Zero-hours contracts are arrangements where the employer is not obliged to provide any minimum working hours, and the worker is not obliged to accept any work offered. They offer flexibility for both parties but have faced significant criticism for the insecurity they create. Major reforms are on the way through the Employment Rights Bill.
Current Rights of Zero-Hours Workers
Despite having no guaranteed hours, zero-hours workers are entitled to:
- National Minimum Wage — for all hours worked
- Holiday pay — accrued pro rata based on hours worked (5.6 weeks per year)
- Rest breaks — the same as any other worker
- Protection from discrimination — under the Equality Act 2010
- Protection from unfair deductions — from wages
- Right to request flexible working — from day one
- Statutory sick pay — if they meet the earnings threshold
- Auto-enrolment pension — if they meet the qualifying criteria
Exclusivity Clauses Are Banned
Since 2015, exclusivity clauses in zero-hours contracts are unenforceable. You cannot prevent a zero-hours worker from working for another employer or penalise them for doing so.
Incoming Reforms
The Employment Rights Bill introduces significant changes:
- Right to guaranteed hours — workers will be entitled to a contract reflecting their regular working pattern after a defined reference period
- Reasonable notice of shifts — employers will need to provide adequate advance notice of shifts
- Compensation for cancelled shifts — short-notice cancellations will trigger a right to payment
These changes will require businesses using zero-hours contracts to fundamentally rethink their workforce planning.
Best Practice for Employers
- Use zero-hours contracts only where genuinely variable demand exists
- Track hours regularly — if a worker is consistently working set hours, consider offering a fixed-hours contract
- Ensure holiday pay is calculated correctly (the 12.07% accrual method is common but must be applied properly)
- Communicate shifts with reasonable notice
Need help reviewing your zero-hours arrangements before the new legislation takes effect? Our compliance audit service can identify risks and prepare your business. Contact us.