone who hires or manages zero-hours workers understands the new requirements, especially around predictable working patterns and compensation for late cancellations.

Frequently Asked Questions About Zero-Hour Contracts

What Is The Notice Period For A Zero-Hour Contract?

There’s no legal minimum notice period for ending a zero-hour contract, but most agreements will specify what notice is needed to end the working relationship. If a shift has already been accepted and is cancelled suddenly, new reforms will require compensation-so build clear notice periods into your agreements. For more, see our article on notice periods for zero-hour contracts.

Do You Get Sick Pay On A Zero-Hours Contract?

Zero-hours workers can be eligible for Statutory Sick Pay (SSP) if they earn at least £123 a week (on average) across the previous 8 weeks. If your workers aren’t earning this much, they won’t qualify for SSP, but you can offer contractual sick pay if you wish. More guidance is available in our zero-hour contract sick pay guide.

Can I Use A Minimum Hours Contract Instead?

A minimum hours contract guarantees a set number of paid hours each week (even if no work is offered), with any extra shifts handled like overtime. This offers workers more financial security, but is less flexible than a true zero-hours arrangement. Under upcoming reforms, this is likely to become the default for workers with regular patterns, so consider moving to this model for many roles.

Key Takeaways

• Zero-hour contracts remain legal in the UK, but are under review and will be restricted (or banned) for inappropriate use by 2026.
• Employers have clear legal duties to pay minimum wage, respect worker rights, avoid exclusivity, and ensure health and safety for zero-hours staff.
• Upcoming reforms mean workers with regular patterns must be offered contracts with guaranteed hours, and compensation will be due for last-minute shift cancellations.
• Regular review and professional drafting of zero-hour agreements is essential to stay compliant and avoid disputes.
• Prepare in advance by updating your contracts, monitoring work patterns, and keeping up with legislative changes.
• Expert legal help can save you time, money, and risk as the rules evolve-reach out before 2026 to review your flexible work arrangements.

If you’d like advice on zero-hour contracts, employee rights, or preparing for the coming legal changes, you can contact us on 08081347754 or email team@sprintlaw.co.uk for a free, no-obligation chat with our friendly legal team. We’re here to help you stay protected and compliant from day one.