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But many HR teams are already asking urgent questions under today’s law:
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Do zero-hour workers have to give notice before leaving?
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How can employers fairly end a zero-hour arrangement without risking an employment tribunal claim?
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Do you give a P45 to a zero-hour contract employee?
At Access Hospitality, we help businesses prepare for upcoming changes to zero-hour contracts with smart workforce solutions, including Rotaready Evo for rota management, CPL Learning Evo for staff development and integrated HR software. Our software equips hospitality operators to stay compliant while building 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 no legally binding conditions for both parties. Though this can be seen as a quick solution for businesses, especially in hospitality, the upcoming Employment Rights Bill will introduce new rules on guaranteed hours, 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.
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.
What will change in 2027?
From 2027, under the Employment Rights Bill, zero-hour workers will gain new rights to guaranteed hours, reasonable notice for shifts and cancellation pay. Employers who plan early can avoid last-minute compliance risks.
What are the best practices for ending a zero-hour contract?
To minimise legal and employee-relations risks, employers should focus on fairness and clarity from the start of the employment relationship. Recommended best practices include:
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Set expectations early – Make it clear in the contract that hours are not guaranteed, shifts do not have to be accepted and that engagements may end at short notice. This transparency protects both parties.
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Support with clear policies – Include procedures for shift cancellations, notice periods and any compensation for lost hours. Written policies reduce ambiguity and help demonstrate fairness if challenged.
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Communicate openly – Keep a clear and professional dialogue with the worker. Transparent communication helps avoid disputes and builds trust, even when the arrangement ends.
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Document the process – Keep records of notice given, correspondence and termination steps to show compliance with ACAS and employment law guidance.
Embedding these policies into your HR software ensures consistent application across your workforce and reduces the risk of costly employment disputes. And for a step-by-step way to review your processes, download our HR Compliance checklist to zer-hour contracts.
Ready to take control of zero-hour contracts in your hospitality business?
Employee contracts can be tricky, especially when there are blurred lines between the rights they are entitled to on zero-hour contracts or the legal considerations you need to take as an employer.
In hospitality, where these types of contracts are very common, employers need to think about the best practices to protect themselves and their employees right from the start to ensure the termination process is fair and professional, which is what we’ve discussed in this article.
At Access Hospitality, we provide smart solutions tailored to the sector:
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Rotaready Evo – Advanced rota management with predictive scheduling, real-time labour cost insights and the latest employee sentiment analysis to help you match staffing levels to demand while keeping teams engaged.
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CPL Learning Evo – Digital training tools that deliver on-demand learning, track compliance certifications and support career progression, helping you retain staff and reduce turnover.
Read more about how we can help support your hospitality business in our Complete Tech Guide to Hospitality Compliance or get in touch with our friendly team.
