Zero Hours Contracts 2026: Holiday Pay, Annual Leave and New Rights

What is a zero hours contract?

A zero hours contract (also called a casual worker agreement) is an employment contract where the employer does not guarantee any minimum number of working hours. The worker is offered shifts as they arise and can accept or decline. The employer can also offer no shifts at all.

Despite the flexible nature, zero hours workers are still entitled to core employment rights — including paid holiday. Employers cannot opt out of these rights, and attempts to contractually waive them are unenforceable.

Holiday entitlement: 5.6 weeks

The statutory minimum annual leave entitlement for UK workers is 5.6 weeks per year (28 days for a full-time five-day-week worker). This applies to zero hours workers on the same basis — but because their working hours vary, the entitlement is calculated proportionally to hours worked.

Example: A zero hours worker who works an average of 20 hours per week is entitled to:

• 5.6 weeks × 20 hours = 112 hours of paid annual leave per year

The April 2024 reform: 12.07% accrual method

Before April 2024, calculating holiday for irregular hours workers was complex and the subject of significant case law (including the Supreme Court case Harpur Trust v Brazel [2022], which concluded that casual workers could not have their holiday capped at 12.07% of weeks worked).

The UK government introduced new regulations from April 2024 that:

1. Defined a new category of "irregular hours worker" (someone whose hours are genuinely variable week to week).
2. Confirmed that irregular hours workers may accrue holiday at 12.07% of hours worked in each pay period — this is the legal holiday accrual rate going forward.
3. Permitted rolled-up holiday pay for irregular hours workers (see below).

The 12.07% rate is derived from: 5.6 weeks ÷ (52 − 5.6) = 5.6 ÷ 46.4 = 12.07%.

The accrual is capped at 28 days per leave year. Workers working very high hours cannot accrue more than the statutory maximum.

Per pay period accrual example

A zero hours worker works 40 hours in a week:

• Holiday accrued: 40 × 12.07% = 4.83 hours accrued that week

If they work 30 hours the next week:

• Holiday accrued: 30 × 12.07% = 3.62 hours accrued

These hours accumulate in a notional "holiday pot" that the worker can draw on when taking leave.

Rolled-up holiday pay: the 12.07% top-up

For irregular hours workers, employers can now choose to pay rolled-up holiday pay — adding 12.07% to each payment to cover holiday entitlement, instead of paying workers separately when they take leave.

This is clearly more convenient for both parties in a casual working arrangement. However:

• It must be clearly identified as holiday pay on the payslip (not hidden in the headline rate).
• Workers must not be discouraged from taking actual time off.
• The worker cannot be required to repay it if they later take leave.

Example payslip entry:

Holiday pay: the 52-week reference period

When a zero hours worker takes actual leave (rather than receiving rolled-up pay), their holiday pay must reflect their average pay over the previous 52 weeks — excluding any weeks where no pay was received.

This is important because holiday pay must include:

• Regular overtime (even if not contractually guaranteed)
• Regular shift supplements
• Regular commission payments
• Regular contractual bonuses

Example: A worker regularly does night shifts and earns an average of £550/week including a £60 night supplement. Their holiday pay must reflect £550/week, not just their basic rate without the supplement.

This 52-week averaging ensures that taking holidays does not result in a pay cut — a requirement established by EU case law and retained in UK law post-Brexit.

The Employment Rights Bill 2026: right to request guaranteed hours

One of the most significant reforms in the Employment Rights Bill (progressing through Parliament in 2025/26) is the right to request a guaranteed hours contract.

Under these provisions:

• A zero hours worker who has worked regular and predictable hours for 12 qualifying weeks will have the right to request a contract reflecting those hours.
• The request must be made to the employer in writing.
• The employer must consider the request and respond within a specified period.
• Refusal is only permitted on specified grounds (e.g. the business genuinely cannot sustain those hours, the worker's role is inherently seasonal or short-term).
• If an employer unreasonably refuses, the worker may complain to an Employment Tribunal.

This reform is significant for the estimated 900,000+ workers on zero hours contracts in the UK who would prefer job security.

Reasonable notice of shifts

The Employment Rights Bill also introduces requirements for employers to give reasonable notice of shift patterns — workers on zero hours contracts will have the right to receive reasonable notice of their shifts and to be compensated if shifts are cancelled at short notice. The specific notice periods are to be set in secondary legislation.

Rest break rights for zero hours workers

Zero hours workers are covered by the Working Time Regulations 1998 in the same way as other workers:

• Daily rest: At least 11 consecutive hours between working days.
• Weekly rest: At least 24 hours' rest per week (or 48 hours per fortnight) — the employer chooses whether to average weekly or fortnightly.
• Shift break: Workers are entitled to a 20-minute uninterrupted break if their shift lasts more than six hours.

These cannot be waived by contract. Some sectors (emergency services, transport, certain hospitality roles) have modified rules but equivalent compensatory rest must be provided.

National Minimum Wage on zero hours

Zero hours workers must be paid at least the National Minimum Wage for every hour worked:

• National Living Wage (aged 21+): £12.21/hour (from April 2025)
• 18–20 rate: £10.00/hour
• Under 18: £6.40/hour
• Apprentice rate: £6.40/hour

Waiting time (if a worker is required to be available at the employer's location but not actively working) generally also counts as working time for NMW purposes.