In Employment Associate, Chris Dobbs’, latest Coffee Break Briefing, he discusses Zero-hour workers and the law and pending changes. He outlines the current extent of use, scrutiny around explanation and upcoming reforms.
You can watch the recording of Chris' webinar using the link below.
What is a Zero-hours contract?
"Zero-hours" is a cultural rather than a legal term. It describes a contract under which there is no guaranteed minimum number of working hours. Instead, work is typically offered and accepted on an ad hoc basis, depending on the needs of the employer and the availability of the individual.
Zero-hours contracts are designed to provide flexibility for both parties. The absence of mutual obligation is one of the reasons why most individuals engaged on zero-hours contracts are likely to be classed as workers rather than employees. In most cases, there is no obligation on the employer to offer work and no obligation on the individual to accept it.
These contracts are commonly used in sectors where demand for work fluctuates, such as hospitality, retail and healthcare. They are also popular with students and working parents who may benefit from the flexibility they offer.
What are the rights for zero-hours staff?
Regardless of whether they are workers or employees, individuals engaged under genuine zero-hours arrangements are entitled to a number of important statutory rights. These include:
- The right to receive at least the National Minimum Wage.
- The right to paid annual leave, which must be calculated correctly based on the hours worked.
- The right to rest breaks in accordance with working time legislation.
- Protection from unlawful discrimination.
Additional rights may apply where an individual is found to have employee status.
What are the specific protections?
Specific legal protections have been introduced for individuals working under zero-hours contracts. Since December 2022, exclusivity clauses have been banned for certain low-income workers with exclusivity in zero-hours contracts deemed unenforceable since 2015. This means employers cannot prevent individuals on zero-hours contracts from working for another employer.
Workers and employees are also protected from suffering a detriment or being unfairly dismissed for taking on work elsewhere where an exclusivity clause would be unenforceable. These protections are designed to ensure that individuals can benefit from the flexibility of zero-hours arrangements without being restricted from seeking additional work opportunities.
What are the current legal risks?
Misclassification
One of the most significant risks for employers is the misclassification of a zero-hours staff member as a worker when they may, in reality, be an employee. Employment status is determined by the actual working relationship rather than the label attached to the contract.
If an individual is found to be an employee, they may be entitled to additional employment rights, including protection from unfair dismissal and statutory redundancy pay.
A particular risk arises where an individual works regular and consistent hours over a prolonged period, as this can create an implied mutuality of obligation and strengthen the argument that an employment relationship exists.
Working Time
Employers must also ensure compliance with working time legislation. Common areas of risk include the correct calculation of holiday pay and ensuring that workers receive at least the National Minimum Wage for all hours worked.
What are the changes under the ERA?
Changes under the Employment Rights Act
The Employment Rights Act will introduce significant new protections for workers on zero-hours and potentially low-hours contracts, placing greater responsibilities on employers.
At the time of writing, the below remains subject to an ongoing consultation and final regulations so what we see materialise may prove very different.
Right to Guaranteed Hours
Employers will be required to offer contracts that reflect the hours individuals regularly work in practice. The right is expected to apply to both zero-hours and low-hours workers and will likely be assessed over a 12-week reference period. This marks a significant shift towards ongoing employer responsibility.
Consultation on Guaranteed Hours
Several aspects of the proposals remain under consultation, including:
- The definition of a low-hours contract (currently proposed as between 8 and 20 hours per week).
- Whether the reference period should be 12, 26 or 52 weeks.
- How "regular" working patterns should be measured, either by the number of weeks or hours worked in excess of contractual hours.
Seasonal and Genuinely Temporary Work
The Government is also consulting on how the rules should apply to seasonal and temporary work, including whether the concept of a "temporary need" requires clearer definition and how guaranteed hours should be calculated.
Reasonable Notice of Shifts
Employers will be required to provide reasonable notice of shifts and may need to compensate workers where shifts are cancelled, moved or curtailed at short notice.
Consultation on Shift Notice
The Government is considering what constitutes reasonable notice, with proposals ranging from one to four weeks for direct workers and a few days to four weeks for agency workers.
Payments for Cancelled, Moved or Curtailed Shifts
Consultation is ongoing on what should qualify as "short notice", whether higher payments should apply in cases of very short notice, and whether compensation should be based on a percentage of lost earnings. Limited exceptions may apply in circumstances such as extreme weather or utility failures.
Agency Workers
Agency workers are expected to receive the same protections as other workers. Current proposals suggest the end-hirer will be responsible for offering guaranteed hours, while responsibility for shift-related obligations may be shared between the agency and end-hirer.
Contracting Out
Contracting out of these rights appears possible only through collective agreements.
Implementation and Enforcement
The reforms are expected to be introduced next year, potentially in phases. Workers will be able to bring claims through the Employment Tribunal, while the Fair Work Agency will enforce certain payment obligations and is expected to play a key role in enforcement of the final framework of these rights alongside individual claims pursued through the Tribunal.
What are the practical steps?
Workforce and Admin Planning
Employers should start reviewing how they use zero-hours and casual labour arrangements. The proposed reforms may reduce the ability to rely on an entirely flexible workforce and could require greater workforce planning, particularly in sectors such as hospitality where staffing needs fluctuate.
Businesses will also need to monitor working hours more closely, track patterns of work and actively manage the proposed reference periods used to assess entitlement to guaranteed hours.
Litigation Risks
The reforms add to the existing risks associated with employment status and worker rights. Employers may face claims where individuals are misclassified, contracts fail to comply with current or future legal requirements, or disputes arise over what constitutes "reasonable" notice of shifts.
Action Plans
To prepare for the changes, employers should:
- Review whether minimum-hours contracts, annualised hours arrangements or other flexible working models may be more appropriate.
- Analyse workforce data to identify current working patterns and potential exposure under the new rules.
- Review contracts and policies to ensure they remain compliant with existing legislation and are capable of adapting to future changes.
- Put systems in place to accurately track working hours and shift patterns.
Employment law experts
If you have any questions regarding this webinar, you can get in touch with a member of the team on 01202 499255 or by filling in the form at the top of the page. We offer all new clients a free initial chat.
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Chris will host his next Coffee Break Briefing on Wednesday 8th July, providing a practical round-up of the key employment law issues and developments from 2025–26. Topics will include common issues which have arisen, including the use of AI by employees, the ongoing implementation of the Employment Rights Act, key changes and developments in employment law and how to plan for them, and recent experiences of the Employment Tribunal system.
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