Zero-hours contracts

A zero-hours contract is a type of employment contract where workers have no guaranteed hours and agree to be potentially available for work. They are favoured by companies seeking labour flexibility and by workers seeking flexibility around their other commitments.

Opinion on zero-hours contracts has been mixed. Employee organisations tend to argue that the contracts result in financial insecurity for workers who lack key employment rights; employer organisations stress their usefulness when seeking to meet fluctuating demand for labour and argue that they play a vital role in keeping people in employment.

What are the legal issues with zero-hours contracts?

Working under a zero-hours contract does not in itself determine what employment rights someone does or does not enjoy. Rather, that depends on their employment status, for which a range of legal tests exists. See the Library briefing Employment status for more details.

However, zero-hours contracts can make it challenging to establish someone’s employment status and their qualification for certain employment rights. ‘Mutuality of obligation’ – where one person is obliged to offer work and the other is obliged to accept it – is a key legal test for whether someone is an ‘employee’. With some zero-hours contracts it can be hard to establish whether such mutuality of obligation exists or not.

Similarly, it is difficult for some zero-hours contract employees to build up enough uninterrupted continuity of service to qualify for certain employment rights, such as unfair dismissal. This is because a week’s gap without work can be enough to reset the timer on their continuity of service.

Since 2015, employers have been banned by section 27A of the Employment Rights Act 1996 from inserting ‘exclusivity clauses’ into zero-hours contracts, which try to stop employees with such contracts from also working elsewhere.

How many people have zero-hours contracts?

The Office for National Statistics (ONS) collects statistics on zero-hours contracts as part of the Labour Force Survey.

According to ONS, over a million people in the UK were employed on a zero-hours contract in April to June 2024. Reported use of zero-hours significantly increased contracts between 2012 and 2016, though it is likely this was due to increased awareness of such contracts among survey respondents at the time, rather than an increase in their use. Since then, the rate of zero-hours contracts has increased by a smaller amount, from around 2.5% to 3.5%.

Based on a small survey by the Chartered Institute of Personnel and Development (CIPD), businesses report that they are most likely to use zero-hours contracts to manage fluctuations in demand for labour.

Collectively, the research by the ONS and the CIPD suggests that people on zero-hours contracts are more likely to be:

• aged 16 to 24
• female
• working part time
• from London and the South East
• employed in the accommodation and food sector
• on average, paid slightly less than those not on zero-hours contracts
• reporting lower opportunities for career progression

What reforms have been proposed?

The perceived increase in zero-hours contracts in recent years has prompted expressions of concern inside and outside Parliament, although many stakeholders support their use. A series of private members’ bills aiming to ban or regulate zero-hours contracts have been introduced, though only one – the Workers (Predictable Terms and Conditions) Bill 2023 – received Royal Assent. No commencement regulations have been made to bring this act into force.

Instead, following the 2024 general election, the newly elected Labour government pledged to ban “exploitative zero-hours contracts”, as part of a promised Employment Rights Bill. The Employment Rights Bill 2024-25 was published on 10 October 2024. The key rights created would be:

• The right to reasonable notice of shifts and payment for shifts that are cancelled or curtailed at short notice.
• The right to a guaranteed hours contract reflecting the hours regularly worked.