Zero or Hero?

Official figures recently published by the ONS show that the number of workers on zero-hours contracts has exceeded 800,000 for the first time.

This figure represents 2.5% of the employed UK workforce, but the data also showed there are approximately 1.7 million such contracts, indicating that many workers have more than one zero-hours contract. This increase has renewed fears amongst opponents that employers are using cheap casual labour to cut costs and avoid making proper commitments to their workforce.

Workers on zero-hours contracts are more likely to be young, part-time, women, or in full-time education compared with other people in employment. An average zero-hours contract provides 26 hours of employment a week and one in three of those on a zero hours contract would like to work more hours, compared with just 10% of those in stable employment who wanted to work more hours.

But the concept of zero hours contracts can, when operated fairly, make for very flexible working arrangements for employers and workers alike. However, some misunderstood aspects surrounding the legislation have emerged in the press about zero-hours entitlements, particularly in relation to maternity pay, holiday pay and travelling expenses.

In fairness, employers don’t have to offer work to people on zero-hours contracts and neither do these workers have to accept the work offered to them. But that said, the arrangement doesn’t change the fact that that zero-hours staff are in many cases entitled to the same rights, protections and benefits as any other worker. In the UK, taking a job with an employer can give someone either ‘worker status’ or ’employee status’ depending on the situation involved. In most cases zero-hours contracts provide worker status and as such workers have key rights, such as statutory annual leave entitlement and protection from discrimination. However, it does take employee status to qualify for certain other rights, including statutory sick pay and the right to request flexible working.

KEY POINTS TO UNDERSTAND:

• Zero hours contracts normally mean there is no obligation for employers to offer work, or for workers to accept it.
• Most zero hours contracts will give staff ‘worker’ employment status.
• Zero hours workers are entitled to annual leave, the National Minimum Wage and National Living Wage and pay for work-related travel in the same way as regular workers.

What exactly is a zero-hours contract?

A zero hours contract describes a contract between an employer and a worker where:

• The employer is not obliged to provide any minimum working hours, and
• The worker is not obliged to accept any work offered.

When are zero hours contracts used?

Zero hours contracts can be used to provide a flexible workforce to meet a temporary or changeable need for staff. Examples may include workers used to cover:

• Unexpected or last-minute events such as a restaurant needing extra staff for an event which has been cancelled by another venue.
• Temporary staff shortages due to illness or unexpected circumstances.
• On-call/bank work where the employer requires extra coverage for a short period of time.

It is important for employers to monitor the need for zero hours contracts and in many cases, it may be more effective or appropriate to use agency workers, or to recruit staff on a fixed term contract or if the need is more permanent then a permanent member of staff should be recruited.

FACTS ABOUT ZERO HOURS CONTRACTS:

Zero hours workers are entitled to annual leave

Any worker or employee starts to accrue their annual leave from the moment they begin working. This includes anyone working on a zero hour’s contract and if the contract means that employment is continuous then a worker should arrange when they take the annual leave with their employer.

If the zero hours contract means that the employment is broken on occasion, which happens when there is a period without work for a full calendar week from Sunday to Saturday, then a worker should receive a payment for any accrued but untaken annual leave.

Zero hours workers are not obliged to accept work

If the zero hours contract is genuinely a casual arrangement, the worker is not obliged to accept any of the hours offered. There is a risk that a worker who continually refuses work when an employer offers it may have his contract terminated by the employer. However, it is not good practice to try and force the worker to accept work, as this may call into question whether or not this is a genuinely casual work arrangement.

Zero hours workers have the same statutory rights around travelling time as other workers

There are specific rules concerned with travelling time and the National Minimum Wage and National Living Wage, which generally mean that a worker (with the exception of a commute) should be paid at least the National Minimum Wage when they are travelling as a requirement of their job. This right is enjoyed by those on ‘zero hours’ contracts.

Equally, it is generally the case that a worker who is required to be on-call and remain on the employer’s premises should be receiving at least the National Minimum Wage for doing so. Again, there is no different rule for zero-hours contracts; the right is the same.

However an employer needs to consider any contractual enhancement to these basic rights. For example, permanent workers may have additional pay or conditions attached so the employer needs to ensure that they do not inadvertently discriminate against workers on the grounds of protected characteristics such as age and sex.

Exclusivity Clauses

Legislation means that an employer cannot stop an individual from looking for work or accepting work from another employer when using a zero hours contract.

An employer must allow the worker to take work elsewhere in order to earn an income if they themselves do not offer sufficient hours. If an employer includes an exclusivity clause in a zero hours contract, the individual cannot be bound by it and the law states that the individual can ignore it.

If an employer dismisses someone for breaching a purported exclusivity clause the dismissal will be automatically unfair.

SUMMARY

As an employer you must make sure that contracts are clear and transparent so that the individual can understand their rights and what the implications of such a contract means to them. When offering a zero-hours contract, employers should consider including information such as:

• Whether the individual is an employee or worker and what employment rights they are entitled to.

• If the individual is an employee, how statutory employment entitlements will be accrued where appropriate, such as redundancy pay.

• The process by which work will be offered and assurance that they are not obliged to accept work on every occasion if they so wish.

• How the individual’s contract will be brought to an end, for example, at the end of each work task or with notice given by either party.

• Employers should plan ahead and give as much notice as possible when offering work. Those who work on a zero hours contract may have caring responsibilities or have studies and may need to plan for childcare or around exams. Employers should be transparent about how they offer work, for example, is there a rota?

• Cancelling work at late notice, or when the individual turns up at the place of work, is unacceptable unless truly unavoidable. Employers should consider putting into place a policy explaining the circumstances when and how work might be cancelled, and how they try to avoid this, and whether the individual can expect any compensation for caring costs they may have incurred.

• When recruiting for a zero hours contract, the job should be clearly advertised as such and the individual should be clear that hours are not guaranteed, and that work may cease if there is a fall in demand.

• Employers should ensure they familiarise themselves with their responsibilities when employing someone on a zero hours contract. Employers must comply with every aspect of the law, including employment law.

• Those who take up work on a zero hours contract are often students, partially retired, or have caring commitments. As an employer you should respect the needs of those individuals to arrange care and be flexible in whether they can accept work at short notice or if they cannot arrange suitable care.

We hope that this article has provided you with some useful information about this type of working arrangement and indeed, that it has busted some of the myths that you might have read in the press. If you need help or advice about using zero hours contracts in your business then please don’t hesitate to get in touch with us.