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What is the future for zero hours contracts?

What is a zero hours contract?

Broadly, a zero hours contract is one which does not guarantee a minimum amount of work per week. They are generally used where the employer needs flexibility to engage the worker on a genuinely ad hoc, “as and when required” basis. There is no guarantee of work, but the worker is generally expected to be available for work if and when offered it. 

Workers engaged on a zero hours basis are often referred to as “casual staff” or “bank workers” to differentiate them from the businesses’ permanent staff. Their status will depend upon whether they are deemed to be employees (and are therefore entitled to enhanced employment rights and protections), or workers (with fewer rights). Determining the status of casual staff is far from straightforward.

Will zero hours contracts be banned?

No. Whilst zero hours contracts will remain lawful, the Bill contains a provision which purports to “ban” exclusivity clauses, rather than zero hours contracts per se. This means that an employer engaging workers under a zero hours contract will not be able to prevent them from doing work for other employers. 

Potential problems

The first problem relates to the actual definition of what constitutes a “zero hours” contract. There is no tried and tested statutory definition and the Bill defines a zero hours contract as one where there is “no certainty that any work will be made available to the worker”. 

That is too vague to be helpful, and the Government has already said that it expects to make regulations to “tidy up” this definition. Plus, there is already some concern that this definition could inadvertently impact on other forms of employment where exclusivity is lawful.

The Government has also said it may legislate further to expand the definition of what is a “zero hours” contract if employers attempt to get around the legislation by offering workers guaranteed work of say, one hour a week. The question of course will be where to draw the line.  Will one hour per week constitute “zero hours”, but two hours will not? 

The actual wording of the “ban” is also odd. It states that an exclusivity clause will be “unenforceable against the worker” but does not offer any protection to the worker who suffers a detriment because he has breached this aspect of his contract. In particular, there is no right to claim unfair dismissal. Instead, the Government has said it may create one if there is evidence of abuse. 

Issues for employers using zero hours contracts

The publicity associated with zero hours contracts, may result in an improved awareness of the employment status and statutory rights of those engaged on such terms. The Government has said that it will make new information and guidance on zero hours contracts widely available and intends to produce a Code of Practice. 

This might be a good opportunity for your business to review any contractual terms it has in place for casual staff to minimise the risk that workers will be deemed to be employees and to ensure that all workers receive their correct statutory entitlements such as the right to receive paid holiday. 

- Fergal Dowling

Key Contact

Fergal Dowling