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As a first time employer, you may be looking at whether a zero hours contract would benefit you and your business.  This week’s Knowledge Nugget outlines how a zero hours contract works for you and your employee, and ‘Myth Busts’ on many misunderstandings that surround zero hours contracts.

What is a ‘Zero-Hours’ Contract?

The person accepting the zero hours contract from the employer is given the employment status of ‘worker’ and not employee.  In common with an employee, the worker will work within the terms of a contract of employment, and are entitled to the National Minimum Wage, or National Living Wage and Holiday Pay.

They also have the right to be protected against unlawful discrimination and to be treated fairly if they work part-time.

Additionally, some workers may have the right to send someone else to carry out the work, for example, a sub-contractor.

A zero hours contract is generally understood to be an agreement where the employer is not obliged to provide a minimum number of hours work for the worker, and the worker is not obliged to accept any hours offered.

When are Zero Hours Contracts Used?

Zero hour contracts tend to be used for filling of varying needs for workers, for example in hospitality, care or seasonal industries.  The employer can increase and decrease the hours their workforce is available easily without the cost of an agency or obligation to provide guaranteed hours for staff.

Some employees find the flexibility useful as they have no obligation to accept any work offered but work on the same basic terms as most workers.  It can also provide opportunity to gain skills and experience.

Changes in Legislation in Relation to Zero Hours Contracts

New regulations were bought in on 26th May 2015. One of the clauses prevents employers from enforcing an ‘Exclusivity Clause’, restricting any worker from working elsewhere.

The Exclusivity Terms in Zero Hours Regulations 2015 state:

  • it will be automatically unfair if someone is dismissed if they have breached a contractual clause stopping them from working for another employer
  • it is unlawful for a worker to suffer a detriment because they work for another employer.

There is no qualifying period to bring an unfair dismissal claim for this reason, and any claim made to a tribunal will depend on the tribunal finding an exclusivity clause in the employment contract.

Breaks in a Zero Hours Contract

A break in a zero hour contract is defined as a full calendar week between Sunday and Saturday.

If the contract defines that it only exists when work is provided, the employer has certain responsibilities, including paying the worker for any holiday pay accrued.

If work is continuous, the worker begins to accrue certain employment rights over time.  For example, workers don’t need to accrue their annual leave before taking it after their first year of continual work.

Changing Status from Worker to Employee

A worker’s status could develop into that of employee if the worker is for example, subject to disciplinary procedures or punishment in some way for not accepting the hours that they are offered.  This then gives them additional rights to things such as a statutory notice period.

Zero hours contracts have to stand-up on paper, and if bought into question, an employment tribunal can decide what contractual relationship exists between the employer and worker and associated employment rights such as the right to maternity leave and pay, and the right to request flexible working may apply.

Bad Press around Zero Hour Contracts

Unite the Union and the TUC have very strong opinions on zero hours contracts, and the exploitation that can occur under them.  However in some cases the flexibility that a zero hours contract provides can be beneficial, and desired by both the employer and the worker.  There have been many articles in the Press about certain large companies providing primarily zero hours contracts to their workforce and the physical and psychological effect this can have on their workers.  Employing a worker on a zero hours contract should be considered carefully and you should ensure that your worker is fully aware of the nature of the contract under which they work and the positives and negatives associated with it.

Further information and advise specific to your circumstances can be obtained on the ACAS Website or by calling the ACAS Helpline on 0300 123 1100