Zero Hour Contacts FAQ’s

At present zero hour contracts are receiving fierce criticism from employment rights groups, The Chartered Institute of Personnel and Development (“CIPD”) as well as the government.

What exactly are zero hour contracts?

Zero hour contracts are contracts by which individuals agree to make themselves available for work as and when required, but have no guaranteed hours or shift patterns.  The impact for an individual working under this type of contract is that they will only be paid for the hours the employer needs them.

How are Zero Hour Contracts different to typical employment contracts?

A typical employment contract is an agreement between an employer and an employee.  Certain terms of employment are critical to this relationship.  For example the employee must turn up to work, and the employer must provide work and usually a set number of hours are specified.  The legal term for this is mutuality of obligations.  The employee has security in knowing that he will be paid for a set number of hours and the employer has security knowing that the employee is there to do the work.  Zero hour contracts remove this.

Will zero hour contracts affect me?

As it stands the Office for National Statistics have recorded that 250,000 UK workers are working under zero hour’s contract.  This represents approximately 1% of the entire UK workforce.  However, it is argued that the actual figure may be much higher than this.  Some of the largest organisations in the UK utilise zero hour contracts – it has been reported that approximately 90% of Sports Direct workers are working under zero hour contracts.  Employers may view zero hour contracts as a preferable option, especially in the current dull economic climate, for the reasons set out below.

Are Zero Hour Contracts beneficial for both parties?

Workers operating under this type of contract will more than likely feel that they lack any form of financial stability as the very nature of the contract allows for alternating working hours week to week.  This prevents certainty in respect of wages and when working hours will present themselves, both of which could easily filter through to a workers personal life and act as a stone in the way of home activities.

Zero hour contract workers may also find it challenging to obtain a mortgage without a guaranteed source of income that a typical contract of employment would offer.

On the flip side, this set up may facilitate personal commitments of workers who have other responsibilities, for example parents and students who would be able to fit work around their home lives.

Employers may also feel the pinch if they have staff on zero hour contracts.  This will remove the employers guaranteed ability to deliver work as the individuals under the contracts are not obliged to work.  The employer therefore can not guarantee that the individual will perform the work.  This is usually solved by having a number of workers on the bank and so if one is unable to accept work, another hopefully will.

The employer will also benefit from having the ability to bring in, or reduce staff for times of fluctuating demand, thus increasing efficiency.

What about your rights?

An individual working under a zero hour contract is in a more fragile position than that of a typical employee.  Individuals working under zero hour contracts will still be entitled to ‘workers rights’. For example this would include the right to be paid in accordance with minimum wage, rest breaks, holiday entitlement (on a pro rata basis) and the right to not be discriminated against.

In relation to other claims, if a zero hours contract worker has more than two years service and is able to show that he or she has enjoyed a regular pattern of work, then it may be possible to pursue an unfair dismissal claim, amounts for outstanding annual leave and notice may also be recovered. However, if the worker’s pattern indicates only a small number of hours worked each week then the level of any Employment Tribunal award is likely to be a lot less than the cost of pursuing this type of claim,  (especially since the introduction of Employment Tribunal Fees on 29 July) meaning that this type of litigation is prohibitive.

If the worker is unable to show a regular pattern of work or no work at all, then the employer may try and defend an unfair dismissal claim, by arguing that the dismissal was not unfair for some other substantial reason. It is likely in this situation that the contract might be possibly regarded as “frustrated”, or in the alternative that dismissal was the appropriate action to ensure that the employee’s status is clarified. For Tax and National Insurance Purposes, as well as for legal certainty and for issues relating to Health & Safety, employees can’t simply be left on “the books”. An employee in this situation though is still entitled to pursue a breach of contract claim for notice and outstanding annual leave, but again the cost of pursuing such claims may be prohibitive.

 

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