Pillar Guide · Updated May 2026

UK Zero-Hours Contracts: A Practical Guide for 2025/26

Around 1.1 million people in the UK have a zero-hours contract as their main job — roughly 3.4% of the workforce. The arrangement is dominant in hospitality, care, retail and warehousing, often controversial, and frequently misunderstood by both workers and employers. This pillar guide explains what a zero-hours contract is in law, the crucial difference between worker and employee status, the National Living Wage of £12.21 per hour for 2025/26, the 12.07% holiday accrual rule, when statutory sick pay does and does not apply, the 2015 exclusivity clause ban, the 2024 Workers Rights Act reform giving the right to request predictable hours, and how zero-hours pay is taxed.

Last updated: 24 May 2026Last reviewed: 24 May 2026How we verify

What Is a Zero-Hours Contract

A zero-hours contract is a written or implied employment arrangement in which the employer makes no commitment to offer any minimum number of hours of work, and the worker is generally not obliged to accept any particular work offered. The contract specifies an hourly rate, the type of work, location and any conditions, but no committed hours per week. Demand fluctuates — busy week, full schedule; quiet week, no shifts. The arrangement is heavily used in hospitality (waiting staff, kitchen porters), social care (domiciliary care visits), retail (peak-season cover), events (stewarding, hosting) and warehousing (peak-period pickers).

Despite the name, zero-hours does not necessarily mean zero hours — many workers on the contracts work consistent hours week after week through a stable demand pattern. The legal distinction is the absence of a contractual minimum, not the actual hours worked. The flip side: a contract that guarantees even one hour per week is not a zero-hours contract — it is a minimum-hours contract with different legal implications.

The arrangement has both critics and defenders. Critics highlight income unpredictability, mortgage-application difficulty, reduced statutory protections, and the power imbalance where workers cannot easily refuse shifts without retaliation. Defenders point to flexibility for workers who genuinely want it (students, semi-retired, parents) and operational efficiency for employers facing variable demand. The 2024-2025 legislative direction has been to tighten the rules around abuse without banning the contracts outright.

Worker vs Employee Status

UK employment law recognises three statuses: self-employed (own business, providing services), worker (intermediate — paid for personal service but not under full employee terms), and employee (full employment relationship with all statutory rights). Almost all zero-hours staff are workers, not employees, because the absence of mutuality of obligation (no commitment to offer work; no commitment to accept it) is incompatible with the “continuous service” framework underpinning full employee rights.

Worker status confers: National Living Wage / National Minimum Wage; 5.6 weeks paid holiday; rest breaks (20 minutes per 6 hours, daily and weekly rest periods); protection from discrimination on the nine protected characteristics; whistleblowing protection; pension auto-enrolment if earning above the threshold; itemised payslips; right to written terms within 2 months.

Worker status does NOT confer: statutory redundancy pay; unfair dismissal rights (which require 2 years' continuous employee service); statutory minimum notice periods beyond what the contract specifies; right to request flexible working; statutory maternity / paternity / parental leave at the employee level (worker-level entitlements differ). Long-tenured zero-hours staff sometimes establish at tribunal that the actual working pattern has crystallised into employee status — fact-specific and not guaranteed — at which point the full rights become available.

National Living Wage and Pay

All zero-hours workers are entitled to the National Living Wage or National Minimum Wage in full for every hour worked. From April 2025 the rates are:

Age band	Rate per hour (2025/26)
21 and over (National Living Wage)	£12.21
18-20 (National Minimum Wage)	£10.00
16-17	£7.55
Apprentices (under 19, or any age in first year)	£7.55

The hourly rate is calculated on actual hours worked, including any agreed travel between assignments where the worker is “at work” (typically applies to care workers travelling between client homes). Tips and gratuities cannot be used to top up below NLW since the Employment (Allocation of Tips) Act 2023 — tips must be paid in addition to NLW.

HMRC enforces NLW compliance through unannounced inspections and naming-and-shaming of underpaying employers twice a year. Common breaches that catch employers out include: deducting uniform costs from pay, treating unpaid training time as non-working, rounding down hours, and applying the wrong age band after a birthday. Workers underpaid can claim arrears for up to six years and the employer faces penalties up to 200% of underpayment.

Holiday Pay and the 12.07% Rule

The legal entitlement is 5.6 weeks of paid annual leave per year, the same for all workers regardless of contract type. For full-time staff working 5 days a week, that is 28 days inclusive of public holidays. For variable-hours workers including zero-hours, the entitlement is expressed as a percentage of hours worked: 12.07% (calculated as 5.6 paid weeks ÷ 46.4 working weeks).

In practical terms, for every hour worked the worker accrues 12.07 minutes ÷ 100 × 60 = 7.24 minutes of paid leave. Over a typical 100-hour month, that is 12.07 hours of paid leave accrued. From April 2024 the Working Time (Amendment) Regulations 2023 gave employers the option to either let leave accrue and be paid as normal when taken, or to pay “rolled-up holiday pay” for irregular-hours and part-year workers — adding 12.07% to each payslip as a separate line item.

The rolled-up option is administratively simpler for both sides but has a downside: the worker receives the holiday element as cash on each payslip and may not save it for an actual break, making time-off harder to take. The accrue-and-pay-when-taken option preserves the holiday balance properly but requires the employer to track accrued hours and the worker to actively book leave. Most modern UK payroll systems support both methods.

Holiday pay for variable-hours workers is calculated using the 52-week reference period: average pay across the 52 weeks immediately before the leave is taken, excluding any weeks with zero pay (rolled forward to find 52 paid weeks within the prior 104 weeks). This protects workers whose pay varies through the year.

Sick Pay and Pension Auto-Enrolment

Statutory Sick Pay is £118.75 per week in 2025/26, paid from the fourth qualifying day of absence (the first three are unpaid “waiting days”) for up to 28 weeks. To qualify, the worker must earn an average of at least the Lower Earnings Limit (£125 per week, 2025/26) calculated over the 8 weeks before the sick period. Many zero-hours workers fall below this threshold in low-hours weeks and lose SSP eligibility — a recurring criticism of the regime.

The Government has consulted on removing the LEL and the waiting days from SSP to improve access for low-hours workers. The Employment Rights Bill 2024 includes provisions for both reforms, with implementation expected through 2025-2026 once regulations are made. Until then, zero-hours workers should track their average earnings carefully — a single week of strong hours can push them above the LEL and restore SSP eligibility.

Pension auto-enrolment applies once a worker turns 22, earns more than £10,000 per year (2025/26 threshold, unchanged since 2014) and is “working in the UK”. For zero-hours workers with variable income, auto-enrolment is triggered if the earnings cross the trigger in any pay period and the worker has been with the employer for the assessment period. The employer must contribute at least 3% of qualifying earnings, the worker 5% (8% total) under the standard scheme. Workers below the trigger can opt in voluntarily and the employer must contribute.

Other benefits available to zero-hours workers: Universal Credit (means-tested, taper at 55%), Working Tax Credits (legacy system, mostly transferred to UC), Council Tax Reduction for low-income, free prescriptions and dental treatment in England for those on UC with low income, free childcare entitlement for working parents. None of these treats zero-hours workers differently from other low-paid workers.

Exclusivity Clause Ban

Until 2015, many zero-hours contracts contained an “exclusivity clause” preventing the worker from accepting work from any other employer without permission — a manifest abuse, given the absence of any guaranteed hours from the original employer. The Small Business, Enterprise and Employment Act 2015 made all such clauses in zero-hours contracts unenforceable. Workers can ignore the clause and accept other work; employers attempting to discipline a worker for breaching the clause face an automatic unfair dismissal (or detriment) claim.

The Exclusivity Terms for Zero Hours Workers (Unenforceability and Redress) Regulations 2015 followed up by providing a tribunal remedy. From December 2022 the ban was extended to all workers earning below the Lower Earnings Limit through the Exclusivity Terms for Zero Hours Workers (Amendment) Regulations 2022 — capturing many part-time and casual workers whose contracts technically had some minimum hours but who earned less than the LEL threshold.

Employers generally know the rule and avoid the clauses — but smaller and less well-advised employers continue to include them in contracts. Workers should be aware that any such clause is legally void and can safely take other work. If detrimentally treated for doing so, ACAS conciliation followed by an employment tribunal claim is the route to redress.

Right to Predictable Hours (2024)

The Workers (Predictable Terms and Conditions) Act 2023, with commencement regulations in 2024, gives workers on zero-hours, low-hours or generally unpredictable contracts the statutory right to request a more predictable working pattern. The right is available to workers with at least 26 weeks of service with the employer.

The process: the worker submits a written request specifying the more predictable pattern they want (e.g. “a minimum of 20 hours per week, Tuesday-Saturday”). The employer must consider the request within one month and either agree, reject on one of the specified statutory grounds (additional cost, detrimental effect on meeting customer demand, inability to recruit other staff, detrimental impact on quality, structural changes), or propose an alternative. The worker can make up to two such requests in any 12-month period.

The right does not guarantee a different pattern — the employer can lawfully refuse with valid reasons — but it formalises the conversation and gives workers a paper trail. Tribunal remedy is available where the employer fails to handle the request properly. Combined with the related right to request flexible working (extended in 2024 to a day-one right for employees), the reform package shifts UK employment law gently away from pure zero-hours flexibility and toward more predictable arrangements.

Tax and National Insurance

Zero-hours workers are paid through PAYE in exactly the same way as any other employee. The employer applies the worker's tax code (typically 1257L for the standard personal allowance in 2025/26) and deducts Income Tax and Class 1 National Insurance on each pay run. Income Tax in England, Wales and NI follows the standard bands (20% above £12,570, 40% above £50,270, 45% above £125,140). Class 1 NI for employees is 8% between the Primary Threshold (£12,570) and the Upper Earnings Limit (£50,270), then 2% above.

The wrinkle for variable income is cumulative PAYE: a heavy week may trigger 40% tax on the assumption the worker will keep earning at that rate all year. A subsequent low week then triggers a refund as the cumulative position rebalances. End-of-year reconciliation via the P60 settles any remaining imbalance, and HMRC may issue a refund or send a Simple Assessment if you owe tax.

Workers with multiple zero-hours jobs face a different issue: only one employer can apply the £12,570 personal allowance. The second employer uses code BR (Basic Rate, 20% on all earnings) by default, which may over- or under-tax depending on total earnings. HMRC adjusts the codes after a few weeks once the data feed reflects the second job. Workers should check both employers have the correct codes (visible on the gov.uk Personal Tax Account) and contact HMRC if codes look wrong.

Pros and Cons

The zero-hours arrangement genuinely suits some workers and clearly disserves others — the policy debate has been one of distinguishing the willing from the constrained.

Pros: complete flexibility (refuse shifts without explanation, work when you want); useful as a top-up to studies, parenting or semi-retirement; no contractual cap so high-earning weeks are possible during peak demand; quick to start (often no probation, light onboarding); easy to multi-employer; suits students juggling academic terms.

Cons: income unpredictability undermines budgeting and household cash flow; mortgage lenders heavily discount zero-hours income, typically requiring 2-3 years of consistent earnings and even then counting only 50-75% toward affordability; SSP often inaccessible due to LEL threshold; reduced employment rights versus employees (no redundancy, no unfair dismissal under 2 years even if status upgraded); employers can effectively dismiss without process by simply not offering shifts (“zeroing out”) — a practice the 2024 reforms attempt to address through the predictable hours right.

For those choosing zero-hours, the practical defence is to spread the risk: hold two or three concurrent zero-hours jobs to ensure some hours are always available; build an emergency fund of 2-3 months living costs; track earnings carefully for tax and SSP threshold purposes; use the 2024 predictable-hours request if you want regularisation; and consider transitioning to fixed-hours work as soon as it is available if predictability matters more than flexibility.

Official References

FAQs

What is a zero-hours contract?

A zero-hours contract is an employment arrangement in which the employer makes no guarantee of any minimum number of hours of work, and the individual generally accepts work as and when offered. The contract sets a hourly rate, the type of work and any conditions, but no committed hours. Some weeks the worker may do 40 hours, other weeks zero. The arrangement is used heavily in hospitality, care, retail and gig-style sectors where demand is unpredictable. Around 1.0-1.2 million people in the UK have a zero-hours contract as their main job, according to ONS Labour Force Survey data from 2024-25.

Am I a worker or an employee on a zero-hours contract?

Almost always a worker, not an employee — and the distinction matters. Workers get the core baseline rights (National Living Wage, paid holiday, rest breaks, protection from discrimination, auto-enrolment pension if eligible) but not the full employment rights (statutory redundancy, unfair dismissal after 2 years, statutory notice periods beyond the contract). Employees enjoy all of those. Whether a particular zero-hours arrangement is worker or employee status depends on the facts — mutual obligation to offer and accept work, control, integration, and right of substitution — and in disputed cases is decided by employment tribunals. The label on the contract is not conclusive.

What is the National Living Wage for zero-hours workers in 2025/26?

The National Living Wage for workers aged 21 and over is £12.21 per hour from April 2025, set by the Government on recommendation of the Low Pay Commission. The National Minimum Wage rates for younger workers are: 18-20 year olds £10.00; 16-17 year olds £7.55; apprentices £7.55 (under 19, or any age in first year). These rates apply to every hour worked, including any rounding for time worked. Zero-hours workers are entitled to the full NLW/NMW for every hour worked just like any other worker — the unpredictable hours do not affect the per-hour rate.

How is holiday pay calculated on a zero-hours contract?

All workers, including zero-hours, are entitled to 5.6 weeks of paid annual leave per year — equivalent to 28 days for a full-time worker. For variable-hours workers, paid leave accrues at the rate of 12.07% of every hour worked (5.6 ÷ 46.4 working weeks = 12.07%). For each hour of work, the worker accrues 7.24 minutes of paid leave. From April 2024, after the Government's Working Time Reforms, employers can either let leave accrue and be taken with normal pay, or pay rolled-up holiday pay (12.07% added to each payslip) for irregular-hours and part-year workers. The payslip must show the rolled-up holiday element separately.

Do zero-hours workers get statutory sick pay?

Yes, provided they meet the eligibility thresholds. Statutory Sick Pay (SSP) is £118.75 per week for 2025/26, paid from the fourth qualifying day of absence for up to 28 weeks. To qualify, the worker must earn an average of at least the Lower Earnings Limit (£125 per week for 2025/26, calculated over the 8 weeks before the sick spell). Many zero-hours workers fall below this threshold in weeks of low or zero work and therefore lose SSP entitlement. The Government has consulted on removing the lower earnings limit and waiting days to make SSP more accessible to low-hours workers — the change is expected to be in the post-2025 Employment Rights Bill.

Are exclusivity clauses really banned?

Yes, since the Small Business, Enterprise and Employment Act 2015. Any clause in a zero-hours contract that purports to prevent the worker from accepting work from another employer is legally unenforceable. From December 2022 the ban was extended to cover all workers earning below the Lower Earnings Limit, capturing many part-time and casual workers regardless of contract type. Employers found in breach can be reported to ACAS or the Department for Business and Trade. In practice the ban is widely respected by larger employers and routinely flouted by smaller ones — workers should know the clause is unenforceable even if it appears in their contract.

What is the right to request more predictable hours?

Introduced as part of the Workers Rights Act 2024 (largely commenced through 2024-2025), the right enables workers on zero-hours, low-hours or unpredictable contracts to request a more predictable working pattern after 26 weeks of service with the employer. The employer must consider the request reasonably and can only refuse on specified grounds (additional costs, detrimental effect on demand, structural reasons). The right does not guarantee a different pattern, but the request process puts pressure on employers to either offer regularised hours or justify continued unpredictability. Up to two requests per 12-month period are permitted.

How is tax and National Insurance handled?

Identically to any other PAYE employment. The employer operates PAYE on each pay run, deducting Income Tax and Class 1 National Insurance based on the worker's tax code (typically 1257L for the standard personal allowance in 2025/26) and the earnings in that pay period. Because zero-hours earnings vary week to week, the worker may overpay tax in heavy weeks and underpay in light weeks — but the PAYE system reconciles cumulatively across the year. If the worker has multiple zero-hours jobs, only one employer applies the personal allowance; the others use code BR (basic rate) until HMRC adjusts. End-of-year reconciliation via P60 typically settles any imbalance.

Can a zero-hours worker be made redundant?

Workers (as opposed to employees) do not qualify for statutory redundancy pay. To be statutorily redundant a person must be an employee with at least 2 years of continuous service; statutory redundancy pay is then calculated by age and length of service. A zero-hours worker classified as a worker (rather than employee) cannot claim statutory redundancy regardless of length of service. Some long-serving zero-hours workers may successfully argue at tribunal that despite the contract label, the facts of their working arrangement establish employee status — at which point redundancy and unfair dismissal rights become available. These cases are fact-specific and not guaranteed.

What pros and cons should I weigh up?

Pros: flexibility (work when you want, refuse offered shifts), useful as a top-up to other income, suits students, parents and semi-retired who value autonomy, no contractual cap so can earn substantial money in busy periods. Cons: income unpredictability makes budgeting hard; mortgage lenders heavily discount or refuse zero-hours income (typically requiring 2+ years of consistent earnings to count any of it); SSP often unavailable in low-hours weeks; no guaranteed work means no fallback; reduced legal protections versus employees. The arrangement suits a minority of workers well and many others poorly. Workers seeking predictability should use the 2024 reform request mechanism or look for fixed-hours alternatives.

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About the author

Emma Clarke

UK Tax Writer

Emma Clarke has been writing about UK personal tax since 2018, with a particular focus on Self Assessment, PAYE coding and the practical mechanics of how HMRC actually applies the rules to ordinary salaries. Her work concentrates on translating the dense language of HMRC manuals and Finance Act schedules into worked examples that show, pound by pound, how income tax and National Insurance reduce a gross salary to the figure that lands in a UK bank account. Emma covers the full PAYE lifecycle: tax codes (1257L, BR, K codes, emergency codes), the Marriage Allowance, the High Income Child Benefit Charge, salary sacrifice arrangements and their effect on pensionable pay, the Apprenticeship Levy, and the differences between the rUK and Scottish income-tax regimes. She is particularly interested in the edge cases that catch PAYE employees out — the £100,000 personal-allowance taper, the 60% effective marginal rate it creates, and the interaction between student-loan plans and pension contributions. Every figure in Emma's articles is verified against the current HMRC rates pages and worked through a Self Assessment calculation by hand before publication. She writes to CalcHub's editorial standards: primary-source citations, plain English, no promotional language, and clear "this is general information, not financial advice" disclaimers where appropriate.

Personal-finance writer since 2018
UK tax specialism — PAYE, Self Assessment, National Insurance
Writes to CalcHub editorial standards (primary-source citation, annual review)

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Disclaimer: Employment law, NLW and statutory pay rates change annually. Figures here reflect the position in 2025/26. Always check gov.uk and seek advice from ACAS or a qualified employment specialist for your specific circumstances.