Zero-hour contract
A zero-hour contract is a type of employment arrangement where workers are not guaranteed any minimum number of hours, despite being expected to remain available for work during the contract period. This flexible model is commonly found in industries with fluctuating demands, such as retail, hospitality, and seasonal jobs. While zero-hour contracts can provide businesses with the agility to adjust staffing levels as needed, they have drawn criticism for favoring employers by leaving workers without guaranteed income or job security.
In the United Kingdom, around 800,000 individuals, including many students and older adults, engage in zero-hour contracts. These contracts often classify workers as temporary or casual, disqualifying them from certain employee benefits, although they must still receive the national minimum wage and are entitled to some standard protections. Critics point out that despite the purported flexibility, these contracts can lead to financial insecurity for workers, as their availability is required even when they may not receive work. Recent labor law reforms in the UK aim to enhance the rights of casual and part-time workers, ensuring they receive clearer information about their rights and protections.
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Zero-hour contract
A zero-hour contract is an agreement between an employer and a worker that establishes a hiring arrangement but does not guarantee any working hours. They require the worker to maintain availability during the period covered by the agreement without promising that the services of the worker will actually be engaged at any point. Thus, workers must commit to the employer with no guarantee of receiving pay.
Zero-hour contracts are common in seasonal industries and employment sectors that see wide fluctuations in business demand. They provide businesses with flexible arrangements that allow them to address their staffing requirements on short notice and according to changing levels of need. They tend to appeal to people seeking casual part-time work, such as students, homemakers, and older individuals in semi-retirement. However, in recent years, zero-hour contracts have become an increasingly common feature of the employment landscape in a wide range of industries. While they offer theoretical benefits to both parties, zero-hour contracts have been criticized for heavily favoring employers.
Background
Labor and employment law experts note that while the term “zero-hour contract” implies an official written agreement, such agreements are rarely formalized in real-world situations. Instead, zero-hour contract arrangements are usually casual and involve only a verbal agreement between the employer and the worker. In such cases, the employer will explain that the position does not involve guaranteed hours and that the worker will be notified if he or she is needed. The two parties will then agree on an hourly wage or daily flat rate for periods during which the worker’s services are engaged.
Zero-hour contracts are common in the United Kingdom and other European countries, but the term is not widely used in the United States. Instead, American workers who maintain casual, as-needed relationships with their employers are usually classified as contract employees, a status that acknowledges the employee is not eligible for benefit-based compensation such as health insurance.
While these types of casual, no-guarantee working arrangements have existed for centuries, contemporary forms of the zero-hour contract emerged in the United Kingdom in the aftermath of the global economic downturn of 2008–2009. As the United Kingdom’s business community absorbed the financial aftershocks of the recession, companies frequently found they were not able to cut staff-related operational expenses as quickly as they needed to. In many cases, this was because employees held long-term or permanent employment contracts that restricted the company’s ability to eliminate their positions. Zero-hour contracts provided a solution to that problem by circumventing the legal protections afforded to those employees.
This solution was used by companies during the COVID-19 pandemic as well. Businesses were forced to shift how they operated, which meant they could make greater use of zero-hour employees, many of whom took to the frontlines of the crisis as delivery drivers, warehouse workers, and home care and healthcare workers. According to a report by the Trades Union Congress in England and Wales, workers on zero-hour contracts were twice as likely to die of COVID-19 as people in other professions.
In other European countries, zero-hour contracts are known by different names, such as “beck and call contracts” or “as and when contracts.” While employers in the United Kingdom enjoy broad discretion, countries such as Austria and the Netherlands regulate such working arrangements more tightly by requiring employers to offer a minimum number of working hours as part of the agreement, with the option to scale the worker’s engagement above this minimum threshold but not below it.
Overview
According to a report published in June 2024 by the Office for National Statistics (ONS), about 1 million people in the United Kingdom worked on zero-hour contracts at the time. While many are students and older individuals nearing retirement, the report noted that a large percentage of zero-hour contract workers are relatively young females. Zero-hour contracts are particularly common in the home healthcare, retail, hospitality, and food-catering industries, and in seasonal jobs that require more staff during times like the summer tourist season and the Christmas shopping season. They are similar to but distinct from limited-hour contracts, also known as low-guaranteed-hour contracts, which function similarly but pledge a fixed minimum number of weekly or monthly working hours for which the employer is obligated to compensate the worker.
Employment law in the United Kingdom draws a sharp distinction between employees and workers, with employees holding long-term or permanent status and qualifying for enhanced benefits and legal safeguards. Workers, on the other hand, usually hold temporary, short-term, or contract status. Most zero-hour contracts classify engaged parties as workers, which disqualifies them from perks and protections like mandatory sick pay, maternity and paternity leave, emergency time off, minimum notice periods for ending employment, severance pay, and safety nets against unfair termination. However, workers on zero-hour contracts must be paid at least the national minimum wage and receive other standard legal protections: they qualify for holiday pay and have the same rights as employees with regard to rest breaks, workplace safety, and anti-discrimination policies. Workers on zero-hour contracts also maintain the right not to work more than 48 hours per week, and cannot be terminated for refusing to do so.
In addition to giving employers more flexibility and control over their operating costs, zero-hour contracts help new businesses accurately assess their personnel needs. They also function as a form of insurance in situations involving site safety and security, where the absence of a regular employee could pose grave risks to the business, its customers, or to the general public. In such cases, maintaining a backup roster of on-call workers on zero-hour contracts is critical to the company’s ability to properly function.
In late 2018, the government of the United Kingdom passed labor law reforms that introduced new protections for casual, part-time workers and workers on zero-hour and limited-hour contracts. Under these laws, businesses were required to offer detailed explanations of workers’ rights to new staff members on their first working day. They also imposed stiff fines and penalties on companies found to be abusing legal loopholes to exploit staff members without long-term or permanent employee status. The laws also prohibited "exclusivity clauses" in zero-hour contracts, meaning employees had the right to work for other companies.
Therefore, in theory, workers on zero-hour contracts retain the freedom to seek employment elsewhere, giving them more choice and freedom. Other purported advantages include the opportunity to earn important experience that can enhance the worker’s chances of landing future full-time, permanent employment, since employers are more likely to hire workers willing to agree to zero-hour arrangements. However, polling data appears to show that a large percentage of workers on zero-hour contracts in the United Kingdom suffer from increased rates of financial insecurity and the inability to find jobs elsewhere. The 2019 Financial Times report indicated that 20.9 percent of these zero-hour contract workers had financial concerns, compared to 9.3 percent of employees on permanent contracts. Furthermore, the theoretical flexibility these contracts offer is often nullified by the fact that many zero-hour contracts require the worker to maintain availability regardless of whether or not he or she is needed from day to day. This limits workers’ ability to seek employment elsewhere, since they must remain on call to the zero-hour employer at specified times. A poll conducted by the Trades Union Congress in 2021 showed that 45 percent of zero-hour contract workers take such jobs because those are the only ones available to them. Organizations like the Trades Union Congress and the Labour party have attempted to ban zero-hour contracts for some time, citing that employees deserve contracts that contain stated regular hours.
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