The use of zero hours contracts in 2018

The use of zero hours contracts in 2018
The use of zero-hours contracts is often in the news with the focus on poor working practices. Many familiar brands and household names widely use them including Sports Direct, JD Wetherspoons, various local authorities and other businesses across the hospitality and voluntary sectors.

The basic meaning of a zero-hours contract or a casual contract as they are interchangeably known is that individuals can be hired by businesses with no guarantee of work. Some businesses hire staff on these type of arrangements often at short notice or on shifts that are offered. The rate of pay on such contracts is usually dependent on the number of hours worked and should be in accordance with the national minimum/living wage with holiday pay also factored in.

The benefits of these types of arrangements for businesses is that it allows them to take on staff in response to a fluctuating demand for their services and to give them flexibility over their workforce.

The argument against zero-hours contracts is that there is a perceptions that they exploit staff who are not guaranteed a fixed income and that it denies them employment rights.

However the fact is that even those individuals who are engaged on zero-hours contracts will usually have some employment rights, although this will depend on the nature of the relationship and whether there is what is termed ‘mutuality of obligation’ between the business offering the work and the individual undertaking that work.

For most individuals who work on zero -ours contracts they will be considered to be a worker because there will be a requirement for individuals to undertake work that is offered or risk being dismissed.

There have been a number of cases recently relating to employment status particularly in the Gig economy, however the main factors which determine this will be the level of control exercised by the business, whether there is a duty to offer work and for an individual to carry it out, whether the individual is an integral part of the business, the financial risks involved, and whether equipment is provided and how individuals are remunerated.

Assuming that these individuals are workers they will automatically have employment rights for example the right to be paid the national minimum/living wage, paid holidays, the right not to be discriminated against, the right not to suffer any unlawful deduction of salary and rest breaks.

If they are employees then they are also entitled to all of these right plus in addition maternity rights, redundancy pay and the right not to be unfairly dismissed (if they have two years’ continuous service).

If individuals are required to work regular patterns of work then it might make sense to treat them as employees from the outset, because in the event of a dispute relating to their true status, an employment tribunal may well consider them to be employees, notwithstanding the label given to them.

There is also a bill currently making its way through Parliament which is seeking to ban zero-hours contracts and which is aimed at bolstering workers’ rights. The Workers (Definition and Rights) Bill 2017-19 is due to receive its second reading in April and apart from abolishing zero-hours contracts will also provide greater protections for those who are in ‘precarious’ work for example in the hospitality sector from day one of their employment.

Whether this bill manages a successful progression and receives royal assent remains to be seen.

In the meantime if you wish to make use of zero-hours contracts then the following should be considered:-

. Do consider whether engaging individuals on this type of arrangement is actually appropriate for the needs of the business.

. Ensure that any written contracts are carefully drafted and are tailored to cover the specific arrangements in place, making it clear that the business has no obligation to offer work and that any work offered does not have to be undertaken by the employee. This will destroy the mutuality of obligation argument.

. Take into consideration the holiday entitlement of staff on zero-hours contracts to avoid breaching the Working Time Regulations.

. Be aware that exclusivity terms in these type of contracts are unlawful and that staff cannot be prevented from working for other businesses on similar arrangements.

. Even if the intention is not to create an employment relationship do be aware that the reality of the situation can change especially where there is an expectation over time that work will be offered and that it must be undertaken.

. Remember that individuals working under the terms of these types of arrangement also have legal protection under equality and whistle-blowing legislation.

. Remember to review these arrangements on a regular basis to ensure that they are working to the benefit of the business.

In summary zero-hours contracts can suit both the needs of the business and the lifestyle of individuals, however it is important that they are tailored and are adapted to suit the needs of the business. Such arrangements can work well if implemented sensibly and communications and expectations are clear.

Contact Head of Employment Law, Steven Eckett at Meaby&Co for timely advice: seckett@meaby.co.uk or call 0207 703 5034.

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