Zero hours contracts are back in the press again with the Labour Party making statements regarding how they would tackle this issue if they were to be elected. This does seem to be a topic that isn’t going away and we think it’s likely that there will be some changes here in the not too distant future.
What are zero hours contracts?
For those readers who aren’t aware of this particular method of engaging with staff the rules are that an individual has a contract which covers all of the normal things that an employment contract covers (non-compete, confidentiality etc.) but it does not guarantee them any actual work or pay.
These contracts have been useful tools for small and medium sized businesses as they allow a very flexible approach to staffing. Employers can build a pool of trained staff who they can call on when there is work but whom they do not have to pay when there is no work.
There was concern last year about the increase in this type of contract as it was felt that it was unfair on the workforce and meant that individuals had no financial certainty.
Considerations when using zero hours contracts
The first thing that you need to consider if your business uses zero hours contracts is whether the individual concerned is classed as an employee or a worker. The terms ‘employee’ and ‘worker’ have clear legal definitions and the rights of an individual will depend on which of these categories they fall into.
Individuals who are deemed to be an employee will have one set of rights whereas those classed as workers will have a different set of rights. As an example, employees, regardless of whether or not they are on zero hours contracts, have a right not to be unfairly dismissed, a right to redundancy pay, a right to maternity pay and are protected by TUPE legislation. Workers have none of these rights.
The way that your contract is worded will be key in determining which category the individual is in. It’s a complex area of law and we won’t go into full detail here as to what constitutes a worker and what constitutes an employee but if you’d like some further guidance then give us a call on 0203 319 1649 and we can look at your particular case. Alternatively, complete the contact form and one of our advisers will be in touch.
How do you deal with holiday pay with zero hours contracts?
Both workers and employees are entitled to holiday pay so this is something that you need to factor into your contract. People working under zero hours contracts are treated in the same way as part time workers so therefore accrue a pro-rated amount of holiday. The easiest way to deal with this is to establish how much holiday a full-time member of staff accrues for each hour worked. Then, for each hour an individual on a zero hours contract works, they should accrue holiday at the same rate.
Exclusivity clauses in zero hours contracts
Some businesses, for very genuine reasons, need individuals on zero hours contracts to be prevented from working for other businesses during times when there is no work available. Circumstances in which exclusivity clauses may be justifiable are where work comes in short bursts and the individual will be needed at short notice AND there will only be short breaks between work being offered. Exclusivity clauses may also be justifiable where an employee is working in a highly specialised or very competitive field and where an individual working for the competition may give the competitors an unfair advantage.
If you fall into one of these categories then you should still make restrictions as narrow as possible. So, don’t have a clause that prevents the individual from working for anyone at all but be very specific as to who they cannot work for and any process you need them to follow if they are working for more than just your business.
This is an area that the government consultation will be looking at and we predict that there are likely to be some changes to the use of exclusivity clauses.
Ed Miliband has announced that, if the Labour Party is elected, they would look to make the following changes to zero hours contracts:
- Workers would not be forced to be available outside of core contracted hours
- Employers would not be able to prevent workers from undertaking work for other employers
- Workers would be entitled to some form of compensation if hours were cancelled at short notice
- Workers would have the right to request a contract of employment giving them a commitment of regular hours after a six month period and workers would have an automatic right to a fixed-hours contract after a twelve month period.
Zero hours contracts provide a flexible way of resourcing but they do need to be fit for purpose and contain some very clear wording. This area of law is complex and, if you’re using zero hours contracts without having sought guidance then we suggest that you contact us so that we can take a look and make sure that the contract you have in place meets your needs.
If you’d like some further guidance then give us a call on 0203 319 1649 or complete the contact form and one of our advisers will be in touch.