Written by Abby Hawkes | 16th June 2026
Summer is coming and many employers will be thinking about the topic of staffing – how do we cover shifts, manage annual leave and respond to customer demand without over-stretching the team?
For some businesses, zero hours contracts are part of the answer. They can be useful and flexible, but they also need careful handling.
This has never been more important as the Employment Rights Act 2025 takes effect. One of the key reforms, due to take effect in January 2027, is workers on zero contract hours will get the right to guaranteed working hours, if they want them.
It’s clear that employers will be expected to show that flexible working arrangements are fair and transparent, and now is the time you should be preparing.
What zero hours contracts are (and what they are not)
A zero hours contract is an arrangement where you, as the employer, do not guarantee a minimum number of hours. Work is offered when it is available and the individual is free to accept or decline it.
That flexibility is often what makes them attractive, as it allows you to scale up or down without committing to fixed hours, and it can suit team members who want or need that level of flexibility. However, zero-hours work has often been seen as one-sided (in favour of the employer), but it’s important not to confuse “no guaranteed hours” with “no employment rights”.
Workers on zero hours contracts are still entitled to statutory protections. These include the National Minimum Wage or National Living Wage for hours worked, paid holiday, rest breaks under the Working Time Regulations 1998 and protection from unlawful discrimination.
In most cases, they will also have worker status, but in some cases they may become an employee depending on how the arrangement operates over time. Regularity of work and mutual expectations play a part in assessing which of these the individual is classed as.
That is important because rights can build quietly over time. A genuinely casual arrangement can become something closer to ongoing employment without anyone formally changing the contract.
That matters even more in light of the Employment Rights Act. The new law will introduce a duty to offer guaranteed hours to qualifying zero hours and low hours workers where their regular working pattern over a reference period shows that they are, in reality, working more predictably than the contract suggests. We’re waiting for confirmation on how long the reference period will be, but it is expected to be 12 weeks.
Workers will also have a right to reasonable notice of shifts and a right to payment for shifts that are cancelled, shortened or moved at short notice.
Where zero hours contracts are best suited
Zero hours arrangements tend to work best where demand in your business fluctuates significantly.
In hospitality, that might be linked to bookings, events, and seasonal peaks in trade. In retail, this could be promotional periods that do not support fixed staffing levels throughout the year. Tourism and leisure operators frequently rely on flexible staffing to respond to visitor numbers, school holidays, and changing schedules across attractions and venues.
In agriculture and food production, the need is often driven by growing cycles and harvest periods, where work is intensive but time limited. Events and festivals are another example, where staffing requirements are typically short-term and project-based, then drop away entirely once the event is finished.
In health and social care, zero hours arrangements are often used to provide additional capacity and cover unplanned absence, helping maintain safe staffing levels.
What links these sectors is that the need for work can be unpredictable, short-term or dependent on factors outside your control.
What good practice looks like
When zero hours contracts work well, it is usually because the arrangement is clear, fair and reviewed regularly.
This starts with clear written terms. Even where work is casual or irregular, people should understand how shifts will be offered, how pay and holiday entitlement will be calculated, whether they are expected to be available, and what happens if they decline work. Clarity at the outset prevents many problems later.
Holiday pay needs particular care, because, like most other employees, zero-hours workers are entitled to 5.6 weeks’ paid holiday each year, pro-rated where appropriate. You need to pay holiday at the correct rate, calculate holiday entitlement accurately and keep proper records. You can use ‘rolled-up’ holiday pay, when you spread holiday pay over a year, adding an amount on top of someone’s normal pay. You must calculate this at a rate of at 12.07% of the worker’s total pay in a pay period (however often they get paid, e.g. monthly), and it should show as a separate item on the worker’s payslip.
A key point with zero-hours work, that is often missed, is that flexibility has to work both ways. Individuals should be able to decline work without feeling that it will negatively affect future opportunities. If that expectation is not in place, the arrangement may not reflect a true zero hours model.
Right to work checks should always be completed before the individual starts work. This applies just as much to casual and seasonal staff as it does to permanent employees. During busy recruitment periods, it is an easy step to rush, but it is one of the most important compliance checks to get right.
It is also sensible to review working patterns regularly. If someone is working the same shifts week after week, or frequently working well above the hours implied by the contract, that is a sign to question whether a different arrangement would be more accurate, more stable and less risky.
Lastly, most issues in flexible working arrangements come down to expectations not being aligned – so make sure you clearly communicate availability and shift offers to avoid misunderstandings.
Where things can go wrong
Most challenges with zero hours contracts start because an arrangement that was casual at the beginning gradually becomes something more fixed, without anyone updating the contract or the management approach.
A common issue is relying on workers for roles that have effectively become permanent. If someone is working regular hours over a sustained period, continuing to treat them as casual can create legal and operational risk.
You also cannot prevent people on zero hours arrangements from working elsewhere. This is not only about removing an exclusivity clause from a contract, it also means avoiding informal practices that penalise someone for taking other work, such as reducing their shifts because they were unavailable on one occasion.
As we have mentioned above, holiday pay is a challenge we see regularly with zero-hours work, especially where payroll systems are not set up for irregular hours. Underpayment can quickly become a compliance issue if it is not spotted early.
There is also a risk around how shifts are allocated. If declining work leads, even indirectly, to fewer future opportunities, it takes away the flexibility that the arrangement is meant to provide.
Now is the time to review your zero hours contracts
Before we hit peak summer where you might need to hire more zero-hours staff, it’s worth asking yourself: are our zero hours contracts being used only where work genuinely fluctuates? Do the written terms match what is happening on the rota? Are holiday pay, rest breaks, National Minimum Wage compliance and right to work checks being managed consistently? Would any regular working patterns suggest that someone should be offered a more predictable arrangement?
If the answer to any of these questions is unclear, now is the right time to review the arrangement rather than waiting until a dispute, payroll issue or recruitment issue happens.
How Reality HR can help
If you are heading into a busy season or just want reassurance that your arrangements are still appropriate and compliant, we can help.
We can review your zero hours arrangements, including checking contracts, checking employment status, supporting with holiday pay compliance, updating manager guidance and helping you prepare for the changes coming through the Employment Rights Act 2025.
Speak to an HR consultant or book a free 30-minute call with one of our expert team – please contact info@realityhr.co.uk or call 01256 328428.
About the author: Abby Hawkes, HR Consultant
With over 13 years of experience in HR, Abby is a dedicated professional who excels in all areas of generalist HR and enjoys HR project work. She has experience in employee relations, including performance management, disciplinary and grievance processes, and redundancies as well as broad generalist HR practises.
At Reality HR, Abby supports a diverse range of clients in construction, engineering, pharmaceutical, and manufacturing industries, with businesses ranging from 15 to 250 employees. She is skilled in developing employee handbooks and policies, ensuring that her clients have the tools they need to succeed. Known for her friendly and approachable nature, Abby strives to create positive, trusting, and open relationships with her clients. She enjoys working through challenges together with her clients to find the best outcomes.