Zero hours contracts – what are they and how to use them

Zero hours contracts have received a lot of negative press recently.  However, this is generally due to how they have been misunderstood and abused!

There is no legal definition of a ‘zero hours contract’ but it is a term used to define a contract where there are no guaranteed minimum hours and the worker or employee is not obliged to accept any work offered.

Main characteristics of a zero hours contract

• There is no obligation to offer work or for it to be accepted by the individual
• Genuine business flexibility is required regarding working hours
• Staff generally have ‘worker’ employment status but this is not always the case
• Staff have the same employment rights as regular workers
• Workers on zero hours contracts are entitled to pro rata statutory annual leave, national minimum
wage and national living wage.

Subject to how much work has been undertaken over a regular period, or any contractual clause in place, statutory notice periods are likely to apply

Protection is given from an exclusivity clause. This means that an employer cannot stop a worker from accepting work from another employer

Employment status of workers on zero hours contracts

Staff on a zero hours contract will be classed as ‘workers’ but subject to how they work with you in practice and how your relationship with them develops,  their employment status may automatically change over time to become an employee. This gives them additional employment rights.

When to use a zero hours contract

This type of arrangement can be beneficial to both the employer and the worker where genuine flexibility is needed. For example, the amount of work available fluctuates or is irregular, including periods where no work is required. For the worker, it provides flexibility to enable them to manage other commitments and work in a way which best suits their needs.

New employers may find it useful to offer workers this type of contract whilst they are building the business or for businesses that have fluctuations in demand such as in hospitality or retail for example.

When not to use a zero hours contract

 It is not acceptable for employers to use zero hours contracts to avoid their responsibilities to their workers. All staff are entitled to employment rights.

It is not good practice to use this type of contract as an alternative to proper business planning and fixed-term contracts may be more appropriate or hiring agency staff to cover peaks in demand.

If you are regularly offering hours every week and a regular pattern of work emerges a permanent contract for part-time hours should probably be used, with flexibility managed via overtime.

Best practice when using zero hours contracts

• Make it clear when recruiting that you are using zero hours contracts and       why
• Make it clear what employment rights the worker has
• Explain the process of how work will be offered and that the worker is not obliged to accept it
• Explain once work is accepted, what obligations each of you has to one another
• Explain what notice is required by either party
• Provide a written statement of terms and conditions
• Include them in communication, meetings, training, social events etc. and ensure they feel part of the team
• If business circumstances change review the need to move to a different type of contract, which can also offer you flexibility

Aim to plan ahead as much as possible. Also, understand that workers who accept zero hours contracts have done so as they usually require the flexibility to turn down work as well as accept it!

Make sure you understand your obligations as an employer and the types of contracts available to you. For advice and guidance, or for development of employment contracts,  call Debbie now on 01278 802329 or email now.

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