Global Work Glossary

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What’s the difference between zero-hour contracts and casual contracts?

Who uses zero-hour contracts?

When to use a zero-hour contract

What is a zero-hour contract

A zero-hour contract is a type of employment contract wherein the employer isn’t obligated to provide the worker with a set number of working hours, and the worker isn’t obligated to accept the work that’s offered to them.

Say you run a catering company and summer is your busy season. During this period of time, you may hire a few zero-hour contract workers that work on an on-call, as-needed basis. When you contact them to pick up a shift, they can accept or decline the work. You are not obligated to offer them work if you aren’t as busy as you expected.

The term ‘zero-hour contract’ has no legal definition, and the terms of a zero-hour contract will vary per organization. Most zero-hour contract workers are part-time, but some consider themselves full-time workers if they work more than 30 hours per week on average. However, zero-hour contract workers are not considered permanent employees and do not receive the same entitlements.

What’s the difference between zero-hour contracts and casual contracts?

In regions outside the UK, such as Canada, a zero-hour contract is also known as a casual labor contract. 

Just like a zero-hour contract, a casual contract doesn’t include a guaranteed minimum number of hours for the worker, and the employee doesn’t have to accept the work they’re offered. Casual workers are often called into work at the last minute.

The main difference between a zero-hours contract and a casual contract is that casual workers are not typically paid for periods of inactivity. However, this depends on their local employment laws, nature of work, and employment status.

Who uses zero-hour contracts?

Zero-hour contracts are commonly used in industries that need seasonal workers or additional staffing on short notice. These industries include:

  • Hospitality

  • Retail

  • Academia

  • Banking

  • Education 

  • Gig economy work

Companies that use zero-hour contracts range from retail and food service companies like McDonald’s and Boots to institutions such as Buckingham Palace and The National Trust. 

Research by the University of Aberdeen found that most zero-hour contract workers are young, female, and in lower-status jobs in the private sector. One-fifth of zero-hour contract workers are full-time students, and 22% have managerial status at their company. 

When to use a zero-hour contract

In the UK, employers use zero-hour contracts when they need additional workforce support for a specific period of time or serve a niche market and don’t need to keep a full-time staff. Zero-hour contracts aren’t always the right hiring solution for a business—consider alternatives such as:

  • Offering part-time employee work

  • Hiring independent contractors

  • Offering paid overtime for existing permanent employees

  • Using a staffing or temp agency

  • Including stipulations in employment agreements that prohibit employees from taking time off during busy periods

  • Holding longer office hours during busy seasons and shorter office hours during slow seasons

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