As a sole trader I want to take on a first employee, but want to guard against a drop in business activity. Is offering a “zero hours” contract a possible answer and what are the implications?

A zero hour’s contract is a normal contract of employment except for the “Hours of work” box. Readers may recall a lot of activity in the press in early 1997 about a fast food chain which was making employees clock off and wait, in the staff canteen, to be called back to clock on again for work, once customers entered the premises. It meant that someone could have been present at work and available for work for eight hours but receive considerably less than eight hours’ pay for the shift. The Labour Party made much of this in their manifesto, that they would ban zero hours contracts, because of these perceived abuses, if they were elected.

They were elected, as you will be aware, but they have not banned zero hour’s contracts. It was not possible to do so because there are so many genuine situations, in employment relationships, where the amount of work available is largely outside the employer’s control. Therefore zero hours contracts are still perfectly legal. The abuses referred to above have been eliminated through a clause in the Minimum Wage Act 1998.

The single biggest issue arising out of zero hours contracts is the uncertainty of earnings it poses for the potential employee – would you accept a job where the boss offers (say) £7 per hour but “I can’t say what the hours would be!” Clearly there are some people who would accept that – if you can find them! You might wish to consider if you can afford to offer guaranteed minimum hours of (?) for the first few weeks/months of employment to provide some security for the new employee. Whether you can or not is obviously a decision for you but what you should do is be open and realistic regarding the situation – do not promise numbers of hours that you know you will never be in a position to offer.

The reality of the situation should be set-out in writing preferably in the contract of employment or the job offer letter or both.