Zero Hours Contracts

The Department for Business, Innovation and Skills has produced a guide for employers on zero-hour contracts. There is also guidance from ACAS.

The BIS guide explains how zero-hour contracts work, the difference between appropriate and inappropriate use of such arrangements, and gives guidance on best practice and alternatives to zero-hour contracts.

BIS says:

Zero hours contracts allow flexibility for both employers and individuals. However, they should not be considered as an alternative to proper business planning and should not be used as a permanent arrangement if it is not justifiable.”

Having contractors available for call–in is not a zero hours contract, if the contractor remains genuinely self-employed.

In contrast someone who is not self-employed will acquire employment rights as a ‘worker’, including the National Minimum Wage, protection from discrimination, rest breaks, annual leave, sick pay and pensions auto-enrollment.

If the arrangement is one under which they work regularly but do not work regular hours, they are likely to be an ‘employee’, with additional rights to a written statement of terms & conditions, holidays, holiday pay and in time protection against unfair dismissal or the right to a redundancy payment. This will apply where there is not a full week without work from Sunday to Saturday between the times they do work, but leaving that break will not necessarily be enough to prevent a ‘worker’  becoming an ’employee’.

Because ‘zero-hours contract’ is used to cover a wide range of situations, it is important for employers to ensure that written contracts contain provisions setting out the status, rights and obligations of their zero-hours staff. Having done that they must keep to those contracts, as otherwise they may find that a ‘worker’ has become an ’employee’. A court or employment tribunal will look at the reality of what happens not just what is written down.

It is important that employers and employees understand what they are doing. Not being clear can lead to disputes, disgruntlement and litigation. Employers may feel that claims from zero-hours staff will be deterred by the costs of paying the high fees to make a claim to an Employment Tribunal, but many claims can also be brought in the Small Claims Court, which is much cheaper.