Employment Issues in the News – Zero Hours Contracts

Employment Issues

Employment Issues in the News – Zero Hours Contracts

Zero Hours Contracts: Zero-hours contracts are used to facilitate casual working arrangements with the intention of creating casual employment but without all the obligations that go with it. Used properly they can be mutually beneficial but it is thought that some employers have used zero-hours contracts in circumstances where they really ought to have taken on the worker as an employee in the usual way.

What constitutes the Employer/Employee Relationship? To understand the zero-hours concept you must first understand what constitutes the normal employer/employee relationship. To constitute such a relationship there must be a “mutuality of obligation”. This typically involves the employer providing work and the employee being required to do it. In the absence of a mutual obligation, the employment relationship does not exist.

How to avoid the Employment Relationship: The intention behind a zero-hours contract is to avoid the employer/employee relationship being created in the first place so the employer will enter into an agreement with the worker under which the employer will not be obliged to provide work and the worker will not usually be obliged to accept it. In other words, there will be no mutuality of obligation. Some contracts which have attracted media attention, although they don’t oblige the employer to offer work, contain an expectation that the worker will accept it if offered and it is this aspect which is seen as unfair and tips the balance unfairly against the worker.

The True Nature of the Relationship: To ascertain the true nature of the relationship between the parties one needs to look further than just the contract and to what has happened in practice. Regardless of what the contract might say, over a period of time, the relationship of employer/employee can be created through custom and practice by the employer always offering work and the employee always accepting it.

What does it matter? If you’re engaged under a true zero-hours contract then you’ll usually be classified as “a worker” and, as such, you will be entitled to receive the national minimum wage, protection from discrimination, paid holiday and potentially statutory sick pay in some circumstances. If, by contrast, you are considered to be an “employee” (albeit still under a zero-hours contract) then, in addition to the above benefits, you’ll also be entitled to all the same benefits as any other employee. Provided that you have satisfied the statutory qualifying period, currently, 2 years’ service these additional rights include the right not to be unfairly dismissed, a right to receive a statutory redundancy payment and maternity/paternity benefits such as paid time off etc.

Are Zero Hours Contracts Good or Bad? It depends. It can be useful for an employer to take on casual labour without all that goes with it and, provided that the worker is not obliged to take the work if offered, then it gives the worker flexibility to pick and choose when to work which can be beneficial to both parties.

The Risks: From the employer’s perspective these arrangements can always be challenged with the employee claiming that he is/was, in fact, an employee rather than a worker and each case will turn on its own facts. However, in circumstances where it is short-term and casual one wouldn’t expect the employee to succeed although, if the relationship has gone on for years, it could be quite different. A legal challenge has been launched against Sports Direct who it is alleged to have engaged a very significant proportion of their staff on zero-hours contracts and is understood that this claim also includes aspects of discrimination against part-time workers.

From the worker’s perspective, the worker is (usually) free to pick and choose if and when he works, provided it is on offer but the downside is the limited protection which he would otherwise enjoy if employed on a permanent or fixed-term basis

Just how widespread are Zero Hours Contracts? Previously the Office National Statistics had estimated that there were 200,000 workers employed on the zero-hours contracts. However, the CIPD has recently suggested that there could be in the region of 1 million employees on zero-hours contracts.

Please remember this blog is for information purposes only. You should take specific advice on any particular situation.


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