Zero Hours Contract

A zero-hour contract is an employment agreement that enables individuals to decide when and for how many hours they work. This setup offers no guarantee of work or employment permanence. Companies that employ staff under this agreement are not obliged to provide work. Workers receive remuneration only for the hours they work. This dynamic arrangement favors agility over certainty. Staffers working on a permanent or indefinite contract are “employees”, while individuals on zero-hour contracts are typically referred to as “casual workers”. Other regions may use terms such as “pool workers” or “per diem” contractors.

When are zero-hour contracts used in practice? You’ll find them primarily in sectors where business patterns are unpredictable. Recent data indicate that as of 2024, over 1.17 million people were employed on zero-hour contracts, with notable concentrations in retail (26%), healthcare and social work (18%), and hospitality (15%). 

Real-world examples include healthcare institutions relying on “bank nurses” in the United Kingdom or Australia, a term referring to a local nurse who fills gaps at short notice. In Canada, such workers are referred to as “per diem nurses” or “pool staff” to fill last-minute absences. Catering companies that employ students on an ad hoc basis or shifts based on business requirements are another example. 

Large organizations, such as Uber, DHL, Burger King, and Amazon, use zero-hour contracts to meet on-demand labor needs, striking a balance between cost controls and operational flexibility. Many workers opt for this employment arrangement to help balance their work and other commitments, or to supplement their income.

Employers find that the most significant benefit is the ability to expand or reduce staff numbers as needed, minimizing the risk of overstaffing and overspending. Seasonal and startup companies, in particular, benefit from zero-hour contracts. 

Most workers appreciate the flexibility offered by a zero-hour contract, which allows them to decline work when they are otherwise occupied. For instance, semi-retirees who wish to balance leisure and work, students who need to work less during exam times and caregivers who must accommodate both family and work. Zero-hour contracts also open doors to new skill acquisition and sometimes serve as a gateway to permanent employment. 

However, reforms are expanding safeguards, aiming to provide workers with fairer notice periods and guaranteed compensation for last-minute shift changes, marking a move toward greater job security in these roles.

Often, the freedom offered by zero-hour contracts can be a blessing and a curse; employers chronically run the risk of misclassification. Misclassified staff triggers tax, legal and reputational consequences. Payroll systems also require accommodations for irregular hours, and they complicate leave and benefits calculations.

The primary stumbling blocks for workers are unpredictable hours and an unstable income. Shifts are sometimes cancelled at the last minute, while finding regular work can remain difficult. Some workers feel pressured to accept all work offers, fearing they may be passed over for the next opportunity. Unfortunately, unfair dismissal can be disguised by simply reducing hours rather than formally terminating employment.

Clearly, despite the advantage of adaptability provided by this arrangement to both parties, it does come with limitations. According to UK statistics, three out of four workers on zero-hour contracts are classified as “severely insecure,” and one in four is consistently seeking more hours or additional jobs to achieve a more reliable income. These contracts are also overrepresented among younger people, women, and ethnic minorities, exacerbating the pre-existing labor market disparities.

For example, in 2024, 67% of zero-hour workers were employed by the same company for more than a year, and nearly half continued on the same contract for more than two years. Alarmingly, 1 in 8 have been on these contracts for over a decade. This scenario clearly shows that these contracts are not always as temporary as initially planned. 

These statistics indicate that zero-hour work is not always a stepping stone or temporary solution. In reality, many workers remain stuck in a zero-hour scenario. This scenario could contribute to the chronic insecurity mentioned, as well as challenges in accessing credit and an unbalanced family life. Many workers have limited choices and trade security for flexibility because of health needs or other labor market barriers.

When a zero-hour contract persists, it reinforces calls for legal reform that limits tenure or guarantees minimum hours for long-term staff.

Despite irregularity and inconsistency, zero-hour contracts are still subject to statutory employment rights. Minimum wage and protection from discrimination, as well as holiday and sick leave (depending on the jurisdiction), remain the employer’s responsibility. Holiday and sick leave pay is tied to the hours worked within a specified period. 

Currently, employers are responsible for providing proportionate compensation for shifts that end abruptly or are cancelled at the last minute with no reasonable notice. These precautions aim to balance out the historical one-sided benefits for the employer. 

Due to activism and legal reform, zero-hour contractors are gaining more rights, such as:

• Minimum wage and allotted breaks: Workers on zero-hour contracts must earn at least the minimum wage for each hour worked, as well as statutory rest periods for shifts exceeding a certain length.
• Rest breaks: In the UK, workers are entitled to a minimum of 20 uninterrupted minutes of rest breaks when their shift exceeds six hours. In the United States, minimum hours and meal breaks vary by state.
• Paid annual leave: Contract workers must receive paid holidays, calculated on an average basis from the first day of employment.
• Maternity and paternity leave: Eligible workers on zero-hour contracts have the right to paternity, maternity, adoption, and shared parental leave under statutory law.
• Protection against unlawful deductions and discrimination: These laws govern zero-hour employees, ensuring that none of their wages are unlawfully withheld.
• Legal safeguards against unfair dismissal or abrupt reduction in hours: Despite being ‘casual or contract workers’, some zero-hour workers have protection against unfair dismissal or treatment.

The UK’s Employment Rights Bill, set for full implementation by 2027, strengthens the protection of workers by providing their right to request contracts that reflect actual hours worked and fair notice for changes and cancellations, enabling tribunal claims for rights infringements.

In the United States, zero-hour contract workers are primarily protected by basic employment rights, including minimum wage and anti-discrimination laws, which are consistently enforced.

Zero-hour contracts are legal in the US, but their acceptance and regulations vary widely across states. Globally, outlooks differ sharply: countries like New Zealand and Ireland have declared them illegal due to concerns over worker exploitation, while the UK and many parts of Europe are currently intensifying laws to protect workers from abuse, guarantee fair payment, and prescribe actual-hour contracts after a settling-in period.

In 2025, navigating the line between accountability and adaptability means employers should evaluate whether such contracts are suitable for their unique operations. It remains essential to understand statutory obligations and recognize that new reforms are rapidly changing the industry. Keeping contracts transparent and explicit regarding expectations, rights, and dispute resolution is of the utmost importance. 

In navigating the complexities of zero-hour contracts, employers benefit from a proactive approach that prioritizes transparency, compliance, and the well-being of workers. Organizations should ensure that all workers receive written statements outlining pay rates, break entitlements, leave accrual, and procedures for logging hours. It meets legal requirements while also building trust and reducing the risk of misunderstandings.

Modern HR technology now plays a crucial role for employers to manage zero-hour contracts effectively. Digital scheduling apps, such as Deputy, Planday, and Workforce.com, can automate shift allocation, monitor real-time attendance, calculate pro-rata holiday pay, and even alert staff instantly to changes or cancellations, supporting business needs and statutory rights. These platforms maintain transparent records, which are invaluable for avoiding disputes and proving compliance in audits or tribunals.

Increasingly, technological advances such as scheduling apps and digital platforms (used by companies like Uber and Amazon) now facilitate real-time workforce management, allowing employers and gig workers to coordinate shifts instantly and respond to demand spikes. Regulatory changes in some regions now also require platforms to provide workers with a minimum notice of shift offers and cancellations, influencing how flexibility is experienced in real-time.

Beyond technological solutions, leading employers conduct periodic compliance reviews, update staff on relevant legal reforms, and provide regular management training on current employment laws and best practices for fair scheduling. Creating open feedback channels, such as dedicated contact points and anonymous surveys, enables workers to report concerns with schedules or rights violations safely and discreetly. Such dedication reinforces worker confidence and protects the business.

By integrating digital tools and thoughtful management, organizations enhance efficiency, improve staff morale, and minimize legal and reputational risks. Zero-hour work can be both adaptable and fair in an evolving regulatory landscape, provided the most recent regulations and changes are adhered to. 

Increasingly, technological advances such as scheduling apps and digital platforms (used by companies like Uber and Amazon) facilitate real-time workforce management, allowing employers and gig workers to coordinate shifts instantly and respond to demand spikes. 

Regulatory changes in some regions now also require platforms to provide workers with a minimum notice of shift offers and cancellations, influencing how flexibility is experienced in real-time. Working with an expert is advised for employers with international staff contingencies to guarantee full compliance with each region or territory. Ultimately, prudent management fosters dignity and certainty for both sides, protecting liberty where possible and providing stability wherever needed.