The facts about zero hours contracts

An estimated 905,000 people are on a zero hours contract for their main employment. That’s 2.8% of people in employment—one in 35.

There were an estimated 1.7 million contracts that didn’t guarantee any hours in November 2016, or 6% of all contracts. One person can hold more than one contract.

Comparisons of the number of people on zero hours contracts over time are affected by the recent growing awareness of the term.

32% of people on zero hours contracts say they want more hours. The remainder did not. “In comparison 9% of other people in employment want more hours,” according to the Office for National Statistics.

There's a wider argument here about job security, which affects more people:

Unemployment and employment rates have returned to pre-recession levels.

But the proportion of people in part time employment because they could not find a full time job (12.8%) has not.

Nor has the proportion of people in a temporary job because they could not find a permanent one (28.5%).

This article looks at zero hours contracts specifically, not the wider gig economy.

“Zero hours contract” isn’t a legal definition. The government and the Office for National Statistics both use it to mean a contract where no work is guaranteed. The employer can offer no hours, and the employee can choose not to work any hours they’re offered.

The key is no minimum guarantee: in practice people might work regular shifts. About 34% of people on these contracts consider themselves full time.

Measuring zero hours contracts

The ONS has two measures, one for the number of contracts that don't guarantee a minimum number of hours, and one for the number of people employed on zero hours contracts. These are not equivalent: people often have more than one contract, and the two use different definitions of zero hours contracts.

The first counts contracts that don’t guarantee any hours. That includes contracts explicitly called “zero hours”, but also arrangements with different labels such as ‘casual contracts’ or 'hours to be notified'. The second measures people who self-report that their main job is a “zero hours contract”.

Neither measure is perfect, so we use both to get a better overview of how zero hours contracts are used.

It’s not possible to calculate what proportion of jobs in the UK involve zero hours contracts because neither of the two measures of zero hours contract available—people or contracts—equate to one job. One person can have more than one job, and one job can have more than one contract.

Counting contracts

The contracts estimate comes from asking businesses how many contracts they use with no guaranteed minimum hours.

1.7 million contracts met this description and provided work in November 2016. That’s about 6%, or one in 17, of all contracts in the economy. This is the same as the year before.

Because this figure is an estimate from a sample of businesses, the actual number of contracts is “likely to lie between 1.4 and 2.0 million”.

Overall 7% of businesses use contracts without guaranteed hours –down from 10% a year before. Larger firms are most likely to. 23% of companies with over 250 people had employees on zero hours contracts in November 2016, compared with around 5% of businesses employing fewer than 10 people.

Their use varies across industries as well. A higher proportion of education organisations used them than any other industry, which includes a large number of local authorities.

These figures exclude contracts under which no work was carried out in the fortnight asked about in the survey. This could be people with multiple zero hours contracts who work on them at different periods, or people who may have found a job elsewhere but not cancelled their contract, or where the worker simply wasn’t offered work or didn’t accept it.

These are contracts, not people. One person could have more than one contract.

Counting people

The other measure asks people whether their main form of employment can be described as a zero hours contract.

On this basis 905,000 people were employed on a zero hours contract in October-December 2016—one in 35 of all people in employment. Again, this figure comes from a sample so the actual number of people on zero hours contracts is likely to be between 836,000 and 975,000.

This is 13% higher than the same period in 2015, and 29% higher than in 2014. But it’s not possible to say reliably if this means there has been an increase. The survey asks people to describe their own employment so the numbers are affected by greater awareness of the term. More people might know that they’re on one.

For example, the most recent survey showed that the increase in zero hours contracts from the previous year was down to people who said they’d been in the same job for more than 12 months. This suggests that they were on a zero hours contract when surveyed previously, but didn’t say so.

The growth in the number of people saying they’re on a zero hours contract is slowing.

The Resolution Foundation, a think tank, has suggested three possible reasons. First, the market for employees might be more competitive as the employment rate is high. Second, firms might be put off using zero hours contracts due to bad publicity. Finally, as we’ve just noted, past increases might be due to more people knowing they’re on a zero hours contract, and now most people are aware.

People on zero hours contracts tend to be relatively young. 33% are aged 16 to 24, and 18% are in full-time education.

The majority of people on zero hours contracts (65%) are working part-time. 32% said they wanted more hours, mostly in their current job.

Some people have more than one job, and will hold more than one zero hours contract. This is partly why asking people gives a figure quite a lot lower than the business estimate, which counted the number of contracts.

Employment rights

If you’re on a zero hours contract, you do have employment rights. The extent of your employment rights depends on whether you're defined as an employee, a worker or as self-employed.

The distinction between employees and workers is nuanced. One difference is that employees have contracts that state that their employer must offer them work in exchange for pay, and they must do the work. This isn’t the case for workers, who can turn work down. This means that most people on zero hours contracts will be workers.

However, whether or not you're an employee or a worker will depend not just on what's in your contract, but what happens day to day. While a contract might say that you're under no obligation to work, if you're 'punished' for not accepting all the hours you're offered, or consistently work a set number of hours, then a tribunal might decide that you're actually an employee.

Workers are entitled to the minimum or living wage, paid holiday, rest breaks and protection against discrimination, overwork and unlawful wage deductions.

Employees have all the rights that workers have. Additionally, they are entitled to things like protection against unfair dismissal, redundancy pay, a minimum notice period and time off for emergencies.

Since May 2015 exclusivity clauses in zero hours contracts, which stop someone from taking on another job, have been banned. Employers can’t enforce the clause, and since January 2016, workers have been able to claim compensation at an employment tribunal if they’re punished or dismissed for looking for work elsewhere.