This guide is maintained as a current resource for July 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Comprehensive guide to redundancy and zero‑hours contracts in England and Wales, explaining when redundancy rights arise, how employment status affects eligibility for statutory redundancy pay, calculation, notice, consultation and tribunal remedies for disputes.
Zero‑hours contracts are widely used in modern UK employment arrangements, offering flexibility for employers and workers. However, confusion often arises around redundancy rights and redundancy pay for individuals engaged under these contracts. This guide explains how redundancy applies to zero‑hours contracts in England and Wales, including entitlement, eligibility, employment status considerations, statutory protections, legal processes and commonly asked questions. All explanations reference authoritative and up‑to‑date sources.
Understanding Zero‑Hours Contracts
A zero‑hours contract is a type of agreement where an employer does not guarantee a minimum number of hours of work. Individuals can be offered work as needed and can accept or decline shifts without breaching their contract. Importantly, a zero‑hours arrangement is not a single legal category - the rights that apply depend on the individual's employment status (for example, whether they are a worker or an employee).
Worker vs Employee
Under UK law, zero‑hours contracts frequently result in individuals being classed as a worker, but not always as an employee. Distinguishing between these statuses is critical because:
- Workers have some employment rights (such as National Minimum Wage, holiday pay and rest breaks) but are generally not entitled to redundancy pay or statutory unfair dismissal protection.
- Employees have full statutory employment rights, including the ability to claim statutory redundancy pay if other conditions (such as qualifying service) are met.
Employment status depends on factors such as the level of control the employer has, mutuality of obligation, and the requirement to personally perform work.
When Redundancy Rights Arise
Eligibility for Statutory Redundancy Pay
To receive statutory redundancy pay under the Employment Rights Act 1996, an individual must:
- Be classed as an employee (not merely a worker).
- Have at least two years' continuous service with the same employer.
- Be dismissed by reason of redundancy - meaning the employer no longer requires employees to do work of a particular kind.
If a zero‑hours contract worker is classed as an employee and meets the service requirement, they can be entitled to statutory redundancy pay in the same way as a permanent employee.
When a Zero‑Hours Job Is Redundant
A redundancy situation occurs when:
- The employer's need for employees to perform a particular kind of work has ceased or diminished.
- There is a reorganisation that eliminates a role, including zero‑hours roles, based on business needs.
Even if work has not been regular, redundancy can still arise if the employer's requirement for that work reduces significantly or ceases altogether.
Continuous Service and Challenges for Zero‑Hours Contracts
Establishing continuous service on a zero‑hours contract can be complex, particularly where:
- Work was irregular or offered sporadically.
- There were gaps in work with no shifts offered.
- The contract explicitly stated that continuity of employment was excluded.
In these cases, gaps in work may break continuous service unless they fall within exceptions (such as statutory leave). For redundancy pay purposes, short gaps that do not reflect a break in contract are sometimes treated as continuous employment, but this often requires careful review of the contract and working records.
Some advisory resources note that if a zero‑hours worker has had no work offered for a sustained period (for example, four consecutive weeks or multiple non‑consecutive weeks over a period), they might be able to make a redundancy claim by asserting that refusal of work effectively represents a dismissal on redundancy grounds. This involves communication with the employer and may lead to leaving with notice and redundancy pay if agreement or counter‑notice is given.
Statutory Redundancy Pay Calculation
For those on zero‑hours contracts classed as employees with sufficient continuous service, statutory redundancy pay is calculated using the same formula as for permanent staff:
- Years of service (up to a statutory cap).
- Age during each year of service (using age bands: under 22, 22–40, 41 and over).
- Average weekly pay (calculated over a defined reference period).
The statutory cap on weekly pay and years of service limits the total redundancy payment that can be awarded. Employers must provide a written statement explaining the calculation.
Other Statutory Entitlements
Notice Pay
If a zero‑hours contract worker is classed as an employee, they are also entitled to statutory minimum notice when dismissed for redundancy, based on length of service.
Holiday Pay
Employees on zero‑hours contracts accrue and are entitled to holiday pay, calculated on an average earnings basis.
Consultation
In collective redundancy situations (typically where 20 or more employees are proposed to be made redundant), employers are legally required to follow meaningful consultation processes with affected employees, including those on zero‑hours contracts who are classed as employees.
Disputes and Legal Remedies
If an individual disputes their redundancy pay entitlement or treatment:
- They may first raise the issue informally with the employer, seeking a written explanation.
- Failing resolution, they can pursue a claim to an employment tribunal.
- Time limits are strict: typically six months minus one day from the employment end date for statutory redundancy pay claims.
To succeed, the claimant normally needs clear evidence of employment status, continuity of service and the reason for termination. Legal advice or representation from a solicitor or Citizens Advice is often beneficial in complex cases.
Practical Examples
Example 1 - Employee on Zero‑Hours Contract
Jo works under a zero‑hours contract and is classed as an employee. They have worked an average of irregular shifts for three years and the business no longer requires this role. If Jo's continuous service counts and they have worked for more than two years, they may be entitled to statutory redundancy pay.
Example 2 - Worker Not Classed as Employee
Sam has a zero‑hours arrangement but is legally a “worker” rather than an employee. Even if Sam has worked for the same employer for years, they generally do not qualify for statutory redundancy pay.
When employment status is unclear, the tribunal tests for control, mutuality of obligation and personal performance become relevant. Legal advice is strongly recommended in such cases.
Key Takeaways
Redundancy rights for individuals on zero‑hours contracts hinge primarily on employment status:
- Workers with zero‑hours contracts are generally not entitled to statutory redundancy pay.
- Employees with zero‑hours contracts can be entitled to redundancy pay if they have at least two years' continuous service and are dismissed by reason of redundancy.
The calculation of statutory redundancy pay and other entitlements is identical to that for permanent employees, provided the individual qualifies. Continuous service questions and employment status disputes are common complexities. Individuals and employers should seek clarity on status and service records early in the redundancy process.
