Zero Hour Contract

What is a Zero Hour Contract?

A Zero Hour Contract is a type of employment agreement where an employer is not obligated to provide a minimum number of working hours to the employee. Similarly, the employee is not required to accept any work offered. The key feature of a zero-hour contract is its flexibility, both for the employer and the employee.

The Employment Rights Act 1996 defines a zero-hours contract as a contract of employment or other worker’s contract involving the undertaking to perform work or services based on availability of the work from an employer. There is no certainty that the work or services are made available to the worker.

Zero-hours contracts staff may be hired by organisations that require more labour at certain periods of the year or additional flexibility in their workforce.

Zero-Hour Contract Examples

There are different scenarios where zero-hours contracts may be used.

Examples of zero-hours contracts include:

• Hospitality
• Delivery driving
• Casual hours work
• Care work
• Warehouse work

Zero Hour Contract Rights

The law gives workers rights to a written record of their terms of employment from day one of employment. The rights of zero-hours contract workers are based on their employment status, rather than their zero-hours contract. A worker is not considered to be self-employed or an employee. They have fewer employment rights than an employee.

As you can be legally classed as a worker or employee while working on a zero-hour contract, you could benefit from several employment rights:

• Rest breaks at work
• Rest between working days or shifts
• Protection from discrimination
• Weekly rest periods
• National Minimum Wage and National Living Wage
• Receiving pay slips
• Paid holiday

Like regular workers, zero-hour contract workers benefit from statutory annual leave and the national minimum wage. Zero-contract hour workers have the right to work elsewhere. They can ignore clauses in their contract that have the effect of preventing them from accepting work from other employers or looking for work.

Those with employee status are typically under an obligation to accept work while workers can have more freedom to accept work when it suits them.

A zero-hours contract worker should not be treated unfavourably because they work for another employer. Even if an exclusivity clause is added to the contract by the employer and they claim that a zero-hours contract worker has not met the terms of the contract by working for another employer, the law would still apply to allow the zero-hour contract worker to not be dismissed for working for another employer. It is illegal for an employer to enforce a clause made to dismiss a zero-hours contract worker for those reasons.

It is important to remember that the amount of sick pay received is dependent on how many qualifying days are worked each week. Zero-hours contract workers are entitled to Statutory Sick Pay as long as the following criteria is met:

• Sick for at least 4 days in a row, with the first three days being qualifying days
• Earn a minimum of £123 a week before tax
• The employer is informed of sickness within the deadline set by the employer or within 7 days.

Good Practice for Employers

Overview

Employers who employ zero-hours contracts have several statutory duties. They have to:

• Pay the national minimum wage, regardless of the number of hours worked
• Give workers statutory employment rights, without exception
• Inform workers of how the contract ends
• Pay wages through PAYE, along with employment deductions and tax
• Inform workers of their rights about things like holiday entitlement, redundancy pay, and sick pay
• Make it clear that those on zero-hours contracts are employees and not workers
• Uphold protected employment rights
• Auto-enrollment for pension depending on qualifying conditions

Safety Measures and Holidays for Zero-Contracts Hours Staff

Those who provide work to zero-contract hour workers may still be held responsible for the safety of the workers.

An employer may insist that a worker goes on holiday. To do this, they would need to provide twice as much notice as the number of days the worker is asked to take off. As an example, 4 days’ notice would need to be needed to make a worker go on a 2 days holiday.

Detriment and Redundancy for Zero-Contract Hours Staff

Employers cannot cause zero-hour contract workers detriment because of a factor related to the zero-hour contract. Detriment can result in worse treatment of a zero-hour contract worker or the worsening of their working situation.

Examples of detriment include:

• Reduction of hours by employer
• Getting overlooked for development opportunities or promotion
• Bullying or harassment
• Training requests being turned down by the employer

An employer is not allowed to dismiss an employee for a reason connected to their zero-hour work contract. While those who are legally classed as workers cannot make claims for unfair dismissal, they may be able to argue that the ending of the contract constituted a detriment. A zero-hours contract worker with employee status also has the right to take maternity/paternity leave and to receive redundancy pay.

If there is a risk of redundancy at an organisation, an employer may offer redundancy to employees with zero-hours contracts. The hours could also be temporarily reduced or stopped. Where a contract ends, a zero-hours contract worker may be paid for outstanding wages, notice pay, and holidays that have not been taken.

The rules for notice periods differ for employees and workers. There is no requirement in the law for zero-hours contract workers or their employers to give notice. Employers that require notice periods have to put it in writing. Zero-hours contract workers do not have to take any work offered to them during notice periods. Employers do not have to give workers minimum working hours during notice periods.

Our expert employment lawyers are available to guide you through your zero-hour contract. CONTACT US

Continuous Employment

Zero-hours contracts continue even without work being provided. A contract continues until it is terminated by the worker or employer. The contract comes to a natural end if no paid work has been provided within a number of weeks. Those who work with zero-hours contracts usually don’t have to do work when asked but they are on call to work when needed.

More rights can be gained by zero-hour contract workers through continuous employment. Examples of this can be found where workers may not have to build up holidays before they take them after the first year of continuous employment.

Zero-hours contract workers who have ongoing contracts may benefit from 5.6 weeks of paid holiday per year which starts on the day of employment. The employer determines whether public holidays are included in the holiday entitlements or gets paid along with the basic holiday entitlement.

The holiday pay for zero-hours contract workers without regular or fixed hours may be calculated by using the average pay received over the previous 52 weeks. The calculation should only include weeks paid. An earlier week than the 52-week period should be used to calculate the holiday if there have been weeks with no pay. This approach is advised by ACAS as pay should be the same when staff go on holiday as when they are working.

Employers can use the pay received in the previous 104 weeks if 52 weeks is not adequate. 104 weeks is the maximum amount of weeks that can be used to calculate the holiday pay. The average can be taken from the full weeks worked by someone that has not worked for 52 weeks.

Advantages of Zero-Hour Contracts

The chances of an individual getting permanent employment through working on a zero-hours contract can increase. This can be advantageous when employers are not able to offer full-time positions. Zero-hours contract workers can have access to opportunities to build connections at the workplace and learn about the company culture, procedures, and policies. Zero-hours contract workers can prove that they are worth permanent employment by performing well at the workplace.

People with other important commitments may find zero-hours contract work advantageous because of the flexibility. They can accept and turn down work more easily than with other types of agreements. Students, for example, can use the flexible schedule to suit their time commitments to the completion of their education.

With a zero-hours contract, you can legally apply for other jobs while working under the contract. This allows for earning through more than one job. For those who are not receiving enough hours to work in one job, this can be beneficial as it allows for extra money to be earned.

Zero-hours contracts provide the temporary income needed when you’re in the process of getting permanent employment. This is especially true when the job market is not as buoyant, leading many companies to opt for hiring zero-hours contract workers over permanent employees.

The work experience gained from zero-hours contract work can be very valuable. It provides continuous work experience for a CV as well as initial work experience for those who are new to the labour market. The opportunities to work more than one job with a zero-hours contract allow for one to gain a wider variety of work experiences. Those who are looking to change their career path may find this particularly appealing as it can help them decide on the new career path they want to take.

Disadvantages of Zero-Hour Contracts

Unfortunately, zero-hours contracts come with disadvantages such as unpredictable work hours and unpredictable income. Workers may have to accept work at times that aren’t the most convenient for them because they want to earn income. This is in contrast to more conventional employee agreements that have set times for when work should be done.

It can be difficult to plan a budget properly or forecast income because of the unpredictable working hours and how limited the hours may be. The workers may be hired for only specific tasks which leads to limited working hours.

How Can IAS Help?

While zero-hours contracts can be beneficial for those looking for flexibility and more than one source of income, concerns loom over the terms of the contracts and how they could be used to exploit workers.

Our expert advisers and lawyers have amassed years worth of resources and knowledge to help you address your zero-hours contract concerns. Our lawyers are available to guide you through the different employment laws you need to make the right decision on your employment decisions.

The team has a great depth of knowledge and experience in helping workers and employees review contracts thoroughly and carry out the due diligence needed to protect clients. Full support can be provided for clients in different working circumstances.

If you would like to get additional information about the zero-hours contract, our advisers and lawyers can help you. Please call us on +44 (0)333 414 9244, or contact us online today.