The Department for Business Innovation and Skills (BIS) has produced a Guide for employers relating to the use of zero hours contracts.
Typically, a zero hours contract is used to refer to an arrangement in which an employer does not guarantee an individual any hours of work. They are often used in sectors such as hospitality, leisure and catering.
Those engaged under zero hours contracts may be “employees” or “workers”. It should also be noted that many self employed people also work on a zero hours basis but the Guide is not intended to apply to the self employed. However, the question of an individual’s employment status (or not) is often a complex one, which requires careful consideration and legal advice.
The Guide (which sets out “best practice” for employers using zero hours contracts) says that:
- Individuals on zero hours contracts will benefit from the employment rights associated with their employment status, such as that of “employee” or “worker”
- The National Minimum Wage will apply to all “workers” and “employees”
- Zero hours contracts may be used appropriately in a new business, where work is seasonal, in cases of unexpected sickness, for special events or where a new service is being tested
- Zero hours contracts can allow flexibility but should not be used as an alternative to proper business planning or as a permanent arrangement if such use is not justifiable
- Zero hours contracts may not be appropriate where an individual will work regular hours over a continuous period of time, such as 9am to 1pm Monday to Wednesday for a 12 month period. In such situations, a part time or fixed term contract may be more appropriate
- Employers should consider alternatives to zero hours contracts, such as offering permanent staff overtime, recruiting part time staff or fixed term staff etc.
The Small Business, Enterprise and Employment Act 2015 prohibited the use of exclusivity clauses in zero hours contracts from May 2015.
Zero hours contracts are a tricky employment issue. On the one hand, such arrangements offer commercial flexibility for employers and may suit some staff, such as students or those with child care responsibilities. On the other hand, used in the wrong way, they can be exploitative. This Guide clearly aims to encourage best practice, whilst avoiding the need for further legislation.
For further details contact Louise Purcell, Senior Associate Solicitor
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