Zero Hours Contracts: These contracts do not have one universally accepted definition. Put simply, a zero hours contract is one type of contract between a business and a casual worker where the worker is engaged on an ad hoc basis with no guarantee of work from the business. Zero hours contracts are also sometimes referred to as “bank contracts”. They are used to facilitate casual working arrangements with the intention of creating casual employment but without all the obligations that go with it. Used properly, they can be mutually beneficial but it is thought that some employers have used zero-hours contracts in circumstances where they ought to have taken on the worker as an employee in the usual way.
What constitutes the Employer/Employee Relationship? To understand the zero-hours concept you must first understand what constitutes the normal employer/employee relationship. To constitute such a relationship, there must be a “mutuality of obligation”. This typically involves the employer providing work and the employee being required to do it. In the absence of a mutual obligation, the employment relationship does not exist.
How to avoid the Employment Relationship: The intention behind a zero-hours contract is to avoid the employer/employee relationship being created in the first place, so the employer will enter into an agreement with the worker under which:
- the employer will not be obliged to provide work; and
- the worker will not (usually) be obliged to accept it.
In other words, there will be no mutuality of obligation.
At least historically, some contracts didn’t oblige the employer to offer work but contained an expectation that the worker will accept it if offered, and it is this aspect that is seen as unfair and tips the balance unfairly against the worker.
The True Nature of the Relationship: To ascertain the true nature of the relationship between the parties one needs to look further than just the contract and to what happens in practice. Regardless of what the contract might say, over a period of time, the relationship of employer/employee can be created through custom and practice by the employer always offering work and the employee always accepting it.
Zero hours worker migrating to Employee Status: If a zero hours worker works a highly regular and predictable pattern of shifts over an extended period, an employment tribunal can rule that an overarching “umbrella contract” has developed in practice. This elevates their legal status to that of an employee, thereby granting them ordinary unfair dismissal rights.
What does it matter? If you’re engaged under a true zero-hours contract, then you’ll usually be classified as “a worker” and, as such, you will be entitled to receive the national minimum wage, protection from discrimination, paid holiday and potentially statutory sick pay in some circumstances. If, by contrast, you are considered to be an “employee” (albeit still under a zero-hours contract), then, in addition to the above benefits, you’ll also be entitled to all the same benefits as any other employee. These additional rights include the right not to be unfairly dismissed, a right to receive a statutory redundancy payment and maternity/paternity benefits such as paid time off, subject to satisfying the statutory qualifying period of two years in July 2026, reducing to 6 months on 1 January 2027.
Exclusivity clauses are no longer enforceable: One of the practices that gave zero-hours contracts a bad name was the use of “exclusivity clauses”, which barred a worker from taking other work even though their own employer was not obliged to offer them any. Those clauses are now unenforceable. The Exclusivity Terms in Zero Hours Contracts Regulations 2015 made exclusivity clauses in zero-hours contracts unenforceable from May 2015 and gave zero-hours workers protection from being treated detrimentally for ignoring them. The protection was later widened by the Exclusivity Terms in Contracts (Workers) Regulations 2022 to cover lower-paid workers more generally. An employer can still offer flexible, casual work, but it can no longer tie a worker’s hands while offering nothing in return.
What is changing under the Employment Rights Act 2025? The Employment Rights Act 2025, which received Royal Assent in December 2025, will reshape this area further once its provisions are brought into force. The Government has indicated a staged roll-out across 2026 and 2027. The main changes for zero-hours working is a new duty on employers to offer
- “Guaranteed hours” contracts to qualifying zero-hours and low-hours workers, reflecting the hours they have regularly worked over a reference period, (likely to be 12 weeks) with the detail to be set by regulations following consultation.
- Rights around reasonable notice of shifts; and
- Payment for shifts cancelled or curtailed at short notice.
Zero-hours contracts are not being banned, but employers who rely on them should keep their arrangements under review as the new rules take effect.
Detriment Claims: Redress for “Workers”
While a zero hours worker (who is not an employee) cannot technically claim “unfair dismissal” under Part X of the Employment Rights Act 1996, they are protected against unfair and detrimental treatment.
If a business terminates a zero hours worker’s arrangement because they breached a banned exclusivity clause, the worker can sue for detriment.
Similarly, under the upcoming guaranteed hours reforms (due 1 January 2027), if a worker’s contract or arrangement is terminated to avoid offering them guaranteed hours, they can bring a detriment claim. If successful, the tribunal can award compensation equivalent to what an employee would receive for an automatically unfair dismissal.
Are Zero Hours Contracts Good or Bad? It depends. It can be useful for an employer to take on casual labour without all that goes with it and, provided that the worker is not obliged to take the work if offered, then it gives the worker flexibility to pick and choose when to work, which can be beneficial to both parties.
- From the employer’s perspective, these arrangements can always be challenged with the employee claiming that he is/was, in fact, an employee rather than a worker and each case will turn on its own facts. However, in circumstances where it is short-term and casual, one wouldn’t expect the employee to succeed although, if the relationship has gone on for some time, it could be quite different.
- From the worker’s perspective, the worker is (usually, if not almost always) free to pick and choose if and when he works, but the downside is the lack of greater protection which he would otherwise enjoy if employed on a permanent or fixed-term basis, if such a contract was on offer.
Just how widespread are Zero Hours Contracts? Zero-hours working remains a significant feature of the labour market. Analysis of the Office for National Statistics data at 31 December 2025 shows approximately 1.2 million people (around 1.23 million in broader related periodic tracking) were employed on zero-hours contracts in the UK. This represented about 3.6% of all people in employment. This figure is up 91,000 in the year to 31 December 2025 with the increase being largely driven by 16 to 24-year-olds who are five times more likely to be on zero-hours contracts rather than full-time contracts.
Notice: This blog is written for information purposes only, and it is not (nor is it intended to be) legal advice. Readers should always seek independent legal advice on the particular circumstances of each case.
21 July 2026