What employers need to know about zero hours contracts

With the use of zero hours contracts on the rise in Q4 of last year, Alan Price reveals what small business employers should understand about this method.

Zero hours contracts can be very appealing to employers as they can be excellent to cover unexpected events

Zero hours contracts can be very appealing to employers as they can be excellent to cover unexpected events

The number of people on zero-hours contracts in their main job increased by 101,000 to 905,000 in the last quarter of 2016, compared with the previous year. According to the Officer for National Statistics (ONS), those on zero hours contracts are more likely to be young, women, and those in full or part-time education.

The main characteristics of a zero hours contract are that the worker is available for when the employer when they need them, they do not have to offer them any hours at all, but at the same time they are not required to accept any hours that the employer offers. This allows both the employer and worker to benefit from the convenient and flexible nature of the agreement. For instance, the individual can have a flexible working pattern and can fit work around other responsibilities, while the employer is not obliged to offer a certain amount of hours when work is scarce but can do in order to meet demand during busy periods. Zero hours contracts can be very appealing to employers as they can be excellent to cover unexpected events, such as temporary staff shortages during heavy demand.

It was quite a common occurrence to see an exclusivity clause in a zero hours contract, which stipulated that the worker was not permitted to obtain more work for another employee, or to look for more work with another employer without first getting the permission of their existing employer.

Back in May 2015, these exclusivity clauses were made banned and employers could no longer put them into operation. In order to allow workers to enforce their new rights, a new tribunal claim was created, which came into effect on Monday 11th January 2016.

This meant that zero hours employees can claim unfair dismissal if they are dismissed for taking on more work with a different employer, or for doing so without the existing employer’s permission. People working on zero hours contracts who are not employees can make a claim for detriment at employment tribunal if they are subjected to detrimental treatment because they have looked for more work. This claim can be made from day one of employment (ie the usual two-year qualifying service does not apply).

Employers should be aware that they should not treat workers on zero hours contracts any less favourably, as they have the same employment rights as other workers on part-time or full-time to a 20-minute break in every six contracts. All zero hours contract workers have the same right hours worked, 11 hours’ uninterrupted rest in every 24-hour period and 24 uninterrupted hours in every seven-day period as other workers.

Additionally like other workers, they are not allowed to work more than 48 hours per week unless they have contracted out of that requirement. Zero hours contract workers have the same right to 28 days’ annual leave (including bank holidays) although this is pro rata (based on the average number of days they work per week). In terms of sick pay, they must also be paid statutory sick pay from the fourth day of their sickness absence, if they have been ill for at least four days and their average weekly earnings over the previous eight weeks are less than the lower earnings limit (£112 per week in 2015/16) in the last eight weeks.

Most importantly they are entitled to the National Minimum Wage. Further to that, employers should not subject workers to detriment and treat them less favourably because they have rejected work or rarely accept it. If the employer follows through with a disciplinary procedure for the above reason, then that might suggest that that the employer is treating them as an employee and it is important to note that employees have additional employment rights compared to workers, eg the right to statutory notice.

If an employer is or wants to use zero hours, they should carefully study the legislation, give the employee a written copy of the terms and condition of the contract. They should also review the performance of the employee regularly and gauge their feelings about the contract to see if they want to change or want to more permanent hours to prevent disillusionment.

Alan Price is employment law director of Peninsula

Further reading on zero hours

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