Zero-hours contracts: Understanding the law

Zero hours contracts are a form of atypical working. 'Atypical working' covers a range of working arrangements, such as people working short-hours, shift work or annualised hours contracts. The definitions of ‘typical working relationships’ are provided on the employment status law page. 

CIPD research into zero-hours contracts has highlighted that a wide range of working arrangements can fall under this  umbrella term. One reason for this is that “zero-hours contract” is not a legal term. The CIPD's research, and this guide, define a zero-hours contract as:   

“An agreement between two parties that one may be asked to perform work for the other, but there is no set minimum number of hours. The contract will provide what pay the individual will get if he or she does work and will deal with the circumstances in which work may be offered (and, possibly, turned down).”   

Zero-hours contracts allow a business to flex its resource on short notice according to customer demand. However, they have come under criticism for the lack of security they provide, which some argue is detrimental to workers or employees working under them.  

Organisations considering using zero-hours contracts should think about the business rationale, including whether there are other types of flexible working or employment practices that would deliver the same benefits.  

All employers should note that the government are proposing a new right for qualifying workers (including zero hours workers, and those employed on a “low” number of minimum hours), where hours exceed the minimum number set out in a contract, to be offered guaranteed hours reflecting the hours worked during an initial or subsequent reference period. This is alongside proposals to introduce a right to reasonable notice of shifts (including changes and cancellations) and payment for cancelled, moved or curtailed shifts. Further, the right to access Statutory Sick Pay from day one of sickness, and the removal of the lower earnings limit, are also under consultation. Members can monitor the progress of these matters on the Make Work Pay tracker. 

The guide below outlines what current legislation should  be followed on zero hours contracts. This guide is produced in collaboration with law firm Lewis Silkin. The guide aims to help employers ensure that they are using zero-hours contracts responsibly, as well as making clear the legal implications of using these contracts. 

For convenience, this guidance uses the term “employer” to mean the hiring party in a contract for work, whether the individual being hired is an employee, a worker or a self-employed person.