Tina Chander defines zero hour contracts, explains what you need to know about
them and outlines what rights people have when on these contracts.

ZERO-hours employment contracts have received a lot of negative press over the years, with many claiming they’re unfair and offer individuals little security in a competitive employment market.

That being said, there are many employers who prefer zero-hours contracts owing to the flexibility they provide, especially for businesses experiencing seasonal peaks. There are also individuals that enjoy the flexibility zero-hours contracts offer, as it allows them to pick and choose when they work, so why is there controversy surrounding the practice?

What are zero-hours contracts?
A zero-hours contract is a non-legal term which refers to an agreement between two parties through which one is expected to carry out work for the other but where there isn’t a set minimum number of contractual hours that an individual has to work.

Like traditional contracts, zero-hours contracts must outline the employment status, rights and obligations of those undertaking the work. They must state what the person will be paid if they undertake work, and what they can expect to happen should they turn down work that’s offered to them.

Often the payment arrangements and the benefits they receive will vary from those received by individuals undertaking the same job on a contract with guaranteed hours. But those employed on zero-hours contracts still have many rights under UK law, as was noted during an independent review of Modern Working Practices back in 2017.

What rights do people with zero-hours contracts have?
Individuals working with zero-hours contracts have numerous basic entitlements under UK law, which include:

• Those aged over 23 are entitled to the national living wage, while those aged under 23 will be eligible for the national minimum wage.
• Many of those on a zero-hours contract will still be entitled to statutory sick pay (SSP) if they meet particular criteria, including whether they’ve previously worked for the employer, and if they’ve earned at least £120 per week for the past eight weeks.
• They’re entitled to the same rest breaks/days as other employees with more traditional contracts.

Furthermore, in 2015, the small business, enterprise and employment act announced it was illegal to include exclusivity clauses in zero-hours contracts, meaning employers can’t stop those with zero-hours contracts from also seeking employment elsewhere. This guarantees that even if staff feel they are not being given sufficient hours on their existing zero-hours contract, they can proactively pursue additional income from another employer.

Most recently, a landmark ruling by the supreme court made it clear that any employee or worker in the UK who has a permanent contract but works part of the year, including those on zero-hour contracts, is entitled to 5.6 weeks’ of annual leave. In addition:

• The amount of leave cannot be pro-rated based on the portion of the year when work is actually done.
• Annual leave must be calculated and paid using the method set out in the Employment Rights Act 1996 (ERA).
• The average earnings of those on zero hours contracts (over the previous 52-week period) must be used to calculate holiday pay.

When calculating pay for these persons, if there are any weeks within the 52 weeks prior to the period of leave in which the individual did not work and therefore didn’t earn, the employer must discount this and calculate the pay based on a full 52 weeks before leave in which the individual worked.

Employment status
There are three types of employment status – employee, worker and self-employed. In terms of their legal rights, those on zero hours contracts could be considered as ‘employees’ or ‘workers’, but this will depend on what their contract states and how the relationship works.

For those with an irregular or unstructured work pattern, the term ‘worker’ is used. This indicates that you’re not offered regular hours by your employer and you have little obligation to make yourself available.

Meanwhile, ‘employees’ are normally required to work regularly and can reasonably expect regular hours, and they cannot refuse to do the work that is given to them.

Because of this, it’s likely most individuals on zero hours contracts will be classed as workers simply owing to there being no mutuality of obligation. Employers need to be certain about which category their zero hour contractors belong to, and then consider the rights that they will subsequently be entitled to.

Although zero hour contracts have become progressively more popular as business owners look to reduce their costs and improve dexterity in an ever-challenging commercial environment, it’s still important to properly consider how working in this way can affect long-term sustainability and stability. After all, they don’t adhere themselves well to succession planning, particularly for small businesses.
www.wrighthassall.co.uk
Tina Chander is head of employment law at Midlands law firm, Wright Hassall