Complete guide to zero-hours contract holiday pay & entitlement

There are around 1.18 million workers in the UK on zero-hours contracts.

Whether you run your own business, or are responsible for all things HR and employ people on zero-hours contracts, it’s important to understand and map out holiday pay & entitlement.

Luckily, here at Breathe, we've put together an easy guide to help you calculate holiday pay for any staff who are on zero-hours contracts. 

You can also find out more about zero-hours contracts in our comprehensive guide. 

Are staff on zero-hours contracts entitled to holiday leave and pay?

How to calculate zero-hour contracts holiday entitlement?

How do I calculate holiday pay for my zero-hours staff?

How can HR software help?

What are zero-hours contracts? 

A zero-hours contract is a type of working agreement where there’s no set number of working hours guaranteed each week. Instead, you’re offered shifts as and when work is available, and you can choose whether to accept them.

For employers, this flexibility can help cover busy periods, seasonal demand, or unexpected absences. For zero hours contract workers, it can be a way to fit work around other commitments, take on additional roles, or top up income.

Are staff on zero-hours contracts entitled to holiday leave and pay?

The simple answer is, yes.

Zero-hours contract workers have the same legal rights as employees on other contracts. The only exception is when there is a break in an employee's working pattern.

If this occurs, it could affect anything that accrues with time - such as the number of days of holiday entitlement.

Just like an employee on a permanent fixed contract, a zero-hours worker is entitled to take paid leave and must also be paid any leave owing to them when their employment contract is terminated.

How to calculate zero-hours contract holiday entitlement?

Here's the numbers bit. But bear with us - it's not too tricky.

The Supreme Court recently ruled that permanent employees (and workers) who only work part of the year are still entitled by law to 5.6 weeks of holiday per year- regardless of how many hours they've worked. 

Holiday entitlement can no longer be pro-rated for permanent part-year or zero-hours workers to reflect the number of weeks the employees have worked in a year. There's an automatic entitlement of 5.6 weeks (or 28 days) in a year. 

That's 28 days for a 5-day-a-week worker. The same goes for employees who work 6 days a week, as it's capped at 28 days. 

It's completely up to you to decide if paid public holidays are counted as part of a worker’s leave entitlement, or whether you give these days in addition to the holiday entitlement.

Annual leave starts to accrue as soon as the employee starts working for you. You'll also have details of your “leave year” in place. For most companies, this runs from 1^st January to 31^st December.

As you're probably aware, for employees with fixed-time contracts leave is accrued monthly in advance, at the rate of one-twelfth of their annual entitlement.

Need help calculating holiday entitlement for your zero-hours contract employee? Try our Holiday Entitlement Calculator to get started.

How do I calculate holiday pay for my zero-hours staff?

Employees are entitled to receive zero-hours contract holiday pay. They are also eligible for payment in lieu of any untaken statutory leave entitlement on the termination of their employment.

To calculate the rate of holiday pay where you have workers without normal working hours, you can take an average of their pay over the preceding 12 weeks, counting only the weeks in which the employee was paid. 

For any weeks where there were no hours worked, and therefore no pay received, then those weeks should be replaced by the most recent previous weeks where pay was earned.

Breathe’s staff holiday planner & booking system provides everyone with the knowledge they need to book their holidays with ease, whether full time or on a zero-hours contract.

Sign up for a 14-day free trial today and see the difference our people management software has on your business.

Looking ahead: changes coming in 2027

From 2027, new rules will give zero-hours contract workers the right to request a predictable working pattern after 26 weeks in a role.

This change won’t take away the flexibility many people value. It will offer more choice, making it easier to plan work and time off if regular hours suit your needs.

You can read more about these upcoming changes on the UK government’s website.

How can HR software help?

HR software like Breathe takes the headache out of holiday management.

The intuitive holiday-management feature can accommodate employees with a variety of working patterns - such as those with zero-hours contracts - meaning you can put the calculator away and focus on developing your people and growing your business.

To find out more, book one of our regular webinar tours of Breathe, or start your free 14-day trial today.

Other common questions about zero-hours contracts

Can an employer stop me from working elsewhere?

If you’re on a zero-hours contract, you’re free to work for more than one employer. That flexibility is one of the reasons these contracts can work so well, they let you fit work around your life.

An employer can set reasonable rules to make sure other work doesn’t cause a clash, like avoiding overlapping shifts or conflicts of interest. But they can’t prevent you from taking on other jobs.

When should zero-hours contracts be used?

A zero-hours contract can work well when the number of working hours changes from week to week. They’re often used for:

• Seasonal work – for example, extra staff in hospitality or retail during busy periods

• Covering staff absences at short notice

• Event-based roles where the hours worked can vary

This type of arrangement can suit both zero hours contract workers and employers who need a bit more flexibility. But they’re not usually the best option if you need guaranteed, fixed hours every week.