Zero Hour Contracts – what do employers need to know?

In the aftermath of the general election and the attempts of politicians in particular to make an example of companies who use them, zero-hour contracts are high on the public agenda list.

New legislation has dealt with the biggest perceived evil, that of the exclusivity clauses which guaranteed no work for the worker, but still required total loyalty. Such clauses are now unenforceable by businesses wishing to use them.

So, where has that left the businesses who rely on an estimated 1.5 million zero-hour contracts across the UK?

Latest statistics from the Office for National Statistics (ONS) show that there has been a 6% rise in the use of zero-hour contracts by UK businesses in the last year compared with the same period last year. The ONS said this increase was “not statistically significant”.  Of course, the term ‘zero-hour contract’ means different things to different people and the ONS relies on the definition “contracts that do not guarantee a minimum number of hours”.

What seems clear is that, love them or hate them, zero-hour contracts are not going to go away any time soon – they suit many types of businesses and, whisper it quietly in ivory towers, often suit the workers who are on them.  Businesses should not shy away from using zero-hour contracts when they have identified a need for the type of flexibility they offer. Having a bank of willing and flexible employees when the demand arises, for example due to seasonal fluctuations, peaks and troughs of production or sales or sickness absence cover, is of great use.

What do employers need to know? 

Firstly, they should remember that, just as there is no obligation on them to offer work, there is normally no obligation on the worker to accept work that is offered. To a certain extent, employers therefore lose an element of control.

Secondly, it is often the case that zero-hour contracts will give workers employment status, so employers need to be aware that they will not be escaping employers’ responsibilities and liabilities. For instance, zero-hour workers will be entitled to paid holidays, Statutory Sick Pay and, once they have two years’ service, other statutory protections such as a right not to be unfairly dismissed and a right to redundancy pay.

Even if the contract states that employment will only continue for the duration of an assignment, where there is a series of such assignments, a tribunal may decide that the employment has been continuous. If it is important to break continuity, an employer should ensure that a worker must have stopped work for a full calendar week (from Sunday to Saturday) or more.

The irregular nature of work performed can also cause headaches in relation to calculating entitlements and liabilities accrued under pension auto-enrolment legislation. Employers should adopt a system to monitor the earning levels of their zero-hour workers to help them deal accurately with the potential issues raised above such as holiday pay, national minimum wage and pension auto-enrolment.

Overall, zero-hour contracts are not only more flexible, they can also be a cheaper and more reliable alternative to agency worker arrangements. Those who have demonised the zero-hour contract and were hoping to celebrate its demise may remain disappointed for the foreseeable future.

If you are a business owner and would like professional advice on this issue or you need expert legal advice on a different employment matter, give our first class team a call today on 0161 930 5151. You can also email us: enquiries@gorvins.com