Before the last election, two consultations were carried out on zero hours contracts. The coalition government’s response to the consultations said that it would review and improve the existing guidance available to employers and workers regarding zero hours contracts. That long-awaited guidance was finally published on 15 October 2015.
The guidance, Zero hours contracts: guidance for employers, can be found here:
The guidance explains what the government understands by the term ‘zero hours contract’. Although the guidance says that ‘zero hours contract’ is a non-legal term, it is worth remembering that the Small Business, Enterprise and Employment Act 2015 (the Act) does, in fact, already include a statutory definition of a zero hours contract in the context of the exclusivity clause prohibition. The guidance goes on to explain that under a true zero hours contract, there is no obligation on the business to offer work nor on the individual to take it up, if offered. It reminds businesses that the National Minimum Wage still applies to zero hours contracts.
It confirms, correctly, that anyone engaged under a zero hours contract is entitled to statutory employment rights. However, it does not, somewhat unhelpfully, offer any guidance on the issue of whether that person is likely to an employee or a worker, although it does refer businesses on to separate guidance on this issue. There can be a risk that a business believes an individual engaged on a zero hours contract to be a worker, not an employee, but the reality of the situation may suggest otherwise. This can be tricky area and we would recommend that you seek advice if you have any concerns about the employment status of your workforce.
The guidance does seek to give practical advice to businesses and sets out areas both where it might be appropriate to use a zero hours contract and where it might not. Appropriate uses are suggested to be new businesses with fluctuating and unpredictable requirements, seasonal work with surges in demand, dealing with unexpected sickness or special events or using adhoc workers to test a new service. Conversely, it suggests that it would be inappropriate to use a zero hours contract for an individual working regular hours over a continuous period of time or for someone involved in running the core of a business.
It reminds businesses that zero hours contracts are not the only option open to them and that the business need might be equally or better met by an alternative including offering overtime, recruiting a part time or fixed term employee, offering an annualised hours contract or using agency staff (although this would often have costs implications for businesses making it a less attractive option).
The guidance confirms that contracts should be given to zero hours workers and suggests information that it might be helpful to include, including statements as to employment status, employment rights and the way in which work will be made available. It concludes with a reminder of the exclusivity ban in the Act, i.e. that clauses preventing a zero hours worker working for another business are unenforceable. Although the Act came into force without any enforcement or redress provisions to sit alongside the ban, draft regulations have now been issued by government providing for:
- A right for zero hours workers not to be unfairly dismissed if the reason, or principal reason, for their dismissal is that they have failed to comply with an exclusivity clause. That would be a ‘day one’ right without a requirement for workers to accrue a qualifying period of employment
- A right for zero hours workers not to be subjected to any detriment because they have failed to comply with an exclusivity clause.
These claims would be pursued in the employment tribunal and claimants could potentially seek a declaration as to their rights and/or compensation linked to any loss suffered. No date has yet been given for the draft regulations to come into force but they are another indication of the government’s attempt to address abuse of zero hours contracts.
The Stephens Scown employment team works in partnership with organisations to improve their HR practices and advise on employment issues. To discuss this or any other HR issue call 01392 210700 or employment@stephens-scown.co.uk.