Zero Hour Contracts Demystified

Zero Hour Contracts Demystified

  • Date: Monday 25th January 2016

After getting bad press last year and nearly being axed in a political move, Zero hour contracts lived to see another day and recent legislation changes around the removal of exclusivity clauses indicates they are here to stay.

What is a Zero Hour contract?

Under a Zero Hour contract the employer confirms the employment of a candidate, but makes no commitment on the number of hours the individual will be working or the longevity of the contract.

Under recent legislation employers are no longer allowed to request exclusivity, which means that Zero hour workers can maintain any reasonable number of contracts, complementing each other to make up a set number of hours required.

What are the advantages?

In essence, flexibility. Students in particular like zero hour contracts because they can turn down work if they want to, and during quiet study times make themselves available for full time work.

Employers generally use these contracts to compliment their existing core workforce and add flexibility in terms of holiday and sickness cover, without having to pay expensive agency fees.

They are also a great way of avoiding unnecessary paperwork; employees don’t have to be taken off the books every time work dries up.

The downsides?

Clearly, a lack of security can have an impact on employees and staff rarely accept a zero hour contract as their main source of income. Not knowing if there will be a pay cheque next month can also be demoralising if employees rely on the income and employees are generally less engaged if they don’t spend much time with the team.  Calculating holiday can also be confusing to employers, since this has to be done on a periodic basis.

What to watch out for:

If you employ somebody on a zero hour basis but regularly provide them with work over a considerable period of time, the employee could argue that their contract is in fact a permanent one. We suggest reviewing hours on a monthly basis and if they seem regular after 3 months, consider offering a fixed term or permanent contract. In these cases you may also not be able to simply terminate the contract without first going through your processes and giving sufficient notice.

Also don’t forget that part time workers are entitled to the same benefits (on a pro rata basis) as their full time equivalents. So if you offer a bonus scheme, enhanced pension or non-monetary benefits, you must include your zero hour workers too.

Lastly, due diligence often takes a backseat with workers who are not often in the business: health and safety training, occupational health reviews, personal details updates, policy and procedure reviews - zero hours or not – all employees should be considered.

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