Zero-hours contracts have a reputation problem, largely earned by a handful of large employers who used them to avoid ordinary employment obligations at scale. For a small café, shop or hospitality business genuinely dealing with unpredictable footfall — busy Saturdays, dead Tuesdays, a summer rush that vanishes by October — they can be a legitimate and fair way to staff variable demand, provided they're used properly rather than as a way to sidestep basic fairness.
What a zero-hours contract actually is
A zero-hours contract is an employment arrangement with no guaranteed minimum hours — the employer offers work as and when it's available, and the worker can generally accept or decline shifts, though the specific flexibility depends on how the contract is written. It sits alongside more predictable options like fixed part-time hours or a bank of casual staff, and the right choice depends entirely on how genuinely variable your demand actually is, not on which option looks cheapest on paper.
Where zero-hours is genuinely the right tool
For a seasonal hospitality business, an events-driven venue, or a retail operation with sharply different weekday and weekend footfall, guaranteeing fixed hours to every staff member would mean either overstaffing on quiet days or underdelivering on busy ones — neither serves the business or the customer well. Used properly here, zero-hours contracts let a business match staffing to actual demand while giving workers genuine flexibility too, which suits some people very well, particularly students, those with caring responsibilities, or anyone deliberately choosing variable work over fixed hours.
Where it becomes a problem
The reputational damage to zero-hours contracts comes from a specific misuse: using them for roles that actually have predictable, regular hours, purely to avoid the obligations that come with a fixed contract — continuity of employment rights, easier planning for the worker, the basic dignity of knowing your income in advance. If someone is working broadly the same 30 hours a week, every week, for months, calling that a zero-hours arrangement isn't flexibility — it's using the label to withhold predictability the actual working pattern doesn't require you to withhold. That gap between the contract type and the real working pattern is exactly where legal risk and reputational risk both concentrate.
If the rota looks the same most weeks, it isn't really zero hours — it's a fixed job wearing a flexible label, and workers (and employment tribunals) can tell the difference.
The exclusivity trap
One of the clearer legal lines: workers on zero-hours contracts cannot be stopped from working for another employer, and exclusivity clauses that try to prevent it are unenforceable — a rule in place since 2015, extended in 2022 to contracts guaranteeing net weekly income at or below the Lower Earnings Limit, and extended again from January 2026 by the Employment Rights Act 2025 to cover all zero-hours arrangements, including informal bank-staff setups never written down as a contract. This makes sense once you think it through — if you're not guaranteeing someone any hours, you can't reasonably also demand they turn down other work while waiting for hours that might not come. Small employers sometimes try to write exclusivity into a zero-hours contract anyway, either from habit or a misunderstanding of what the arrangement actually permits, and it's one of the more common ways these contracts get challenged.
What the Employment Rights Act 2025 changes, and when
The rules under this article are moving, and a small employer using zero-hours contracts in 2026 needs the dates. Two changes have already landed: the wider ban on exclusivity terms from January 2026, and the Statutory Sick Pay reform on 6 April 2026, which removed both the three waiting days and the Lower Earnings Limit test — SSP is now payable from the first qualifying day at £123.25 a week or 80% of normal weekly earnings, whichever is lower, which pulls a lot of variable-hours staff into sick pay for the first time.
The bigger change is scheduled for 2027. Zero-hours and low-hours workers will gain a right to be offered guaranteed hours reflecting what they have actually worked across a reference period — the government's stated preference is 12 weeks — along with a right to reasonable notice of shifts and compensation when a shift is cancelled, moved or cut short. The detail is still arriving through secondary regulations, but the direction is settled.
The preparation that pays is free and takes an hour. Print your last twelve weeks of rotas and mark every person whose hours barely moved. Those are the people the guaranteed-hours right will capture, and they are the same people the article's honesty test already flags: if the rota looks the same most weeks, it was never really a zero-hours role. Better to decide now, on your own terms, which of them you would rather move onto fixed hours than to be told in 2027.
What zero-hours workers are still entitled to
It's a common myth that zero-hours means no rights — in practice, workers on these contracts are still entitled to the same hourly minimum wage, holiday pay accrued in proportion to hours actually worked, rest breaks, and protection from discrimination as any other worker. The 'zero' refers only to guaranteed hours, not to the underlying employment rights that attach to any hours that are actually worked. Getting holiday pay calculations right for genuinely variable hours is one of the more common practical mistakes — it should be calculated as a proportion of hours worked (12.07% of the hours actually worked in each pay period, for leave years beginning on or after 1 April 2024 — that figure is 5.6 weeks of statutory leave spread over the 46.4 working weeks left in the year), not ignored on the assumption that irregular hours means no holiday entitlement at all.
How to use zero-hours contracts fairly
The businesses that use this arrangement well tend to do a few things consistently: they're honest with themselves about whether the role is genuinely variable or just being treated that way for convenience; they give as much notice of shifts as realistically possible, because unpredictability is the actual cost workers bear in this arrangement, and minimising it is a fair trade for the flexibility the business gains; and they don't penalise workers, formally or informally, for turning down shifts — since the whole basis of the arrangement is that accepting work is optional, and treating a decline as a black mark undermines the fairness the contract type depends on.
The retail and hospitality reality
For a small café or shop owner reading this while planning next month's rota, the practical takeaway is simple: zero-hours contracts are a legitimate tool for genuinely unpredictable demand, not a workaround for basic fairness, and the two are easy to tell apart once you're honest about the actual working pattern. Combine it with a clear written contract that spells out exactly what's guaranteed and what isn't, so nobody — staff or owner — is working from an assumption that doesn't match reality.
Mixing zero-hours with a core fixed team
Many small retail and hospitality businesses land on the best of both worlds by combining a small core of staff on guaranteed fixed hours — enough to cover the baseline everyday running of the place — with a wider pool of zero-hours workers who genuinely flex around the peaks. That mix gives the business the stability of a dependable core team while still absorbing the busy Saturdays and quiet Tuesdays fairly, rather than forcing every single role into the same contract type regardless of whether the actual hours behind it are predictable or not. It's worth reviewing that split every six months or so as the business settles into its real, observed pattern of demand, since the right balance in year one is rarely still the right balance once trading history actually exists to plan against.
Common questions
Can I stop a zero-hours worker taking a second job with a competitor?
No. Exclusivity clauses in zero-hours contracts have been unenforceable since 2015, and the protection widened in 2022 to cover contracts guaranteeing net weekly income at or below the Lower Earnings Limit. From January 2026 the Employment Rights Act 2025 extended it again, to all zero-hours arrangements — including the informal bank-staff and ad-hoc setups that were never written down as a contract at all. A worker can accept other work regardless of what your paperwork says, and you cannot lawfully penalise them for it by quietly cutting their shifts. If you have genuinely confidential information to protect, that is a job for a confidentiality clause, not an exclusivity one.
How do I calculate holiday for someone whose hours change every week?
For leave years beginning on or after 1 April 2024, holiday for irregular-hours and part-year workers accrues at 12.07% of the hours actually worked in each pay period. The figure is not a rule of thumb someone invented: 5.6 weeks of statutory leave divided by the 46.4 working weeks that remain in the year gives 12.07%. So a worker who does 30 hours in a pay period banks 3 hours and 37 minutes of paid holiday. You may also choose rolled-up holiday pay for these workers — 12.07% added to every payslip — but only for irregular-hours and part-year staff, and it has to be itemised separately on the payslip.
What changes in 2027, and what should I do about it now?
From 2027, zero-hours and low-hours workers gain a right to be offered guaranteed hours reflecting what they have actually worked over a reference period, reasonable notice of shifts, and compensation when a shift is cancelled, moved or cut short. The government's stated preference for that reference period is 12 weeks, with the detail arriving through secondary regulations. The useful thing to do now costs nothing: pull your last twelve weeks of rotas and see which of your 'zero-hours' people have in practice worked a steady pattern. Those are the ones the new right will capture, and you would much rather learn that from your own spreadsheet than from a tribunal.
Can I drop someone down the rota for turning shifts down?
Not safely, and doing it undermines the entire basis of the arrangement. If the contract says a worker may decline offered work, then reducing their shifts because they exercised that right is a detriment — and the Employment Rights Act 2025 specifically protects workers from being penalised in connection with the new guaranteed-hours and shift-notice rights as those come into force. There is a practical problem long before the legal one, too: the informal blacklist is exactly how small hospitality businesses lose their best casual staff to the pub down the road. If you need dependable coverage on particular shifts, the honest fix is to guarantee those hours and pay for them.
Do zero-hours workers get the minimum wage, sick pay and a pension?
The minimum wage always, from the first hour: £12.71 an hour for workers aged 21 and over from 1 April 2026, £10.85 for 18 to 20 year olds and £8.00 for 16 and 17 year olds. Sick pay changed materially on 6 April 2026 — Statutory Sick Pay is now payable from the first qualifying day rather than the fourth, and the Lower Earnings Limit test has gone, so low-paid and variable-hours staff qualify. The rate is £123.25 a week or 80% of normal weekly earnings, whichever is lower. Auto-enrolment still depends on earnings, so assess variable-hours staff every pay period. 'Zero' describes the guaranteed hours, not the rights.
