Zero-Hour Contracts: Should A Worker Expect Annual Leave & Other Considerations

4th July 2021

zero hours contract and holiday entitlement

The UK is one of a small selection of countries that currently allows “zero-hour contracts”. An unofficial name, a zero-hour contract simply means that there is no minimum work requirement and, instead, work is variable.

Most commonly, zero-hour contracts are used during holidays and when there’s seasonal demand. For the likes of delivery services, this extra flexibility afforded by zero-hour contracts allows businesses to keep up with demand.

When flexibility is over-prioritised, employment rights and entitlements can be unfortunately overlooked. Seasonal demands can put unprecedented, and sometimes unanticipated, pressure on businesses.

Before using zero-hour contracts, it’s imperative that an employer understands their responsibilities. This means being aware of your workforce and anything they might ask you about in their contract.

What are the pay requirements for a zero-hour contract?

As with all workers, employees are entitled to the national minimum wage. From April 2021, the qualifying criteria for receipt of the minimum wage has been extended to 23 and 24 years old (whereas it only applied to those 25 years and over before), so it’s worth checking that all workers are correctly paid.

How does a zero-hour worker know what their annual leave pay is?

Under the Working Time Regulations 1998, workers in the UK are legally entitled to a minimum of 5.6 weeks of paid holiday every year, and this includes workers on zero hour contracts, who will begin to accrue paid holiday as soon as they start their job. Annual leave or holiday pay must be calculated based on an employee’s average weekly earnings in the 52 weeks leading up to the date their holiday starts.

In the first year of an employment contract, employers can insist on the worker working enough days to accrue their holiday entitlement before they can take it. Employers should be aware that they must still allow workers to take already accrued holiday entitlements despite any gaps in employment whilst working sporadic zero-hour contracts.

Zero-hour contracts and holiday entitlements

Employers should note that employees continue to accrue holiday when absent from work. A worker can request to take paid holiday as part of their sick leave, but an employer cannot enforce this.

Is a worker entitled to SSP (Statutory Sick Pay) on a zero-hours contract?

During the current pandemic, SSP has been used for both those self-isolating and those who were off work sick for COVID-19 related reasons, in addition to non-COVID related sickness absences

Statutory Sick Pay may apply to an employee who is a on a zero-hour contract arrangement if they meet the following criteria:

  • They have earned at least £120 per week (2020/21 tax year) in the past 8 weeks
  • They have an employment relationship in place with an employer
  • They have been ill for four or more consecutive days (please note that this is not a requirement for COVID-related absences).
  • The sickness is reported to the employer

Agency workers are entitled to SSP. Where an employee is not eligible for SSP, then other benefits may be available.

The current SSP rate is £96.35 per week and is paid by the employer for up to 28 weeks.

Redundancy as a zero-hours worker

Employees on zero-hour contracts may be eligible for redundancy pay and other statutory entitlements if the individual has worked continuously for their employer for two years or more.

Is a zero-hours worker entitled to breaks and subject to working maximum hours?

In the UK, workers generally have a right to not work more than 48 hours in an average week as per the Working Time Regulations. There may be exceptions to this depending on the nature of the role

Regarding break times, workers on zero-hour contracts are entitled to a 20-minute break in every six hours worked, 11 hours’ uninterrupted rest in every 24-hour period and 24 or 48 uninterrupted hours in every seven, or fourteen-day period, respectively, in line with workers on other working arrangements.

Should a zero-hour worker have a contract?

In short, yes. The government is very clear on this, and the contract should clarify the following areas:

  • The individual’s employment status, i.e., are they a worker or employee?
  • If they are an employee, how will statutory entitlements be paid and accrued?
  • How work will be offered, and the method of accepting or refusing the work accordingly
  • How the contract can or will be terminated

A contract could also include information about rotas, how to book holiday, what to do if a shift needs switching, and how to go about requesting specific hours and more flexible scheduling.

In addition, a zero-hours contract cannot include an exclusivity clause; a worker is legally entitled to find work elsewhere and pursue other opportunities. Similarly, an employer is not allowed to require a worker to request permission before pursuing work elsewhere.

Zero hours contracts allow flexibility for both employers and individuals. However, they should not be considered as an alternative to proper business planning and should not be used as a permanent arrangement if it is not justifiable.

If you’re an employer trying to work out the specifics of a zero-hour worker’s pay and contractual Terms and Conditions, and need help demystifying the process, get in touch with IRIS FMP today.