Key Takeaways
- Zero contracts (zero-hours contracts) offer no guaranteed hours but still give you rights such as minimum wage, paid holiday, and protection from discrimination.
- Your status as a worker or employee under a zero-hours contract affects whether you have rights to unfair dismissal, redundancy, and continuity of employment.
- Employers cannot enforce exclusivity clauses in zero-hours contracts—you are free to work for multiple employers at the same time.
- Holiday and redundancy pay for zero-hours workers must be calculated fairly, typically using average earnings from recent weeks.
- If you are dropped from the rota or dismissed, you may have claims for unfair dismissal, notice pay, or redundancy if you have sufficient continuity.
- Settlement agreements can offer a tax-free payment and legal certainty if you wish to leave a zero-hours contract on agreed terms, with employer-funded legal advice.
- Our SRA-regulated solicitors can negotiate exit terms and provide settlement agreement advice at no cost to you, as legal fees are paid by your employer.
- Settlement Agreement Lawyers are rated Excellent on Trustpilot, Google, and more, offering fast, remote UK-wide appointments.
Zero contracts: what are your rights and how can settlement agreements help?
Zero contracts, or zero-hours contracts, provide flexibility but create uncertainty about income and hours. Even without fixed hours, you have legal rights: minimum wage, paid holiday, and protection from discrimination. If your employer offers a settlement agreement to end your zero contract, you are legally required to get independent legal advice before signing. In almost all cases, your employer pays our solicitor’s fees—so there is no cost to you.
Do not rush into signing. Settlement agreements usually involve waiving claims including unfair dismissal, redundancy pay, backdated holiday, or notice pay. Our solicitors help zero-hours workers understand their rights, clarify employment status, check settlement terms, and negotiate a fair exit—ensuring correct pay, fair tax treatment, and full legal protection.
To speak to an expert now, call our solicitors on 0800 054 1144 or book your settlement agreement advice online.
What rights do you have on a zero-hours contract—and what can you do if there’s a dispute?
Zero-hours contracts are used extensively in retail, hospitality, social care and other sectors needing staffing flexibility. They suit some, but the unpredictability of work schedules leaves many unsure about their rights. Even on zero contracts, workers and employees are entitled to the National Minimum Wage, paid holiday, protection from discrimination under the Equality Act 2010, and safeguards against unlawful deductions.
If you are removed from the rota, dismissed without clear reason, or believe your rights are being breached, your steps include: raising a written grievance with your employer, seeking specialist legal advice, or claiming in the Employment Tribunal (depending on status).
If you are unfairly dropped from shifts, keep a diary and save all written communications. Evidence is vital in grievances and in any claim under Unfair Dismissal or Discrimination law.
Find guidance on ACAS: Zero-hours contracts and on GOV.UK – your employment rights.
Zero contracts explained: what is a zero-hours contract and who does it affect?
A zero-hours contract is where you have no guarantee of paid hours each week. Your employer only pays for the shifts or assignments you actually work. Zero contracts are common where demand fluctuates, like hospitality, care, retail and education.
This type of work may be ideal for students, carers, or those who want flexible shifts. But the unpredictability means planning financially and asserting rights can be difficult. Understanding whether you’re an “employee” or “worker” is essential, as it impacts your right to redundancy, unfair dismissal, and employment continuity.
A care worker is given a zero-hours contract, gets regular shifts for several months, then none for weeks. Regardless of hours, they are still entitled to statutory minimum wage and to paid holiday based on the hours actually worked.
For more details, see GOV.UK: Zero hours contracts overview or book ILA online with our team.
Are zero-hours contract workers classed as employees or workers? Employment status, rights and protection
Your true employment status defines what rights you have on a zero-hours contract. In law, you may be:
- An “employee” (with a contract of employment and mutual obligation) – full rights after two years’ service, including unfair dismissal and redundancy.
- A “worker” (entitled to basic rights like minimum wage and paid holiday, but not unfair dismissal or redundancy protections).
Tribunals look at the actual working relationship, not just terminology. A pattern of regular shifts, mutual obligation, and workplace integration increases the chance of employee status.
| Status | Minimum Wage | Paid Holiday | Unfair Dismissal | Statutory Sick Pay | Redundancy Pay |
|---|---|---|---|---|---|
| Employee | Yes | Yes | Yes | Yes | Yes (>2 years) |
| Worker | Yes | Yes | No | No | No |
| Self-employed | No | No | No | No | No |
If you work regular hours and your employer expects you to accept work, you may be an employee no matter how your contract is labelled. Check with our solicitors before accepting redundancy or dismissal.
See the ACAS guide on employment status and our Settlement Agreement Advice page.
What statutory rights do you have on a zero-hours contract? Minimum wage, holiday, and anti-discrimination
Despite the lack of guaranteed hours, you are entitled to be paid at least the National Minimum Wage for hours worked. Holiday entitlement for zero-hours workers is usually 12.07% of hours actually worked.
You are protected from discrimination under the Equality Act 2010 and have protection against unlawful wage deductions and breaches of working time or health and safety rules.
If your holiday is denied or pay is wrongly calculated, raise the issue with your employer—then seek advice or pursue a grievance if unresolved. You can claim at the Employment Tribunal if basic statutory rights are breached, even as a worker.
A retail worker regularly passed over for evening shifts due to age can challenge this as discrimination, regardless of “worker” or “employee” status.
See GOV.UK: Your rights at work and our Discrimination and Harassment pages for support.
Can zero-hours contract workers be forced to accept exclusivity clauses or work for only one employer?
Exclusivity clauses are not enforceable in zero-hours contracts. Since May 2015, your employer cannot restrict you from working for someone else or penalise you for doing so. Section 27A of the Employment Rights Act 1996 bans exclusivity clauses in zero contracts.
If your employer cuts shifts or dismisses you for taking other work, you may have grounds for unfair or automatically unfair dismissal (if an employee), or protection from detriment (if a worker).
If you have a contract clause preventing you from working elsewhere, it is not enforceable under zero-hours law. Get legal advice if your employer attempts to enforce or penalise you under such restrictions.
See ACAS: Exclusivity clauses in zero-hours contracts or book ILA online for confidential help.
Written particulars and your contract: key documentation for zero-hours and casual workers
Employers must provide all employees and workers with a written statement of particulars (your main terms) on or before the first day of work, including pay, hours, holiday entitlement, and notice periods. For zero-hours contracts, this should explain the ad hoc nature of your work and clarify pay, holiday, and how shifts are allocated.
Lack of written particulars increases the risk of misunderstandings, underpayment, and difficulty claiming rights or bringing a grievance.
If your zero-hours contract omits holiday entitlement details and you are underpaid, you could claim compensation at the Employment Tribunal for lack of written particulars and unpaid holiday.
See ACAS guidance on contracts and written statements and our Workplace Grievance team if you are missing key information.
What happens if you are suddenly dropped from the rota or dismissed on a zero-hours contract?
Being left off the rota without explanation is a major issue in zero contracts. Regular workers may in fact have employee status, especially after months or years of reliable work and expectation of shifts.
If you are dropped from the rota for no reason or are told your contract is ended, you might have a claim for unfair dismissal, redundancy or breach of contract—especially after two years’ continuous service.
Never agree to end your role “by mutual agreement” or resign before getting legal advice. It could weaken your Employment Tribunal case or forfeit important statutory rights.
Find more on ACAS: Dismissals and disciplinary hearings and our Unfair Dismissal guidance.
Can zero-hours contract workers claim unfair dismissal, redundancy pay or notice pay?
Entitlement depends on your status and continuity. Employees with two years’ continuous service have unfair dismissal and redundancy rights, even on fluctuating hours, as well as minimum notice or pay in lieu.
Regular workers usually do not have redundancy or unfair dismissal protection, but are entitled to minimum wage and paid holiday. What counts as “continuous service” can be complex if there are gaps between shifts.
A server on a zero contract averages 20 hours a week over three years. Dismissed suddenly, they are classed as an employee with entitlement to redundancy and notice pay due to sustained regular work.
Read more at GOV.UK: Redundancy – who is entitled to redundancy pay or use our Redundancy Calculator to estimate your entitlement.
If you are unsure of your rights, call 0800 054 1144 or book your settlement agreement advice online for clear, free legal advice.
How do settlement agreements work for zero-hours contract workers? Why independent legal advice (ILA) is required
Settlement agreements are increasingly used for zero-hours workers in redundancy, disputes, or where a regular pattern of shifts means an employment relationship. The agreement is only legally binding if you receive independent legal advice—required by s.203 Employment Rights Act 1996. The employer must pay for the advice, not you.
Our solicitor must confirm you understand the rights you give up, ensure the payment and terms are fair, and issue an ILA certificate. This means you can secure a tax-free payment and a legally safe exit with a properly structured agreement.
Signing without legal advice makes the agreement unenforceable. Let our solicitors review and negotiate your settlement to maximise your outcome and safeguard your rights.
See the ACAS guide to settlement agreements or our Settlement Agreement Advice page.
The legal framework: s.203 Employment Rights Act 1996 and mandatory ILA
Section 203 ERA 1996 states that you cannot waive legal rights unless you get independent advice from a qualified solicitor. The agreement must state which rights are waived and confirm independent legal advice was obtained. The employer pays for this process so you are not out of pocket.
A warehouse worker is offered a redundancy settlement. Our solicitor reviews the offer, explains legal risks, checks for fair pay, and issues the ILA certificate needed for you to receive your money and close the case.
Full law is at Section 203 ERA 1996. For fast, remote legal advice, see our book ILA online page.
Typical reasons for offering settlement agreements to zero-hours staff
Settlement agreements are used to resolve redundancy, grievances (such as discrimination or harassment), performance issues, or end regular casual arrangements. Employers sometimes use settlement agreements to avoid formal redundancy, grievance, or Tribunal routes.
Initial settlement offers, especially for zero-hours workers, are commonly lower than what can be achieved with negotiation. Our solicitors regularly obtain improved exit payments and reference wording for clients.
For real-life outcomes, see Client success stories. If performance issues play a role, visit our Performance, Capability & Disciplinary Exits page.
Is the financial offer fair? Calculating pay, holiday, and redundancy under zero contracts
Settlement agreements should include payment for outstanding wages, holiday, redundancy, and any ex gratia sums. For zero-hours contracts, average your earnings over the last 12 paid weeks to calculate “week’s pay” for redundancy and holiday. All unpaid holiday, expenses, or notice must be included. Enhanced (tax-free ex gratia) payments may be possible.
Check you aren’t being underpaid—a common issue when employers use only recent low-earning periods.
A zero-hours worker is offered redundancy but the weekly pay figure is based on two quiet months. Our solicitors renegotiate using their 12-week average, increasing redundancy pay by £1,200.
Calculation tools: GOV.UK: Redundancy pay overview and our Settlement Agreement Calculator.
Common negotiation points for zero-hours settlement agreements
Payment breakdown, reference wording, tax treatment, status and service date confirmation, and restrictive covenants are all negotiation points. Ex gratia sums are often negotiable—especially with potential legal claims in the background, like whistleblowing or discrimination.
Always insist agreed reference terms are attached to the settlement agreement. Promises made outside the agreement may not be enforceable.
See negotiation advice in our Settlement Agreement Advice guide.
If you have a settlement offer on a zero contract, our solicitors can check if you can get more—and negotiate on your behalf. Free to employees: call 0800 054 1144 or book online.
Tax on settlement agreements for zero-hours and casual workers: what is tax free, what is not?
The first £30,000 of genuine compensation or redundancy is tax-free. Outstanding wages, holiday pay, and pay in lieu of notice (PENP) are always taxable under current HMRC rules. Zero-hours workers must ensure a clear payment breakdown for correct tax treatment and to avoid issues later.
Employers sometimes roll all sums into one figure or tax everything—this can be challenged and adjusted for maximum benefit.
| Payment type | Taxable? |
|---|---|
| Outstanding wages | Yes |
| Accrued holiday | Yes |
| Statutory or enhanced redundancy | No (up to £30k) |
| Ex gratia/compensation (up to £30k) | No (up to £30k) |
| Payment in Lieu of Notice (PENP) | Yes |
A zero-hours warehouse worker faces an “all in” settlement with no distinction for tax. Our solicitors negotiate a split payment and obtain a written breakdown so most of the sum is tax-free.
See GOV.UK: Tax on settlement agreements and our Settlement Agreement Calculator.
£30,000 tax-free exemption, PENP and tax on pay in lieu of notice
Compensation for redundancy or loss of employment (up to £30,000) is tax-free, but PENP (pay in lieu of notice), wages, and holiday pay are taxed as normal. The correct calculation, especially for variable hours, normally uses your 12-week earnings average.
Check the agreement does not just say “all sums are taxable.” Our solicitors ensure clear wording and fair tax treatment to maximise your take-home payment.
For further explanation, see GOV.UK: Termination payments and tax, and our Settlement Agreement Advice page.
Key clauses and risks in zero-hours settlement agreements: what to check before signing
Read every clause before you sign. Common sections include: detailed payment breakdown, tax treatment, exact claims waived, restrictive covenants, confidentiality, tax indemnity, and service date confirmation.
Look for clauses that are too broad or overly restrictive on future work. Any agreed reference must be attached, and waivers must be specific (not “all known/unknown claims”). Ask our solicitors to check the agreement for these risks.
A hospitality worker is offered a settlement with a 12-month non-compete clause. After review, the clause is removed, allowing the worker to start a new job immediately.
See more at our Settlement Agreement Advice section.
Restrictive covenants, confidentiality, references, tax indemnities and waivers
Restrictive covenants may try to block you from working for competitors. Confidentiality clauses prevent sharing settlement details but cannot block legal advice or whistleblowing. References should be by agreed wording. Tax indemnity clauses demand you pay back tax if HMRC asks—this can be negotiated.
Do not accept blanket waivers or unreasonable restrictions. Our solicitors always tailor the list of claims waived to protect future rights and your ability to work.
Full details on our Settlement Agreement Advice page.
Step-by-step guide to signing a zero-hours settlement agreement: from offer to completion
The process typically unfolds:
- Receive a written settlement agreement offer.
- Get independent legal advice—required by law, with no cost to you as the employee.
- Our solicitors review the agreement for fairness, accuracy, and opportunities to negotiate.
- Negotiate improved terms if necessary.
- Sign the agreement when you accept the terms.
- Our solicitor provides an ILA certificate, a legal necessity.
- Return the documents to your employer.
- Receive your agreed payment (usually within 14 days).
Our service is remote and quick, with the employer always paying our fees.
A retail worker receives a Friday settlement offer, has a same-day video review with our solicitor, negotiates a higher exit sum, and receives payment days later—no face-to-face meeting needed.
For remote appointments, see our book ILA online page.
How fast, remote, and employer-funded legal advice works
There’s no need to visit our office. Our solicitors conduct all reviews and negotiations remotely—simply upload your documents, book your call, and get legal advice plus your ILA certificate by email. The employer is invoiced directly; there’s no cost to you.
All documents and appointments are securely handled for a quick turnaround, so zero-hours and casual workers across England and Wales get expert settlement agreement advice, wherever you are.
Before your appointment, have your settlement offer, contract, and payslips ready. Good paperwork allows our solicitors to work faster and secure better results.
To arrange your appointment, call 0800 054 1144 or book ILA online.
Why Choose Settlement Agreement Lawyers?
Settlement Agreement Lawyers focus solely on representing employees and workers. Our SRA-regulated team delivers expert advice on zero contracts, settlement agreements, redundancy, dismissals and workplace disputes across England and Wales.
We provide a free, same-day, fully remote service. Because the employer pays our capped legal fees, there is no cost to you. Our solicitors specialise in securing improved compensation, robust references, and achieving risk-free exits—especially for zero-hours and casual roles.
See what clients think via our client success stories page, or how our funding works at Free for employees / funding.
A supermarket worker on a zero-hours contract was offered a standard settlement. After our solicitor acted, the client received 50% more in compensation and an agreed reference, with all exit clauses clarified.
Frequently Asked Questions About Zero Contracts
What is a zero-hours contract and how does it work?
A zero-hours contract is a working arrangement with no guaranteed minimum hours. Your employer offers shifts or work when needed, and you can usually accept or decline each assignment. This flexibility can be helpful for some, but often leads to unpredictable pay and job security.
Do zero-hours contract workers get holiday and sick pay?
Zero-hours workers have the right to paid holiday, generally calculated at 12.07% of hours worked. Eligibility for statutory sick pay depends on your worker or employee status and average weekly earnings—employees are more likely to qualify for sick pay than workers.
Can my employer stop me getting work elsewhere on a zero-hours contract?
Your employer cannot enforce exclusivity clauses on a zero-hours contract. The law since 2015 prohibits such clauses, so you are free to work for several employers and take any shifts you wish without penalty or threat of dismissal.
Am I entitled to redundancy or unfair dismissal on a zero-hours contract?
If you are legally an employee and have at least two years’ continuous service, you can claim statutory redundancy pay and protection from unfair dismissal. If you are a worker (not an employee), you do not have those rights but can still challenge discrimination or pay issues.
How do I negotiate a better exit package from a zero-hours or casual contract?
Start by reviewing recent hours, pay, and length of service. Seek independent legal advice to check for underpayments or missed entitlements. Our solicitors can then negotiate improved compensation, clear reference wording, and ensure the settlement agreement protects your rights.
What is a settlement agreement for zero-hours workers and when should I use one?
A settlement agreement is a legal document confirming agreed terms for ending employment, usually with a compensatory payment. It is used for redundancy, disputes, or when a regular working pattern ends. Independent legal advice is required before signing so your rights are protected.
How is holiday and redundancy pay calculated if my hours change each week?
Holiday and redundancy pay for zero-hours contracts are based on an average of your weekly pay, usually taken over the 12 weeks (or up to 52) before your last day. This ensures the calculation reflects all work, not just low-earning periods.
Are zero-hours contracts being banned or reformed in the UK?
Zero-hours contracts remain legal in the UK. The government has made reforms such as banning exclusivity clauses, and further changes to improve rights and predictability are under discussion. For now, zero contracts continue to be widely used, especially in casual and flexible sectors.
Zero-Hours Contracts: Secure Your Rights with Free, Specialist Legal Advice
Zero-hours contracts can be confusing, especially around employment status, entitlement to redundancy, dismissal and settlement agreements. Our solicitors clarify your rights, ensure fair calculation of notice, holiday and compensation, and check or negotiate every aspect of your settlement—always with no cost to you, as the employer pays our fees.
Take the next step now: call Settlement Agreement Lawyers on 0800 054 1144 or book your settlement agreement advice online for a same-day, confidential remote appointment with our expert team.
