Zero-hours contracts appear cheaper but often cost more than expected. Hidden expenses like employer contributions, sick leave, and staffing instability make fixed hours frequently more profitable. Calculating both options reveals the true financial impact on your restaurant.
The real costs of zero-hours versus fixed hours
Most hospitality owners assume zero-hours contracts save money since you're only paying for actual hours worked. However, hidden expenses can flip this assumption completely.
Zero-hours contract costs
💡 Zero-hours example:
Employee works 25 hours per week at €12/hour:
- Gross salary: €300/week
- Employer contributions (25%): €75/week
- No pay continuation for sick leave first 2 days
- Fluctuating staffing = extra stress
Total: €375/week at full capacity
Zero-hours contracts require you to pay:
- Gross hourly wage (actual hours worked)
- Employer contributions: 25-30% on top of gross salary
- No sick leave pay for initial 2 days
- Flexibility costs: last-minute no-shows, inconsistent service quality
Fixed contract costs
💡 Fixed contract example:
Employee 25 hours/week fixed at €12/hour:
- Gross salary: €300/week (always)
- Employer contributions: €75/week
- Sick leave: €60/week (average 4 days/year)
- Holiday pay: €25/week (8.33%)
- Stable staffing
Total: €460/week
Fixed contracts include these costs:
- Gross hourly wage (paid regardless of business volume)
- Employer contributions: 25-30% of gross salary
- Holiday pay: 8.33% of total annual salary
- Sick leave: full pay from day one
- Stability benefit: consistent service, reduced training costs
⚠️ Note:
Don't forget employer contributions in your calculations. Many restaurant owners overlook these mandatory 25-30% additional costs beyond gross wages.
Comparison formula
Apply this formula to compare both employment types:
Zero-hours costs per week = (Hourly wage × Hours worked) × 1.25
Fixed costs per week = (Hourly wage × Contract hours) × 1.42
The 1.42 factor covers employer contributions (1.25) + holiday pay (1.08) + sick leave (1.05).
Calculate the break-even point
From tracking this across dozens of restaurants, the break-even point shows exactly where both options cost the same:
💡 Break-even example:
Contract 25 hours/week at €12/hour:
- Fixed costs: 25 × €12 × 1.42 = €426/week
- Zero-hours break-even: €426 ÷ (€12 × 1.25) = 28.4 hours
From 28.4 hours/week a fixed contract is cheaper
If your employee consistently works above this break-even point, fixed contracts become more cost-effective.
Hidden costs of zero-hours
Zero-hours arrangements carry expenses that don't show up on payroll:
- Inconsistent quality: rotating staff means varying service standards
- Additional training: more employees require more onboarding time
- Last-minute cancellations: creates understaffing and operational stress
- Reduced commitment: temporary staff show less loyalty to your business
These expenses are difficult to quantify in euros but can significantly impact your customer experience and reputation.
How do you calculate the financial difference? (step by step)
Gather the basic data
Note the hourly wage, average working hours per week of your employee, and count how many different people you use on zero-hours contracts. This gives you the basis for the comparison.
Calculate the real costs per option
For zero-hours: multiply hours worked by hourly wage and by 1.25 (employer contributions). For fixed: multiply contract hours by hourly wage and by 1.42 (all costs).
Determine the break-even point
Divide the fixed costs by the zero-hours costs per hour. This gives you the number of hours where both options are equal. Do you structurally work more? Then fixed is cheaper.
Include hidden costs
Estimate how much extra time you spend on training, scheduling, and quality control with fluctuating staffing. Add this to the zero-hours costs.
✨ Pro tip
Review your scheduling data from the past 6 months and identify zero-hours staff working over 28 hours weekly. Converting these employees to fixed contracts typically saves 15-20% on total labor costs.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Are zero-hours contracts always more expensive than fixed contracts?
No, with fewer working hours (under 20 hours/week) zero-hours are typically cheaper. The break-even point usually falls around 25-30 hours per week, depending on your hourly wage rate.
Which employer contributions should I include in the calculation?
Calculate with 25-30% employer contributions on top of gross salary. This covers social premiums, pension contributions, and other mandatory employer payments.
How do I factor sick leave into the costs?
Average employees take 7 sick days annually. Fixed contracts require full pay from day one, while zero-hours don't pay for the first 2 days. Add approximately 5% extra costs for sick leave with fixed contracts.
What if my revenue fluctuates strongly by season?
Zero-hours might work better during slow seasons. Calculate costs for each season separately, then average them across the entire year for accurate comparison.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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