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At Access Hospitality, we help businesses prepare for upcoming changes to zero-hour contracts through our our Hospitality People Suite, an integrated, end-to-end solution that brings together recruitment, HR, workforce management, training, payroll and employee engagement in one platform. By connecting scheduling, training and people data, the suite helps hospitality operators stay compliant, respond to change faster and build fairer, more sustainable working practices.
In this article, we will explore more about zero-hour contracts, how employees may be affected and the best practices you can take to make the termination process fair, quick and easy. To help you put these steps into action, we've also created a free, downloadable checklist that covers your key HR compliance duties and the upcoming 2027 changes to zero-hour contracts.
What are zero-hour contracts?
Let’s start by unpacking the main features of a zero-hour contract.
These are a type of employment where the employer is not necessarily obliged to provide employees with guaranteed working hours or set contracted hours for them to complete. Many sectors use zero-hour contracts to meet business demands, especially in the hospitality industry where 17% of its workforce are on zero-hour contracts.
Employers are also not required to give these employees a minimum amount of work and employees do not have to work when they are asked, meaning there are limited legally binding conditions for both parties under current law. Though this can be seen as a quick solution for businesses, especially in hospitality, the Employment Rights Act 2025 will introduce new rules on guaranteed hours, reasonable shift notice and cancellation pay, expected to take effect from 2027.
How to fairly terminate a zero-hour contract?
With the Employment Rights Bill set to introduce reforms by 2027, many employers are already reviewing how they manage zero-hour contracts. A key question for HR teams is how to end these arrangements fairly under current UK law.
Here are the main principles to follow when terminating a zero-hour contract today:
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Clear policies – Setting out simple, transparent rules in your zero-hour contract makes termination easier to manage and reduces the risk of disputes or unfair dismissal claims.
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Statutory minimum notice – While employers are not obliged to guarantee hours, it is best practice to include a notice clause. This gives workers time to seek alternative employment and demonstrates fair treatment.
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Termination documents– Regardless of contract type, all workers should receive a P45 when their employment ends, in line with HMRC requirements.
Legal considerations for employers
As employers in the hospitality industry, it is important to consider how your decisions may impact your employees and what measures you should take to adhere to the latest legislation updates. Key considerations include:
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Payroll compliance – Workers on zero-hour contracts should be paid through PAYE so the correct tax and National Insurance contributions are deducted. Employers must ensure payroll records are accurate and up to date.
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Clarity of rights – Because zero-hour contracts are not specifically defined in legislation, it is the employer’s responsibility to set out employment rights, expectations and obligations in writing. This helps avoid disputes and confusion.
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Health and safety duties – Employers have a duty of care under UK law to provide a safe workplace for all staff, including those on zero-hour contracts. Failure to meet Health and Safety Executive (HSE) standards could result in serious penalties and unsafe working conditions for staff.
- Guaranteed hours and predictable work – As the Employment Rights Act takes effect, employers will need clear rules on when regular hours trigger a guaranteed‑hours offer, how those hours are calculated, and how reasonable notice and any cancellation pay are communicated to staff.
Employers are also responsible for creating a safe working environment for all employees, even if they are on a zero-hour contract. Not complying with health and safety regulations could result in large penalties for the company and risks employees being subject to unsafe working conditions.
Employee rights when terminating zero-hour contracts
When thinking about terminating employees who are on a zero-hour contract, you must think about their rights and any repercussions you may face. Here are some of the main legal rights that zero-hour contracted employees are entitled to:
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Paid holiday – once a zero-hour contract is terminated, employers must pay out any holiday that has built up or not taken.
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Outstanding wages and notice pay – this applies if the worker was legally classed as an employee and has been employed for more than one month.
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Unfair dismissal – employees, not workers, on zero-hour contracts are still protected against any unfair dismissal if they have at least worked for the company for two years. Currently, this applies after two years’ service, but under the Employment Rights Bill 2024, protection will become a day-one right once the reforms take effect.
Embedding these policies within an integrated people management platform helps ensure they are applied consistently across your workforce, reduces manual risk and provides a clear audit trail if decisions are challenged.
For a step-by-step way to review your approach, download our HR compliance checklist for zero-hour contracts.
Ready to take control of zero-hour contracts in your hospitality business?
Employee contracts can be complex, particularly where zero-hour arrangements blur the lines around rights, expectations and legal responsibilities.
In hospitality, where flexible contracts are common, employers need clear, consistent practices from the very start to protect both their people and their business. That means setting expectations early, applying policies fairly and ensuring termination processes are handled professionally, as outlined in this article.
At Access, our Hospitality People Suite helps hospitality businesses manage zero-hour contracts with confidence by connecting scheduling, training, compliance and people insights in one place, reducing risk while supporting fair, transparent employment practices.
Get in touch with the team to see how our tailored solutions can help you apply fair, consistent zero-hour practices across your business and for more information on legislation and compliance, visit our Employment law & rota compliance hub.
