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Understanding zero hours contracts

When an individual is employed under a zero hours contract they will usually be classified as a worker under employment law. There is no obligation for the employer to provide work or for the individual to accept it. Being defined as a worker coveys certain employment rights in relation to annual leave, the national minimum wage and pay for work related travel, although the accrual of these rights might be affected by any breaks in the contract.

This term (zero hours) is not set out in legislation but is widely accepted.

When are zero hours contracts useful?

Zero hours contracts can be used to provide a flexible workforce, as an alternative to using agency workers or fixed-term contracts. This is particularly useful if there is a temporary or changing need for staff. Examples of this include unexpected or last minute events, temporary staff shortages or on-call work such as caring.
Employers get access to a pool of staff that can be used as need arises, no ongoing requirement to guarantee them work and an often cheaper alternative to using an agency.
Employees get flexible work on the same basic terms as most other workers, no obligation to accept work (or consequences for refusing) and gain skills/experience on the job.

Understanding breaks in zero hours contracts

In many cases a contract will only exist when the work is provided (ie. someone will be given a contract to cover the period of work only, not to be open ended). In this case, if there is a full calendar week without work (from Sunday to Saturday) then this is classed as a break in employment.
When a contract is continuous certain employment rights accumulate over time (for example the right to request flexible working or the right to annual leave). If the contract is broken this is affected, as is the employer’s need to pay any accrued or untaken holiday pay.

Exclusivity clauses

As part of the Small Business, Enterprise & Employment Bill (published on 25th June 2014) the government announced plans to ban exclusivity clauses in contracts that offer no guarantee of work and to improve transparency of zero hours contracts by increasing the availability of information for employees.
This new Bill states that any provision of a zero hours contract, prohibiting a worker from working under another contract, or prohibits them from doing so without the employer’s consent, is unenforceable. This change means that workers have total freedom to seek work with more than one employer.

Further guidance

The Government announced plans to develop a code of practice on the fair use of zero hours contracts, review existing guidance/information available to employees and employers and carry out further consultation on zero hours contracts by the end of 2014.
For help with setting in place clear guidelines and policies relating to zero hours contracts contact our Commercial Services team on 0117 9292811. For help with handling disputes on this subject contact James Taylor on 01454 204880.

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