Zero-hours contracts: the rules for employers and 2027 changes

What a zero-hours contract is

The term has no single legal definition for most purposes, but section 27A of the Employment Rights Act 1996 supplies one for the exclusivity rules: a contract of employment or a worker's contract under which the employer's obligation to provide work is conditional on the employer making it available, and there is no certainty that any work will be made available at all. The employer offers hours when it has them; the worker can usually accept or decline.

That is the whole of the arrangement, and it is why the contract suits genuinely variable demand, seasonal peaks, cover for sickness and holidays, and people who want to work around study or another job. It is also why it suits regular work badly. A person who has worked the same twenty hours a week for two years on a zero-hours contract has, in every practical sense, a twenty-hour job, and the law is moving towards treating it as one.

Government guidance describes zero-hours contracts as normally used for piece work or on-call work, and says an employer using them does not have to give work and the worker does not have to accept it. Both halves matter. A contract that requires the worker to accept whatever is offered is not the arrangement the guidance describes, and it points towards employee status.

Exclusivity clauses

Since 26 May 2015, section 27A(1) has made unenforceable any term in a zero-hours contract that prohibits the worker from working for anyone else, or from doing so without the employer's consent. A worker can ignore such a clause, and regulations made under the section protect them from dismissal or detriment for doing so. Government guidance is blunt about it: the worker can ignore a clause that bans them from looking for or accepting work elsewhere.

The reasoning is straightforward. An employer that guarantees nothing cannot reasonably demand that the worker keep themselves available for nothing. Many older templates still contain an exclusivity clause, and it should be removed, because a clause that cannot be enforced achieves nothing beyond signalling that the contract was not reviewed.

What remains lawful is confidentiality, and a requirement that the worker does not act in conflict with the employer's interests during a shift. What is not lawful is treating a worker less favourably, or offering them fewer hours, because they also work for a competitor.

Worker or employee

A zero-hours contract does not fix the person's status. It usually creates a worker, which is the wider category with the core rights set out below. It can create an employee, with the fuller set of rights that includes unfair dismissal, statutory redundancy pay and the family leave entitlements, where in reality there is mutuality of obligation and control: the employer expects the person to turn up when rostered, the person expects to be rostered, and declining shifts has consequences.

Tribunals look at how the arrangement operates day to day, and a long-running pattern of regular hours points to employment whatever the document says. Continuity of service can also build across gaps between engagements where the gaps are short or fall within a regular pattern. An employer who has used a zero-hours contract for the same person for years should assume they are an employee with that length of service, and from 1 January 2027 that assumption carries more weight, because the qualifying period for unfair dismissal falls from two years to six months for dismissals with an effective date of termination on or after that date.

The written statement of particulars under section 1 of the Employment Rights Act 1996 is due to workers as well as employees, on or before the first day, and it has to state that hours vary and how. A zero-hours contract issued a month after the person started is a breach of that section.

The rights that apply anyway

Whatever the label, a zero-hours worker has the rights that attach to worker status, and the employer's obligations do not shrink because the hours do.

National Minimum Wage. Every hour worked must be paid at or above the rate for the worker's age. From 1 April 2026 the National Living Wage for those aged 21 and over is £12.71 an hour, the rate for 18 to 20 year olds is £10.85, and the rate for under-18s and apprentices is £8.00. Time spent waiting at the premises at the employer's request is working time for these purposes, which catches employers who ask staff to arrive and wait to see whether they are needed.

Holiday. The statutory entitlement is 5.6 weeks a year. For an irregular-hours worker, defined in the regulations as one whose paid hours in each pay period are wholly or mostly variable under the contract, holiday accrues at 12.07% of the hours worked in each pay period, for leave years beginning on or after 1 April 2024. The employer may instead pay rolled-up holiday pay, adding 12.07% to each payslip, provided it is shown separately and paid at the same time as the wages. Untaken accrued holiday must be paid on termination.

Rest breaks. A worker over 18 who works more than six hours in a day is entitled to an uninterrupted 20-minute break, to 11 hours' rest between working days, and to 24 hours off in each week or 48 hours in each fortnight.

Statutory sick pay. A zero-hours worker paid through PAYE who has done some work under the contract and is sick for at least a full working day will usually qualify. Since 6 April 2026 there are no waiting days and no lower earnings limit, and the rate is £123.25 a week or 80% of average weekly earnings, whichever is lower.

Protection from discrimination, the right to a payslip, pension auto-enrolment where the earnings thresholds are met, and whistleblowing protection apply as well. The one right a genuine zero-hours worker lacks is the set reserved for employees, and as set out above, the label does not decide who is one.

The Employment Rights Act 2025 and guaranteed hours

Sections 1 to 3 of the Employment Rights Act 2025 insert new rights for zero-hours and low-hours workers into the 1996 Act. They are the largest change to this kind of contract since the exclusivity ban.

Guaranteed hours. Section 1 requires an employer to offer a worker on a zero-hours contract, or on a contract guaranteeing only a low number of hours, a contract with guaranteed hours reflecting the hours they worked over a reference period. The length of the reference period, and the initial reference period after commencement, are set by regulations. The worker can accept or reject the offer, and a worker who does not respond within the response period is treated as having rejected it. The right recurs, so a worker whose hours settle at a higher level later gets a fresh offer. The intent is that a person whose worked hours have been regular is offered a contract that says so, while somebody who genuinely wants to stay on zero hours can decline.

Reasonable notice of shifts. Section 2 requires reasonable notice of a shift the worker is asked to work, of its cancellation, and of a change to its start or end time. The Act does not fix what is reasonable; it creates a presumption that notice shorter than a period to be set by regulations is unreasonable.

Payment for cancelled, moved and curtailed shifts. Section 3 gives a right to a payment where a shift is cancelled, moved or cut short at short notice, with the amount and the notice threshold to be set by regulations.

The Act contains parallel provisions for agency workers, so the new rights cannot be sidestepped by taking the same people through an agency. Section 8 also widens the power to make regulations on exclusivity terms in zero-hours arrangements.

The timetable

Sections 1 to 6 and 8 were brought into force on 6 January 2026, but only so far as they confer a duty to consult or a power to make regulations. The substantive rights depend on those regulations, and the government's timeline, updated on 25 August 2026, lists the right to guaranteed hours, the right to reasonable notice of shifts and short-notice payments as measures for 2027, adding that timings will be updated after consultation. The Workers (Predictable Terms and Conditions) Act 2023, which would have given a right to request a more predictable pattern, was repealed on 6 January 2026 and never came into force.

So the position in September 2026 is that the rights are on the statute book, the detail and the date are not, and the earliest an employer will have to make a guaranteed hours offer is some time in 2027 after an initial reference period has run. That is enough time to prepare and not enough to ignore. Our guide to the Employment Rights Act 2025 tracks the wider timetable.

The preparation is arithmetic before it is legal. Take everyone on a zero-hours or low-hours contract and look at their worked hours over the last twelve weeks and the last twelve months. Anybody whose hours are regular is somebody the Act will require an offer to, and the sensible question is whether to make it now.

Running zero-hours contracts fairly

Acas guidance sets out the practice that keeps a zero-hours arrangement on the right side of the law and of the people working under it. State plainly in the contract that work is not guaranteed and may stop at short notice. Allocate work by a method that can be explained, so that offering fewer hours to one person is a decision with a reason and not a pattern that looks like penalising them. Have a cancellation policy that gives notice, and pay something where a shift is cancelled late, ahead of the Act requiring it. Use the contract for variable demand, cover and peaks, and put regular work on a contract with hours in it.

Do not use it to avoid obligations. The minimum wage, holiday, rest breaks and sick pay apply in full, and a contract drafted to make them look like they do not will be read against the employer. Do not treat a worker who declines a shift, or works elsewhere, as having done something wrong.

Issue the written statement on day one, keep records of hours offered, accepted and worked, and keep holiday records showing accrual and payment; since April 2026 employers have had to keep records of annual leave and holiday pay for six years. Those records are also what the guaranteed hours calculation will be built on.

The alternatives

For most owner-managed businesses the honest question is whether zero hours was ever the right tool, and there are usually three better ones.

A minimum-hours contract with flexibility. Guarantee the hours the business can always use, whether that is eight a week or twenty, and provide that additional hours may be offered and accepted. The worker has a floor, the business keeps the ability to flex above it, and the arrangement already looks like what the 2025 Act will require.

Annualised hours. Guarantee a number of hours across the year and schedule them unevenly to match demand, with pay smoothed monthly. This suits seasonal businesses that know their annual pattern, and it removes the weekly negotiation. It needs a clear rule on what happens if the hours are not all used and on how overtime beyond the annual total is paid.

A genuine casual arrangement. Where the business really does need people only occasionally, each engagement can be a separate contract, with a framework document setting out the terms that will apply whenever an engagement is offered. Between engagements neither side owes the other anything, which is honest about the relationship. It does not remove worker rights during each engagement, and if the engagements become regular the arrangement drifts back towards employment.

Whichever is chosen, part-time employment with an agreed pattern remains the default for regular work, and a flexible working procedure lets the pattern change when the employee needs it to. Our guide to employment law essentials covers the rules that apply to every contract type.

These rules apply across Great Britain; Northern Ireland has its own employment legislation and the 2025 Act's zero-hours provisions do not extend to it.

Frequently asked questions

Are zero-hours contracts still legal?

Yes. A zero-hours contract remains lawful in England, Wales and Scotland. What has changed is the surrounding law: exclusivity clauses have been unenforceable since 26 May 2015, holiday for irregular-hours workers accrues at 12.07% of hours worked, and the Employment Rights Act 2025 will require employers to offer guaranteed hours reflecting the hours worked, with reasonable notice of shifts and payment for cancelled ones, on a timetable the government lists for 2027.

Can I stop a zero-hours worker working for a competitor?

No. Section 27A of the Employment Rights Act 1996 makes any exclusivity term in a zero-hours contract unenforceable, and the worker is protected from dismissal or detriment for working elsewhere. You can require confidentiality and expect the worker not to act against your interests during a shift, but you cannot demand availability you are not paying for, and offering fewer hours because someone works for a competitor is a detriment.

Do zero-hours workers get holiday pay?

Yes, 5.6 weeks a year like every worker. For an irregular-hours worker, holiday accrues at 12.07% of the hours worked in each pay period for leave years starting on or after 1 April 2024. You can pay it as rolled-up holiday pay by adding 12.07% to each payslip, provided it is itemised separately and paid with the wages, or pay it when leave is taken. Accrued untaken holiday must be paid when the contract ends, and records of leave and pay must be kept for six years.

Are zero-hours workers entitled to sick pay?

Usually. Statutory sick pay depends on being paid through PAYE, having done some work under the contract and being sick for at least one full working day. Fixed hours are no part of the test. Since 6 April 2026 there are no waiting days and no lower earnings limit, and the rate is £123.25 a week or 80% of the person's average weekly earnings, whichever is lower. Average earnings for someone on variable hours are worked out over the relevant period before the sickness.

What is the right to guaranteed hours?

Section 1 of the Employment Rights Act 2025 requires an employer to offer a zero-hours or low-hours worker a contract guaranteeing hours that reflect the hours they worked over a reference period set by regulations. The worker can accept or decline, and silence counts as declining. The right recurs, so someone whose hours rise later gets a new offer. The government's timeline lists it for 2027 with the date to be confirmed after consultation.

When do the new zero-hours rules start?

The sections were commenced on 6 January 2026 only for consultation and for making regulations. The government's timeline, updated on 25 August 2026, lists guaranteed hours, reasonable notice of shifts and short-notice payments as measures for 2027 and says the timings will be updated after consultation. The substantive duties will not bite until the regulations set the reference period and an initial reference period has run, so the earliest practical date is during 2027.

Is a zero-hours worker an employee?

Sometimes. The contract usually creates a worker, but where the reality is that the person is expected to work when rostered and is rostered regularly, a tribunal can find employee status, with unfair dismissal and redundancy rights attached. Continuity can build across short gaps. From 1 January 2027 the qualifying period for unfair dismissal falls to six months, so a long-serving zero-hours employee should be treated as having the protection that service gives.

What are the alternatives to a zero-hours contract?

For regular work, a part-time contract with a fixed pattern, or a minimum-hours contract that guarantees a floor and allows additional hours. For seasonal businesses, annualised hours that guarantee a yearly total scheduled unevenly and paid evenly. For genuinely occasional work, a casual arrangement where each engagement is a separate contract under a framework document. All of these already resemble what the Employment Rights Act 2025 will require.

Sources & further reading

• Employment Rights Act 1996, section 27A
• Employment Rights Act 2025, section 1: right to guaranteed hours
• Employment Rights Act 2025, section 2: shifts, rights to reasonable notice
• The Employment Rights Act 2025 (Commencement No. 1) Regulations 2026
• GOV.UK: Plan to Make Work Pay and Employment Rights Act timeline update
• GOV.UK: holiday pay and entitlement reforms
• GOV.UK: National Minimum Wage and National Living Wage rates
• Acas: zero-hours contracts

This article is general information, not legal advice. The law changes and depends on your circumstances — always take advice on your specific situation before acting. Last reviewed 22 September 2026. AD Solicitors Limited is a recognised body regulated by the SRA (no. 8011228).