Flexible working arrangements have become a core part of the UK labour market. For many employers, especially small and medium-sized businesses, zero-hours and casual contracts offer a practical way to manage fluctuating demand.
But while flexibility can benefit both employers and workers, these arrangements carry significant legal and reputational risks if not managed properly. Recent legislative changes and growing scrutiny around fair work practices make it vital for businesses to understand their obligations.
Why Flexible Contracts Appeal to SMEs
Zero-hours contracts give businesses the ability to scale their workforce up or down as needed, which is ideal for sectors such as hospitality, retail, education, or healthcare, where workloads can change week to week.
For employers, the benefits include:
- Greater cost control, as staffing levels match demand.
- The ability to fill short-term gaps quickly.
- Access to a more agile workforce.
For workers, flexibility can also be attractive. For example, to fit around studies, caring responsibilities, or other employment. However, this flexibility often comes with uncertainty, and when poorly managed, it can quickly lead to issues of fairness and trust.
The Controversy Around Zero-Hours Contracts
Zero-hours contracts have faced ongoing criticism for creating job insecurity and inconsistent income. Some workers have reported being effectively “on call,” with limited control over their schedules or guaranteed hours.
Historically, exclusivity clauses which prevented workers on zero-hours contracts from taking other jobs, drew particular concern. These clauses have now been banned under UK law, ensuring individuals can seek additional work elsewhere if their hours are not guaranteed.
For employers, the challenge is balancing legitimate business needs with fair treatment of staff. Reputationally, misuse of zero-hours contracts can damage trust and attract public criticism, even if the arrangements are technically lawful.
The Legal Framework: Rights and Protections
Despite misconceptions, workers on zero-hours contracts still enjoy important legal rights. Employers must ensure these are fully observed, including:
- Holiday Pay: Zero-hours staff accrue paid annual leave in proportion to the hours they work. Employers cannot deny or roll up holiday pay.
- National Minimum Wage: All working hours including time spent on mandatory training or waiting at the workplace, must be paid at least at the National Minimum Wage.
- Statutory Sick Pay (SSP): Eligible workers may qualify for SSP if their average earnings meet the threshold.
- Protection from Unfair Treatment: Zero-hours workers have protection from discrimination and, in some cases, the right not to be unfairly dismissed once qualifying criteria are met.
Employers should also provide written terms setting out the nature of the relationship, including how hours are offered, the rate of pay, and what flexibility exists for both parties. Transparency helps to reduce misunderstandings and risk.
Upcoming Changes: The Employment Rights Bill
The proposed Employment Rights Bill, part of wider reform discussions, aims to strengthen worker protections in flexible arrangements. Although not yet enacted, proposals include:
- A right to request predictable working patterns, giving workers more control over when they work.
- Improved transparency around contract terms and scheduling.
- Potential restrictions on repeated short-term or rolling arrangements.
While details are still emerging, businesses should prepare by reviewing their current use of flexible contracts and considering how greater predictability could be introduced without losing agility.
Best Practice for Fair and Compliant Use
Employers who rely on flexible or zero-hours arrangements can minimise legal and reputational risk by adopting clear, fair, and transparent processes.
1. Fair Scheduling
- Provide as much notice as possible of shifts or work assignments.
- Avoid last-minute cancellations without compensation.
2. Transparent Communication
- Clearly explain the terms of engagement, expected hours, and pay structure.
- Be upfront about the level of flexibility and what it means in practice.
3. Consultation and Feedback
- Engage with staff about scheduling and workload.
- Create channels for concerns or feedback to be raised safely.
4. Regular Policy Review
- Keep contracts, policies, and practices under review to ensure they reflect current law and best practice.
- Seek legal advice before implementing large-scale changes or restructures involving flexible workers.
By approaching flexibility through the lens of fairness and compliance, employers can retain agility without exposing themselves to unnecessary risk.
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Flexible contracts are not inherently problematic, but they must be handled responsibly. When businesses combine flexibility with transparency and fair treatment, they create a more engaged workforce and protect their reputation.
We help employers design compliant, people-first workforce models that balance operational needs with legal and ethical best practice. Talk to our team today about reviewing your flexible working arrangements to ensure they’re fair, lawful, and fit for the future.