A zero-hours contract is an employment arrangement where the employer is not obliged to provide any minimum working hours, and the worker is not obliged to accept any work offered. Zero-hours contracts are common in the UK, particularly in hospitality, retail, care work, and education. Despite the flexibility they offer both parties, they raise important questions about workers’ rights — especially around holiday pay, which accrues differently than for fixed-hours employees.
If you are on a zero-hours contract or manage zero-hours workers, understanding how holiday entitlement and pay work is critical. UK law provides clear protections, but the calculation is less straightforward than for traditional employees.
Key Takeaways
- Zero-hours contracts offer no guaranteed hours — the employer offers work and the worker can accept or decline.
- Workers on zero-hours contracts are still entitled to statutory annual leave (5.6 weeks per year) and holiday pay.
- Holiday pay for irregular-hours workers is calculated based on average earnings over a 52-week reference period (rolled up from 2024).
- Workers cannot be penalised for refusing work, and zero-hours contracts cannot be used to avoid employment rights.
- Employers must keep accurate records of hours worked to calculate holiday pay correctly.
What Is a Zero-Hours Contract?
A zero-hours contract is a type of employment contract where:
- The employer does not guarantee a minimum number of hours.
- The worker is free to accept or decline shifts offered.
- Hours are offered on an as-needed basis, often with short notice.
- The worker is still classified as a “worker” (or “employee” in some cases) and entitled to employment rights.
Zero-hours contracts are not the same as freelance or self-employed arrangements. Workers on zero-hours contracts have employment rights including minimum wage, holiday pay, sick pay, and protection against discrimination. The distinction matters: if someone is genuinely self-employed, they do not have these rights. But if they are on a zero-hours contract, they are a worker under UK law.
How Common Are Zero-Hours Contracts?
According to the Office for National Statistics, approximately 1.1 million workers in the UK were on zero-hours contracts in 2023 (ONS, Employee Labour Dispute Survey). The actual figure may be higher, as some employers use informal arrangements that are not captured in surveys.
| Sector | Typical Use |
|---|---|
| Hospitality & catering | Event staffing, seasonal peaks |
| Retail | Flexible shift coverage |
| Healthcare & social care | On-call and agency work |
| Education | Supply teaching, exam invigilation |
| Warehouse & logistics | Peak demand periods |
Holiday Entitlement for Zero-Hours Workers
Workers on zero-hours contracts are entitled to the same statutory annual leave as any other worker: 5.6 weeks per year. For someone working irregular hours, this is calculated based on the hours they actually work, not a fixed 5-day week.
How Holiday Accrues
Holiday accrues based on hours worked. For every hour a zero-hours worker works, they accrue holiday pay at 12.07% of the hours worked. This percentage comes from the formula:
- 5.6 weeks holiday ÷ (52 weeks − 5.6 weeks) = 12.07%
So for every hour worked, the worker accrues approximately 0.1207 hours of paid holiday.
Example:
- Worker completes 20 hours in a week
- Holiday accrued: 20 × 12.07% = 2.41 hours of paid holiday
Taking Holiday
Zero-hours workers can request holiday in the same way as other workers. The employer can require the worker to take holiday on specific dates, provided they give sufficient notice (at least twice the number of days being requested). However, many employers and workers agree to “rolled-up” holiday pay instead.
Rolled-Up Holiday Pay (From 2024)
From April 2024, the UK government introduced rolled-up holiday pay for irregular-hours and part-year workers under the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2024. This means:
- Employers can include holiday pay in each payslip rather than requiring workers to take time off and receive separate holiday pay.
- The 12.07% uplift is applied to all hours worked.
- Workers still have the right to take leave — rolling up pay does not remove the right to time off.
This change was designed to simplify holiday calculations for workers with variable hours, who previously faced complex accrual and calculation rules.
Before vs. After 2024
| Feature | Before April 2024 | After April 2024 |
|---|---|---|
| Holiday calculation | 52-week average reference period | 52-week average (rolled-up option available) |
| Holiday pay timing | Paid when leave is taken | Can be paid with each payslip (12.07% uplift) |
| Worker right to leave | Cannot be denied | Still cannot be denied |
Calculating Holiday Pay for Zero-Hours Workers
The calculation depends on whether the worker has regular or variable hours:
Workers with Regular Hours
For workers on zero-hours contracts who consistently work the same hours each week, holiday pay is calculated in the same way as for fixed-hours employees — 5.6 weeks of their normal weekly pay.
Workers with Variable Hours
For workers whose hours vary week to week, holiday pay is based on the average weekly pay over a 52-week reference period. To calculate:
- Look back over the most recent 52 weeks in which the worker was paid.
- Add up total gross pay over those 52 weeks.
- Divide by 52 to get the average weekly pay.
- Multiply by 5.6 to get the annual holiday pay entitlement.
If the worker has been employed for fewer than 52 weeks, use the number of complete weeks they have been employed.
Example:
- Worker has been employed for 30 weeks, earning a total of £6,000 gross
- Average weekly pay: £6,000 ÷ 30 = £200
- Annual holiday pay: £200 × 5.6 = £1,120
Legal Protections for Zero-Hours Workers
UK law provides several protections:
- No exclusivity clauses: Employers cannot include clauses in zero-hours contracts that prevent workers from working for other employers. The Small Business, Enterprise and Employment Act 2015 banned exclusivity clauses in zero-hours contracts.
- Protection from detriment: Workers cannot be subjected to any detriment (such as being offered fewer hours) for refusing work or raising a complaint about their rights.
- Right to a written statement of terms: Zero-hours workers must receive a written statement of employment particulars on or before their first day of work, setting out the terms of the arrangement.
- National Minimum Wage: Zero-hours workers are entitled to the National Minimum Wage (or National Living Wage if aged 21+) for all hours worked, including any on-call time where they are required to be available.
Frequently Asked Questions
Can I be fired for refusing shifts on a zero-hours contract?
No. Refusing a shift is not grounds for dismissal. Workers on zero-hours contracts are under no obligation to accept work, and employers cannot penalise them for declining shifts. If you are dismissed for refusing work, you may have a claim for unfair dismissal or detriment.
Does a zero-hours contract give me any employment rights?
Yes. Workers on zero-hours contracts are classified as “workers” under UK law and are entitled to the National Minimum Wage, statutory annual leave, sick pay (SSP), protection from discrimination, and protection from detriment for exercising their rights. Some zero-hours workers may also qualify as “employees” with additional rights, depending on the nature of the relationship.
How do I calculate my holiday pay as a zero-hours worker?
If you have variable hours, your holiday pay is based on your average weekly earnings over the most recent 52 weeks you were paid. Add up your gross pay over those 52 weeks and divide by 52. Multiply the result by 5.6 for your annual holiday pay. From April 2024, your employer may also apply the rolled-up method, adding 12.07% to each payslip.
Can an employer use a zero-hours contract to avoid giving me rights?
No. Zero-hours contracts do not remove employment rights. If someone is genuinely a worker, they are entitled to minimum wage, holiday, and other protections regardless of how their hours are structured. HMRC can investigate employers who use zero-hours contracts to evade employment obligations.
What is the difference between a zero-hours contract and an agency contract?
In an agency arrangement, the worker is employed by the agency, not the end client. The agency is responsible for paying holiday pay, sick pay, and meeting employment obligations. In a zero-hours contract, the worker is directly engaged by the employer. Both arrangements carry employment rights, but the responsible party differs.
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