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Legal Blog - Zero—hour contracts: a quick update

Mon, 2015-11-09 15:00

Zero-hour contracts have received much attention in the press over the last year, and continue to be the subject of much debate.  

What is a zero-hour contract?

A zero-hour contract is a type of working relationship where there is no obligation on the employer to provide work and no obligation on the worker to make themselves available to work the hours offered.  An individual on a zero-hour contract will hold the employment status of “worker”, therefore giving them the same rights as a regular worker, but different rights to those held by “employees”.  Workers are entitled to a number of rights including national minimum wage, paid annual leave and the right not to be discriminated against.  Employers should always bear in mind that the way the working relationship develops may mean the worker’s status is enhanced to that of an employee which would entitle them to additional rights, such as statutory notice.

Many organisations continue to use this type of arrangement as it offers greater flexibility and allows employers to call upon staff to assist with work as and when needed.  However zero-hour contracts have come under heavy criticism for creating insecurity in working hours and earnings for many individuals, with statistics showing that many workers on these contracts would like to work more hours for their employers.

Developments in 2015 

Following the introduction of the Small Business, Enterprise and Employment Act 2015 in May, employers are now prevented from enforcing “exclusivity clauses” in zero-hour contracts.  “Exclusivity clauses” are clauses which prevent a zero-hour worker from looking for other work or from working for another employer.  They require the worker to be exclusively available to that one employer. This type of clause is now no longer enforceable and if it is contained in this type of contract it will be considered void. 

In September this year the Office of National Statistics (“ONS”) released its updated findings which indicated that the number of workers engaged on zero-hour contracts between April and June 2015 has risen by 0.4% against the figure in the previous year.  Of the total number of people in employment, 2.4% are engaged on these type of contracts.  The ONS have also reported that those engaged on these contracts are more likely to fall into particular groups, such as those in full time education, women or younger and older age groups.  

This controversial contract looks set to continue to be in the headlines for a little longer and the Department for Business, Innovation and Skills has released new guidance for employers.  This guidance explains zero-hour contracts, details the appropriate and inappropriate way they are used and offers best practice guidance (a link to this guide is provided below).  The government’s overarching aim is to eliminate abuse associated with these contracts and to ensure that they are used lawfully.

https://www.gov.uk/government/publications/zero-hours-contracts-guidance...

Looking forward

Employers should continue to monitor their use of these contracts, give as much notice as possible of hours available to staff and be transparent on how the work will be offered.

Sophie Macphail

Solicitor   t: 03700 868136  e: sophie.macphail@shoosmiths.co.uk