Flexible work arrangements and zero-hour contracts have become an increasingly popular option - for employers as a way to better adapt to fluctuating workload needs within their teams, and for workers as a way to have better flexibility in their lives.
In this guide we’ll look at how zero-hour contracts work in the UK, their key characteristics, responsibilities for employers and employee rights.
What is a zero-hour contract?
A zero-hour contract in the UK is a type of employment agreement offering flexibility but without a guarantee of minimum working hours.
Zero-hour contracts do not fall under a specific legal framework. Instead, they form a group of ‘atypical’ working agreements that are frequently seen in industries in the UK such as retail, hospitality, and healthcare. These contracts are a popular choice for employers looking to manage fluctuating workloads and staffing requirements.
Under these contracts, employees agree to be available for work as and when required, allowing employers to adapt to fluctuating business needs. Although zero-hour contracts do not guarantee a fixed work schedule, employees are still entitled to rights and protections, such as the National Minimum Wage and National Living Wage.
Key features and characteristics of zero-hour contracts
Zero-hour contracts have distinct features and characteristics that set them apart from other types of employment contracts.
Some key aspects include:
- No guaranteed hours: Employees under zero-hour contracts have no guaranteed minimum working hours, making their schedules subject to change based on the employer's needs.
- Flexibility: These contracts offer flexibility for both employers and employees. Employers can adapt to fluctuating business demands, while employees have the opportunity to balance work with other commitments or pursue multiple jobs.
- Employment rights: Despite the absence of guaranteed hours, zero-hour contract workers are entitled to certain employment rights, such as the National Minimum Wage, National Living Wage, and paid annual leave based on hours worked.
- Mutuality of obligation: Employers are not obligated to offer work, and employees are not required to accept it, though some contracts may have clauses specifying availability requirements.
- Exclusivity ban: UK law prohibits exclusivity clauses in zero-hour contracts, allowing employees to work for multiple employers simultaneously.
- Continuous employment: The length of service under a zero-hour contract counts as continuous employment, impacting an employee's statutory rights, such as redundancy pay and protection against unfair dismissal.
- Termination: Zero-hour contracts can be terminated like other employment contracts, either by the employee or the employer, adhering to notice periods and other applicable employment law provisions.
Legal Aspects of Zero-Hour Contracts in the UK: Employers' Responsibilities
Determining the employment status
The three main types of employment statuses in the UK are either employee, worker or self-employed. Under zero-hour contracts, people can be employed either as employees or workers.
Being employed as a worker or an employee will lead to different employment rights. As an employer it is important you determine early which status applies to your employment contract - which is best done with the help of a legal counsel.
This will be done based on the contract clauses and on the work relationship between your business and each worker/employee.
Respecting UK employment laws
As an employer using zero-hour contracts, you must follow UK employment laws and regulations. This means you’ll need to:
- grant workers statutory employment rights, with no exceptions (e.g holiday pay, rest periods, etc)
- uphold their protected employment rights (e.g discrimination rights)
- pay the National Minimum Wage or the National Living Wage, no matter how many hours are offered or worked
- make it clear whether they are an employee or a worker in an employment contract
- tell them what their rights are to things like sick pay, holiday entitlement and redundancy pay in the contract or in your company policies
- let them know how the contract will be ended
- pay their wages through PAYE, including tax and National Insurance (NI) deductions.
Recent UK law changes on zero-hour contracts: banning exclusivity clauses
In 2015 the UK government made illegal for employers to restrict employees on zero-hour contracts from working for other employers - banning exclusivity clauses for zero-hour workers. This law aims to promote fairness and flexibility for employees.
National Minimum Wage and National Living Wage
From 1 April 2023, the National Living Wage rate stands at £10.42 per hour and applies to employees aged 23 and over. The National Minimum Wage applies to those aged between 16 and 22 and varies based on the employee’s age - see rates on HMRC’s website here.
The National Living Wage rate is projected in April 2024 to be in a range from £10.90 to £11.43.
Employers: When to use zero-hour contracts, when to not
Zero-hour contracts are beneficial if your company is experiencing fluctuating workloads or seasonal demand, such as in the entertainment, tourism, and hospitality industries.
This type of contract will provide you the ability to scale your workforce according to business needs, while offering employees flexibility to balance work and personal commitments.
Zero-hour contracts are great if:
- your company’s workload varies week to week or month to month
- your company operates in an industry with demand peaks and quiet periods (for eg retail, hospitality, tourism, entertainment, healthcare, etc)
- you’re just starting out and aren’t yet clear on your hiring needs.
We do not recommend using zero-hour contracts if:
- you’re using zero-hour contracts to avoid giving workers employment rights: they’re entitled to them by law
- your company’s workload is stable: a permanent employee is better suited for this type of work.
If you’re considering alternatives to zero-hour contracts, you can consider the following:
- overtime or part-time work-hours for permanent employees, or
- fixed-term employment.
Employees: Your rights on zero-hour contracts
As a zero-hour contract worker, you are entitled to the same basic employment rights as other employees.
Do you get holiday pay on zero hour contracts?
Yes, as an employee or worker on zero-hour contracts you are entitled to holiday pay, calculated on the number of hours you have worked. The statutory minimum for a full-time job is 5.6 weeks of paid annual leave per year including bank holidays. Your allowance will be calculated based on the number of hours you have worked based on this statutory minimum - the more you work, the more holiday pay you’ll build.
Do you get rest breaks on zero hour contracts?
You have the right to rest breaks, including a daily rest period of 11 consecutive hours between shifts and a weekly rest period of 24 uninterrupted hours (or 48 hours within a two-week period).
Within your work day, you are entitled to one uninterrupted rest break for twenty minutes for every six hours worked.
Do you get sick pay on zero hour contracts?
Yes, however there are limitations.
First, you need to meet the qualifying criteria such as earning at least £123 per week and being off work for four or more consecutive days.
Second, you’ll only be entitled to Statutory Sick Pay (SSP) for the days you’ve been scheduled to work and you will not be paid SPP for the first three days you’re off.
You can read more about SSP here.
Can you get maternity and paternity leave?
Yes you can legally get maternity, paternity, shared parental leave and adoption leave if you meet the qualifying criteria. However, this qualifying criteria may be more difficult to meet as a zero-hour contract worker than if you were in regular employment.
To receive any type of maternity/paternity/adoption/shared parental pay, you must have been earning on average at least £112 per week, and have been employed continuously for at least 26 weeks by the 15th week before your baby is due.
On top of this, if you don’t receive any shifts for a full calendar week – seven consecutive days from Sunday to the following Saturday – this may count as a break in employment which would go against the criteria of continuous employment.
Can you work for more than one employer on zero hour contracts?
Yes, especially since the government has made it illegal for employers to put in exclusivity clauses in zero-hour contracts. As minimum hours aren’t guaranteed in zero-hour contracts, it is very common for people to work simultaneously for multiple employers.
FAQS
Do zero-hour contract workers get sick pay?
Zero-hour contract workers in the UK are entitled to Statutory Sick Pay (SSP) if they meet certain eligibility criteria. To qualify for SSP, an employee must have done some work for the employer, been ill for at least 4 days in a row, and have an average weekly earnings of at least £123 before tax (more info here). However, due to the irregular nature of zero-hour contracts, not all workers meet this threshold. It's also important to note that while eligible employees can get SSP for up to 28 weeks, the rate is lower than most people's usual pay.
Do zero-hour contract workers get a notice period?
As per UK employment law, zero-hour contract workers are not necessarily entitled to a notice period. Generally, these contracts do not guarantee any hours of work, and shifts can be cancelled without notice. However, an employer may include a notice period in the individual contract, but this varies on a case-by-case basis. If there is a notice period in the contract and the employer fails to provide it, the worker may have a claim for breach of contract.
Do zero-hour contract workers get holiday pay?
Yes, zero-hour contract workers in the UK are legally entitled to holiday pay. Despite the flexible nature of these contracts, workers are still covered by the Working Time Regulations 1998. This means they have the right to 5.6 weeks' paid holiday per year, pro-rated for part-time workers. However, calculating holiday pay for zero-hour contract workers can be complex due to fluctuations in working hours. You can read more about this on our article about holiday entitlements for part-time employees and workers.
Conclusion
Zero-hour contracts offer a flexible employment solution for both employers and workers in the UK. They provide a way for businesses to adapt to fluctuating demands while offering employees the opportunity to balance work with other commitments. It is essential, however, for both employers and employees to understand the legal aspects, responsibilities, and rights associated with these contracts. By doing so, they can ensure that zero-hour contracts are used responsibly and fairly, leading to a productive and positive working environment.
💡 Onfolk is a cloud-based payroll and HR solution targeted at businesses with flexible working arrangements in their team. Get more info or book a demo.
Flexible work arrangements and zero-hour contracts have become an increasingly popular option - for employers as a way to better adapt to fluctuating workload needs within their teams, and for workers as a way to have better flexibility in their lives.
In this guide we’ll look at how zero-hour contracts work in the UK, their key characteristics, responsibilities for employers and employee rights.
What is a zero-hour contract?
A zero-hour contract in the UK is a type of employment agreement offering flexibility but without a guarantee of minimum working hours.
Zero-hour contracts do not fall under a specific legal framework. Instead, they form a group of ‘atypical’ working agreements that are frequently seen in industries in the UK such as retail, hospitality, and healthcare. These contracts are a popular choice for employers looking to manage fluctuating workloads and staffing requirements.
Under these contracts, employees agree to be available for work as and when required, allowing employers to adapt to fluctuating business needs. Although zero-hour contracts do not guarantee a fixed work schedule, employees are still entitled to rights and protections, such as the National Minimum Wage and National Living Wage.
Key features and characteristics of zero-hour contracts
Zero-hour contracts have distinct features and characteristics that set them apart from other types of employment contracts.
Some key aspects include:
- No guaranteed hours: Employees under zero-hour contracts have no guaranteed minimum working hours, making their schedules subject to change based on the employer's needs.
- Flexibility: These contracts offer flexibility for both employers and employees. Employers can adapt to fluctuating business demands, while employees have the opportunity to balance work with other commitments or pursue multiple jobs.
- Employment rights: Despite the absence of guaranteed hours, zero-hour contract workers are entitled to certain employment rights, such as the National Minimum Wage, National Living Wage, and paid annual leave based on hours worked.
- Mutuality of obligation: Employers are not obligated to offer work, and employees are not required to accept it, though some contracts may have clauses specifying availability requirements.
- Exclusivity ban: UK law prohibits exclusivity clauses in zero-hour contracts, allowing employees to work for multiple employers simultaneously.
- Continuous employment: The length of service under a zero-hour contract counts as continuous employment, impacting an employee's statutory rights, such as redundancy pay and protection against unfair dismissal.
- Termination: Zero-hour contracts can be terminated like other employment contracts, either by the employee or the employer, adhering to notice periods and other applicable employment law provisions.
Legal Aspects of Zero-Hour Contracts in the UK: Employers' Responsibilities
Determining the employment status
The three main types of employment statuses in the UK are either employee, worker or self-employed. Under zero-hour contracts, people can be employed either as employees or workers.
Being employed as a worker or an employee will lead to different employment rights. As an employer it is important you determine early which status applies to your employment contract - which is best done with the help of a legal counsel.
This will be done based on the contract clauses and on the work relationship between your business and each worker/employee.
Respecting UK employment laws
As an employer using zero-hour contracts, you must follow UK employment laws and regulations. This means you’ll need to:
- grant workers statutory employment rights, with no exceptions (e.g holiday pay, rest periods, etc)
- uphold their protected employment rights (e.g discrimination rights)
- pay the National Minimum Wage or the National Living Wage, no matter how many hours are offered or worked
- make it clear whether they are an employee or a worker in an employment contract
- tell them what their rights are to things like sick pay, holiday entitlement and redundancy pay in the contract or in your company policies
- let them know how the contract will be ended
- pay their wages through PAYE, including tax and National Insurance (NI) deductions.
Recent UK law changes on zero-hour contracts: banning exclusivity clauses
In 2015 the UK government made illegal for employers to restrict employees on zero-hour contracts from working for other employers - banning exclusivity clauses for zero-hour workers. This law aims to promote fairness and flexibility for employees.
National Minimum Wage and National Living Wage
From 1 April 2023, the National Living Wage rate stands at £10.42 per hour and applies to employees aged 23 and over. The National Minimum Wage applies to those aged between 16 and 22 and varies based on the employee’s age - see rates on HMRC’s website here.
The National Living Wage rate is projected in April 2024 to be in a range from £10.90 to £11.43.
Employers: When to use zero-hour contracts, when to not
Zero-hour contracts are beneficial if your company is experiencing fluctuating workloads or seasonal demand, such as in the entertainment, tourism, and hospitality industries.
This type of contract will provide you the ability to scale your workforce according to business needs, while offering employees flexibility to balance work and personal commitments.
Zero-hour contracts are great if:
- your company’s workload varies week to week or month to month
- your company operates in an industry with demand peaks and quiet periods (for eg retail, hospitality, tourism, entertainment, healthcare, etc)
- you’re just starting out and aren’t yet clear on your hiring needs.
We do not recommend using zero-hour contracts if:
- you’re using zero-hour contracts to avoid giving workers employment rights: they’re entitled to them by law
- your company’s workload is stable: a permanent employee is better suited for this type of work.
If you’re considering alternatives to zero-hour contracts, you can consider the following:
- overtime or part-time work-hours for permanent employees, or
- fixed-term employment.
Employees: Your rights on zero-hour contracts
As a zero-hour contract worker, you are entitled to the same basic employment rights as other employees.
Do you get holiday pay on zero hour contracts?
Yes, as an employee or worker on zero-hour contracts you are entitled to holiday pay, calculated on the number of hours you have worked. The statutory minimum for a full-time job is 5.6 weeks of paid annual leave per year including bank holidays. Your allowance will be calculated based on the number of hours you have worked based on this statutory minimum - the more you work, the more holiday pay you’ll build.
Do you get rest breaks on zero hour contracts?
You have the right to rest breaks, including a daily rest period of 11 consecutive hours between shifts and a weekly rest period of 24 uninterrupted hours (or 48 hours within a two-week period).
Within your work day, you are entitled to one uninterrupted rest break for twenty minutes for every six hours worked.
Do you get sick pay on zero hour contracts?
Yes, however there are limitations.
First, you need to meet the qualifying criteria such as earning at least £123 per week and being off work for four or more consecutive days.
Second, you’ll only be entitled to Statutory Sick Pay (SSP) for the days you’ve been scheduled to work and you will not be paid SPP for the first three days you’re off.
You can read more about SSP here.
Can you get maternity and paternity leave?
Yes you can legally get maternity, paternity, shared parental leave and adoption leave if you meet the qualifying criteria. However, this qualifying criteria may be more difficult to meet as a zero-hour contract worker than if you were in regular employment.
To receive any type of maternity/paternity/adoption/shared parental pay, you must have been earning on average at least £112 per week, and have been employed continuously for at least 26 weeks by the 15th week before your baby is due.
On top of this, if you don’t receive any shifts for a full calendar week – seven consecutive days from Sunday to the following Saturday – this may count as a break in employment which would go against the criteria of continuous employment.
Can you work for more than one employer on zero hour contracts?
Yes, especially since the government has made it illegal for employers to put in exclusivity clauses in zero-hour contracts. As minimum hours aren’t guaranteed in zero-hour contracts, it is very common for people to work simultaneously for multiple employers.
FAQS
Do zero-hour contract workers get sick pay?
Zero-hour contract workers in the UK are entitled to Statutory Sick Pay (SSP) if they meet certain eligibility criteria. To qualify for SSP, an employee must have done some work for the employer, been ill for at least 4 days in a row, and have an average weekly earnings of at least £123 before tax (more info here). However, due to the irregular nature of zero-hour contracts, not all workers meet this threshold. It's also important to note that while eligible employees can get SSP for up to 28 weeks, the rate is lower than most people's usual pay.
Do zero-hour contract workers get a notice period?
As per UK employment law, zero-hour contract workers are not necessarily entitled to a notice period. Generally, these contracts do not guarantee any hours of work, and shifts can be cancelled without notice. However, an employer may include a notice period in the individual contract, but this varies on a case-by-case basis. If there is a notice period in the contract and the employer fails to provide it, the worker may have a claim for breach of contract.
Do zero-hour contract workers get holiday pay?
Yes, zero-hour contract workers in the UK are legally entitled to holiday pay. Despite the flexible nature of these contracts, workers are still covered by the Working Time Regulations 1998. This means they have the right to 5.6 weeks' paid holiday per year, pro-rated for part-time workers. However, calculating holiday pay for zero-hour contract workers can be complex due to fluctuations in working hours. You can read more about this on our article about holiday entitlements for part-time employees and workers.
Conclusion
Zero-hour contracts offer a flexible employment solution for both employers and workers in the UK. They provide a way for businesses to adapt to fluctuating demands while offering employees the opportunity to balance work with other commitments. It is essential, however, for both employers and employees to understand the legal aspects, responsibilities, and rights associated with these contracts. By doing so, they can ensure that zero-hour contracts are used responsibly and fairly, leading to a productive and positive working environment.
💡 Onfolk is a cloud-based payroll and HR solution targeted at businesses with flexible working arrangements in their team. Get more info or book a demo.
