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Clarity on Zero Hours

Zero hours contracts pop in and out of the news, championed by some disparaged by others

Whatever the mass media, or the Government, may think of them, zero hours contracts are used by many employers and their popularity isn’t waning: according to ACAS’s Workplace Trend Report 2016, the Office for National Statistics estimates that some 744,000 workers in the UK are working on such contracts.

New laws have homed in on aspects of such contracts. If you’re confused about what’s changed (or if you’re simply wondering what all the fuss is about) here’s some clarity on the current state of play.

What are they?

Zero hours or casual contracts are ones where there’s no guarantee on the part of the employer to provide work – i.e. no (or zero) hours’ of work are guaranteed.

If and when the employer does provide work, they only pay for the work that’s undertaken. Workers or employees under such contracts aren’t obliged to do the work when asked, so there is an element of choice on both sides. But, as with most employment contracts, the bargaining position between the respective parties is rarely equal. This, together with a perceived increase in casual or zero hour contracts, has led to concerns about the (ab)use of them.

People engaged under zero hour contracts will be workers or employees. In each case they’ll be entitled to the national minimum wage (the national living wage, if applicable, from April), paid annual leave, rest breaks, health and safety protections, and protection from discrimination. Employees will also have the benefit of statutory employment rights.
(Work carried out by someone who is genuinely self-employed, will be governed by a different type of arrangement- not a zero hours’ contract.)

What’s new?

After lots of political huffing and puffing on all political sides, the UK Government has done three things:

• In May 2015: it changed the law so that zero hours workers can’t be prevented, by a provision in their contracts, from working under any other contract or arrangement. In other words, exclusivity clauses in zero hour contracts were prohibited from this point. Employers shouldn’t prevent zero hour workers from working for others.

• In October 2015, via the Department for Business, Innovation and Skills, it published guidance on zero-hours contracts aimed at employers. This acknowledges the business benefits of zero hours contracts (e.g. for seasonal work or special events), but urges against using them as a permanent arrangement, giving examples of both their “appropriate” and “inappropriate” use, and providing suggested alternatives to them.

It contains best practice, for example, listing the sorts of information “employers should consider including” when offering a zero hours contract and explaining what things to include when recruiting for them. Finally, it explains that an employer cannot stop an individual from looking for work or accepting work from another employer.

• In January 2016, it changed the law again, so that now: o employees working under zero hours contracts have a right not to be unfairly dismissed if the (main) reason is that the employee has failed to comply with an exclusivity clause. This right (sensibly) isn’t subject to a qualifying period of employment – so an employee doesn’t have to have been working for a certain length of time before they can avail themselves of it; and o workers working under zero hours contracts have a right not to be subjected to any detriment by, or as a result of any act or deliberate failure to act, done by an employer for the reason that the employee has failed to comply with an exclusivity clause.

If an employer breaches the above rights, the employee or worker can issue a claim in an employment tribunal seeking a declaration or compensation or both.

Will this change things?

Zero hours contracts are still “legal” and can still be used. They shouldn’t contain exclusivity clauses.

The prohibition on exclusivity clauses from last May meant that, in theory at least, workers could keep their options open and sign up to more than one zero hours’ contract. Some argued that workers would – regardless of what their contracts said – be fearful of ever saying “no” to work, for fear that they may not be asked again. There may be some truth in that; although employers select specific workers for a host of reasons (skill sets; reliability; knowledge of client). The smaller the pool of workers (because of increased competition), the stronger the respective negotiating position of the workers in it is likely to be.

The fact that, prior to January, there were no sanctions if employers’ breached the rules and included/enforced clauses was a concern. This was remedied by the most recent legislation which effectively gave the prohibition some teeth.

Giving zero-hours’ employees’ and workers’ rights to claim isn’t going to be an immediate gamechanger.

It costs money to bring an employment claim and statistics show that even if you win in the employment tribunal, your chances of seeing the money aren’t great. It’s no great surprise that zero hours employees aren’t suddenly deluging our employment tribunals. If you’d like some advice on a zero hours’ contract, or on any other type of employment or worker contract, or if you’d like to discuss which arrangements may best suit your business’s needs, please do get in touch.

By Simon Whitehead, Partner at HRC Law

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