Zero-hours contract

A zero-hours contract is a UK and Irish work agreement with no guaranteed hours and no worker obligation to accept hours offered.

For UK and Irish payroll teams, the working question isn't whether the format is legal. It's which statutory entitlements still run despite the lack of guaranteed hours, and how the payroll system reports irregular work to HMRC or Revenue.

The UK runs the format under the Employment Rights Act 1996, with exclusivity clauses void since 2015 under ERA 1996 s.27A. Ireland regulates similar "if and when" contracts under the Employment (Miscellaneous Provisions) Act 2018, with banded-hours rights after 12 months.

The Netherlands caps the same arrangement under the Wet Arbeidsmarkt in Balans, forcing an offer of fixed hours after 12 months. Germany regulates Arbeit auf Abruf under TzBfG §12. The US has no direct equivalent; "as-needed" or "PRN" employment sits inside the at-will doctrine.

Which contract type applies when you need variable-hours staff?

The label "zero-hours" is UK and Ireland terminology. Other countries regulate similar mutual-non-obligation contracts under different names with different protections.

Where the contract types diverge

• Zero-hours (UK / Ireland): no minimum hours, no obligation to accept; worker status with statutory floor.
• Casual employment (Australia): irregular pattern, no guaranteed hours; statutory definition under Fair Work Act since 2021.
• Oproepcontract / nul-urencontract (Netherlands): on-call contract; mandatory fixed-hours offer after 12 months.
• Arbeit auf Abruf (Germany): on-call work; statutory 10-hour weekly default and 20% deviation cap.
• PRN / as-needed (US): at-will arrangement; no statutory floor beyond FLSA minimum wage.
• Fixed-hours part-time: guaranteed minimum hours; full employee status; standard payroll cycle.

Worker versus employee status

In the UK, most zero-hours staff hold "worker" rather than "employee" status under ERA 1996 s.230(3). That distinction matters at termination: workers don't qualify for statutory unfair-dismissal protection or redundancy pay.

They do get the statutory floor: National Minimum Wage, statutory holiday, rest breaks, pension auto-enrolment, and protection from unlawful discrimination. The line between worker and employee on a zero-hours arrangement usually turns on mutuality of obligation across the working relationship, not the contract label. See our UK employee versus contractor analysis for the parallel classification test.

What you must still pay even with no guaranteed hours

The biggest mistake on zero-hours staff is treating "no minimum hours" as "no statutory cost". Almost every employer obligation that applies to fixed-hours staff also applies to zero-hours work, scaled to hours actually worked.

For full-cost modelling on variable-hours staff, see fully burdened employment cost. The on-cost loading still applies; only the gross hours line moves.

Harpur Trust and the 12.07% rule

Pre-2022, most UK payroll systems calculated zero-hours holiday pay at 12.07% of hours worked (5.6 ÷ 46.4 = 12.07%). That rule of thumb survived for permanent staff on variable hours but failed for term-time and irregular-pattern workers.

Harpur Trust v Brazel [2022] UKSC 21 forced employers to give part-year workers the full 5.6 weeks of paid leave averaged over the 52-week reference period under s.224 ERA 1996, not a pro-rated 12.07% figure. The 2024 Working Time amendments restored the 12.07% method for irregular-hours and part-year workers from April 2024, but the Harpur Trust principle still applies to historic claims.

Country-by-country: where zero-hours is regulated, banned, or unknown

The format varies more by country than the headline name suggests. Some markets regulate the arrangement closely; others have no statutory equivalent at all.

The civil-law markets that don't recognise zero-hours (France, Spain, Italy, Belgium) push variable-hours work into other channels: fixed-hours part-time, intermittent contracts, or fixed-term arrangements. The format is not portable across the EU. If your headcount spans the UK and a civil-law market, you need two separate contract frameworks; a single zero-hours template will not travel.

UK Employment Rights Bill 2024

The Bill, currently passing through Parliament, introduces a statutory right for zero-hours and "low-hours" workers to request guaranteed hours after a 12-week reference period. The provision is modelled on the existing flexible-working request regime, with the employer required to offer hours that reflect the worker's actual pattern.

The reform sits alongside the predictable-terms regime already in force. Once enacted, the practical effect mirrors the Dutch and Australian approach: zero-hours stays lawful but becomes a starter format that converts to fixed-hours after a defined period.

How payroll teams handle holiday pay, pension, and RTI for zero-hours staff

Zero-hours payroll is more administrative work per head than fixed-hours. The variable-hours pattern complicates holiday-pay calculation, pension assessment, and Real-Time Information submission to HMRC.

Holiday-pay calculation

For irregular-hours workers from April 2024, the 12.07% method applies: each pay period, accrue 12.07% of hours worked as paid holiday entitlement. The calculation runs at the same time as the gross-to-net cycle. Pay the accrued holiday when leave is taken, not as rolled-up pay (which the WTR 1998 prohibits except for genuinely irregular work).

Pension auto-enrolment

Auto-enrolment under the Pensions Act 2008 triggers when earnings cross £833 in a monthly pay period or £192 weekly. For zero-hours staff, that means assessing eligibility on every pay run. A worker who earns above the trigger in March and below it in April moves in and out of eligibility, with the corresponding contribution lines on the payslip.

HMRC RTI under PAYE12035

RTI submissions for irregular workers follow the standard FPS/EPS cycle, with one wrinkle: an "irregular employment indicator" on the FPS for workers expected to have gaps in work. The flag stops HMRC from treating a missed pay run as a leaver. The HMRC PAYE Manual at PAYE12035 sets out the indicator's use and the consequences of getting it wrong.

Why EORs refuse zero-hours globally

Most global EOR providers default every country contract to fixed-hours. Zero-hours, casual, and on-call formats sit outside the standard template, and providers usually decline to support them.

The provider position

Deel, Remote, Multiplier, and the other tier-one EORs run a fixed-hours baseline in every country they operate in. The reasons are operational: payroll cycles assume predictable gross-to-net inputs, social-charge calculations assume regular pay periods, and country-by-country employment templates assume a defined working week.

If you ask an EOR to hire a UK or Irish worker on zero-hours, the typical answer is no, or a counter-offer of a fixed minimum-hours contract (often 8 to 16 hours weekly) that meets the worker's expected pattern. See our Deel review for the standard country-contract approach and how it handles variable-hours requests.

What buyers do instead

The two practical alternatives are running the workers directly on the buyer's own PAYE (if the buyer holds a UK or Irish entity) or accepting a fixed minimum-hours EOR contract that approximates the working pattern. Casual labour in retail, hospitality, and seasonal work is usually outside the EOR scope entirely.

For genuine global-payroll coverage of variable-hours workers, look at providers that run direct payroll services rather than EOR employment. The best global payroll providers shortlist covers the players with full direct-payroll capability.

Zero-hours contract FAQs

Are zero-hours contracts legal in the UK?

Yes. Zero-hours contracts are lawful under the Employment Rights Act 1996. Exclusivity clauses that ban the worker from taking other work are unenforceable under ERA 1996 s.27A since the 2015 Regulations.

The Employment Rights Bill 2024, currently in Parliament, introduces a right to request guaranteed hours after a 12-week reference period. Zero-hours staff still receive National Minimum Wage, statutory holiday, rest breaks, and pension auto-enrolment.

How is holiday pay calculated on a zero-hours contract?

For irregular-hours workers from April 2024, accrue 12.07% of hours worked each pay period as paid holiday. Pay the holiday when taken; rolled-up pay is prohibited by the Working Time Regulations except for genuinely irregular work.

Before April 2024, Harpur Trust v Brazel [2022] UKSC 21 required term-time and part-year workers to receive 5.6 weeks of paid leave averaged over 52 working weeks under s.224 ERA 1996. The principle still applies to historic underpayment claims.

Do zero-hours workers qualify for unfair-dismissal protection?

Usually not. Most zero-hours staff hold worker status rather than employee status under ERA 1996 s.230(3), and statutory unfair-dismissal protection only applies to employees with two years' continuous service.

Day-one protections still apply: Equality Act 2010 discrimination, whistleblowing, and family-leave reasons. The status line turns on mutuality of obligation in the working relationship, not the contract label. See the parallel test in probation period for the wider termination framework.

Can an EOR hire someone on a zero-hours contract?

Most global EORs decline. Deel, Remote, Multiplier, and other tier-one providers default to fixed-hours contracts in every country because payroll cycles, social-charge calculations, and country-employment templates assume predictable pay periods.

The typical counter-offer is a fixed minimum-hours contract that approximates the working pattern. Casual labour usually sits outside EOR scope entirely. See the employer of record entry for the wider responsibility split.

Does zero-hours exist outside the UK?

The label is UK and Ireland. Other countries regulate similar arrangements under different names: Netherlands nul-urencontract with a mandatory fixed-hours offer after 12 months, Germany Arbeit auf Abruf under TzBfG §12 with a 20% deviation cap and 10-hour default, Australia casual employment with a 12-month conversion right.

France, Spain, and Italy effectively prohibit the format. The US runs as-needed work under the at-will doctrine with no statutory floor beyond FLSA minimum wage.