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The facts about zero-hours contracts

The once traditional Monday to Friday, 9 to 5, is now only the norm for a minority of people. As both employers and workers look for more flexible alternatives, the number of zero-hours contracts has grown rapidly in recent years leading to what has become widely-known as the ‘gig economy’.

It’s estimated that 896,000 people in the UK are in employment on zero-hour contracts as their main job. That’s 115,000 more than the year before. But while this working arrangement offers flexibility and the chance for people to pick their hours, it’s also come under close scrutiny in recent years.

What is a zero-hours contract?

A zero-hours contract is a contract between an employee and worker where the employer is not obligated to provide minimum working hours and the worker is not obligated to accept work offered to them. This type of working arrangement provides employers with a flexible workforce to meet a temporary or changeable need for staff. Most people on a zero-hours contracts have a ‘worker’ employment status, but still have the same rights as regular employees such as the National Minimum Wage, National Living Wage, annual leave and pay for work travel. For workers, it provides flexible employment and crucial employment experience and the opportunity to develop skills for future employment.

Zero-hours contracts continue to hit the headlines, particularly in industries reliant on flexible working arrangements. In September 2016, Sports Direct was forced to apologise for working conditions and its treatment of casual staff in its warehouse. An undercover investigation by the Guardian newspaper discovered that casual warehouse staff were subjected to lengthy security searches which often resulted in the workers’ pay falling below the legal minimum wage. The company has since promised to abolish zero-hours contracts across the company. It will now instead employ workers for a guaranteed minimum of 12 hours a week.

Pro-rated holiday pay

Holiday pay for permanent workers who work for only part of the year, including those on zero-hours contracts, should be calculated by taking their average earnings over a 12-week period and not pro-rated. This was confirmed by the Court of Appeal in its ruling during the summer where a music teacher took her employer to a tribunal over pro-rated holiday pay. The clarinet and saxophone teacher was employed on a permanent zero-hours contract and her working hours during term-time depended on the number of students requiring teaching. She was not required to teach during the school holidays. The teacher was paid monthly, based on an hourly rate according to the hours she worked.

Her contract specified that she was entitled to 5.6 weeks’ paid holiday each year but this holiday must be taken during the three main school holidays. Her employer calculated her earnings over a school term and then paid her one-third of 12.07% of that figure in three equal instalments at the end of each term. However, the teacher argued that this was incorrect and resulted in her being underpaid. The Court of Appeal agreed with the teacher and ruled that zero-hours workers, like this teacher, should be entitled to 5.6 weeks of holiday per year, even if they don’t work the entire year. This is a minimum entitlement which should not be pro-rated.

Exclusivity Terms for zero-hours workers

New regulations on zero-hours contracts were introduced on 26 May 2015 which stops employers from being able to enforce an exclusivity clause in a zero-hours contract. The Exclusivity Terms in Zero Hours Regulations 2015 determine that it is unfair to dismiss a worker if they have broken the clause in their contract that prevents them working for other employers. It is also illegal for workers to be put at a disadvantage because they also work for someone else.

A student employed on a zero-hours contract was awarded over £4,000 in outstanding wages, despite starting a new full-time job while suspended from her restaurant job. The Employment Appeal Tribunal (EAT) decided that the restaurant worker’s zero-hours contract allowed her to seek other employment regardless of the fact that she was suspended from duties. It also concluded that it was impossible for the company to be sure that she would have turned down restaurant shifts once she had started her new role.

Future of zero-hours contracts

With the results of the December 2019 General Election resulting in a majority Conservative Governement, the future of zero-hours contracts is uncertain.

To find out more about zero-contracts and how HR solutions can help your business navigate employee contracts, call us on 0844 324 5840 or contact us online. You can also watch our zero-contracts webinar which takes a closer look at these types of contract.




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