A zero hours contract is a type of employment arrangement under which an employer is not obliged to offer any minimum number of hours of work, and the worker is not obliged to accept any hours that are offered. It is sometimes called a casual contract or an on-call contract, and it is one of the most controversial and widely discussed forms of flexible working in the United Kingdom.

Despite the controversy, zero hours contracts are entirely lawful in England and Wales, and they serve a genuine commercial purpose in a wide range of industries. Hospitality employers use them to manage seasonal fluctuations in customer demand. Healthcare providers use them to build rotas of bank staff who can cover unexpected absences. Retailers use them during peak periods such as Christmas and summer sales. Event management companies use them to staff one-off occasions. In all of these contexts, a well-drafted zero hours contract protects the interests of both the employer and the worker by clearly recording what has been agreed and what statutory rights apply.

Under the Employment Rights Act 1996, every worker engaged under a zero hours contract is entitled to receive a written statement of employment particulars. This must include the worker’s name and the employer’s name, the commencement date, the pay rate, the pay interval, the holiday entitlement, details of any pension, the notice period required to end an individual engagement, and any applicable disciplinary and grievance procedures. Since the Good Work Plan reforms, this written statement must be provided on or before the worker’s first day of work, not within two months as was previously the case.

It is important to understand what a zero hours contract is not. It is not a mechanism to avoid paying National Minimum Wage or National Living Wage. It is not a mechanism to deny workers their statutory holiday entitlement. It is not a device for denying workers the right to join a trade union or to make a protected disclosure. Workers engaged under zero hours contracts have the same protection from unlawful discrimination under the Equality Act 2010 as employees on permanent contracts. They have the right to be accompanied at disciplinary and grievance hearings under the Employment Relations Act 1999. And since the Small Business, Enterprise and Employment Act 2015, employers cannot use zero hours contracts to stop workers from working for other employers.

The legal landscape for zero hours contracts continues to evolve. The Employment Rights Bill 2024-25, introduced in the autumn of 2024, proposes to give workers on zero hours contracts the right to request a contract that guarantees a minimum number of hours based on their average hours worked over a reference period. Employers will be required to respond to such requests and to provide a written explanation if they refuse. This right is expected to come into force in 2026. Any employer using a zero hours contract should be aware of these forthcoming changes and should be prepared to update their contracts accordingly.

A zero hours contract is appropriate when there is a genuine absence of mutuality of obligation between the parties. This legal concept, developed through decades of case law including Carmichael v National Power plc [1999] UKHL 47, is the defining characteristic of zero hours arrangements. If there is no obligation on the employer to offer work and no obligation on the worker to accept it, then the arrangement is genuinely casual and a zero hours contract is the correct document.

You need a zero hours contract in the following situations. First, you are operating in an industry with unpredictable demand, such as hospitality, retail, healthcare, or events, and you need a pool of workers who can be called upon at short notice without a guaranteed commitment to regular hours. Second, you are building a bank of casual staff to cover annual leave, sickness absence, or unexpected increases in workload. Third, you are engaging students, retirees, or others who want flexible work without a commitment to regular hours. Fourth, you are running a seasonal business and need staff for a specific period, but cannot predict exactly when or for how long they will be needed.

A zero hours contract is not appropriate in all situations. If in practice a worker works regular hours every week and relies on those hours as their primary source of income, the genuine mutuality of obligation of a zero hours contract may not exist, and the worker may have acquired employee status by operation of law, regardless of what the written contract says. Courts and Employment Tribunals look at the reality of the working relationship, not just the label on the document. Regular, habitual working arrangements can create implied terms of a contract, and a zero hours contract label cannot disguise an employment relationship.

If you need someone to work a fixed number of hours per week on a regular basis, even if those hours are part-time, you should use a part-time employment contract rather than a zero hours contract. If you need someone for a defined project or a finite period, a fixed-term employment contract is more appropriate. If you need a self-employed contractor, a freelance contract or consulting agreement is the correct document. Getting the correct contract for the correct working relationship is not merely a matter of paperwork — it determines the worker’s legal rights, the employer’s obligations, and the employer’s tax and National Insurance liability.

A legally compliant zero hours contract for England and Wales must contain several essential elements. Understanding each of these elements will help you ensure that your contract is both effective as a business document and compliant with UK employment law.

The no-obligation clause is the most fundamental element. This clause must make absolutely clear that the employer has no obligation to offer any minimum amount of work, and the worker has no obligation to accept any work that is offered. The clause should also address what happens to an engagement once a shift has been accepted — typically, cancellation on short notice by either party is permissible with a specified period of notice.

The right to work elsewhere clause is legally required. Under section 27A of the Employment Rights Act 1996, as amended by the Small Business, Enterprise and Employment Act 2015, any provision in a zero hours contract that purports to prohibit the worker from working for another employer is void and unenforceable. The Exclusivity Terms for Zero Hours Workers (Redress) Regulations 2015 also give workers the right not to be subjected to a detriment for working for another employer in breach of an exclusivity clause, and the right not to be unfairly dismissed for doing so. Your contract should acknowledge the worker’s right to work elsewhere in plain terms.

The pay provisions must comply with the National Minimum Wage Act 1998. For the 2024/25 tax year, the National Living Wage for workers aged 21 and over is £11.44 per hour. The National Minimum Wage rates for younger workers and apprentices are lower. Any zero hours contract that provides for a rate below the applicable National Minimum Wage rate is void to that extent, and the employer faces civil and criminal enforcement action from HMRC.

Holiday pay provisions must comply with the Working Time Regulations 1998. Under the WTR, workers with irregular hours accrue statutory holiday at a rate of 5.6 weeks per year, calculated in proportion to hours worked. Following the Supreme Court decision in Harpur Trust v Brazel [2022] UKSC 21 and the subsequent Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023, rolled-up holiday pay at 12.07% of earnings is permissible for workers with irregular hours, provided it is clearly identified as such on the payslip.

The pension auto-enrolment provisions are mandatory under the Pensions Act 2008. If the worker earns above the earnings trigger (£10,000 per year as of 2024/25) and is between 22 and state pension age, the employer must automatically enrol them in a qualifying workplace pension scheme. If the worker earns between £6,240 and £10,000 and asks to be enrolled, the employer must enrol them and make minimum contributions.

The notice provisions should address two separate situations: the notice required to cancel an individual shift that has been accepted, and the notice required to end the overall framework arrangement. Clarity on both points reduces disputes.

Data protection provisions are required under the UK GDPR and the Data Protection Act 2018. Employers process significant amounts of personal data about their workers, including National Insurance numbers, bank account details, and absence records. The contract should direct the worker to the employer’s Worker Privacy Notice for details of how their data will be processed.

The Employment Rights Bill 2024-25, if enacted in its current form, will require employers to give qualifying zero hours workers a minimum hours guarantee after a reference period. Employers using zero hours contracts should monitor the progress of this legislation closely.