If you’re in the business world, then you’ve no doubt heard about zero hour contracts. As the discussion around them continues to ramp up, it can be tough to get to the bottom of what zero hour contracts really are and why they’re in use.
Today, we’re going to focus on the facts. We’ll let you know exactly what a zero hour contract is, its advantages and disadvantages, and how they should be used in line with the law. We’ll delve into workers’ rights, employment status, and much more, so be sure to pay attention!
What Are Zero Hours Contracts?
A zero hours contract is a type of working arrangement where the employer does not guarantee a minimum number of working hours. Instead, workers are assigned hours on an ad hoc basis, with the right to turn down any work that they’re offered.
There are a variety of industries that use zero hours contracts. Most commonly, this type of arrangement is used for casual and gig economy work, thanks to the flexibility that it offers. However, zero hours contracts can also be found in the NHS, care homes, and hospitality jobs.
Zero Hours Contracts in Practise
According to the ONS, as at September 2017, 2.9% of the UK workforce had a zero hour contract. That was 900,000 UK workers. This number is still rising.
Many employees find the reality of a zero hours contract is heavily tilted in favour of their employer. They are sometimes expected to work full time hours without the protection of a contract, and in some cases, can be told they can’t turn down shifts. Many are unaware of their rights and the laws surrounding zero hour employment.
Zero Hours Contracts Advantages and Disadvantages
Despite the sometimes poor reputation of this type of employment contract, it does have advantages for both parties, as well as disadvantages. We’ll look at the key pros and cons for both employer and employee.
Advantages of Zero Hour Contracts
Zero hour contracts offer a number of advantages for employers and workers alike. Perhaps the biggest benefit for both parties is flexibility. Employers can get workers in whenever they need them whilst the workers are free to decide when they want to take on the hours.
This means zero hours contracts are particularly beneficial for employers that offer fluctuating or irregular work. Employers can save a lot of cash on payroll costs by not paying their workers a full time salary.
For workers, another advantage is that they can use a zero hours contract for extra income. Employers cannot tie down their workers with this type of contract, meaning they are free to work at multiple places. As a result, many workers are able to use this to their advantage and top up their income when and where they need to.
Disadvantages Of Zero Hours Contracts
Although zero hours contracts clearly have their benefits, it’s important to talk about some of the drawbacks too. Since workers have the right to turn down any hours that they’re offered, employers cannot guarantee that they will have enough workers when they need them.
To get around this issue, employers often hire extra zero hour workers to ensure they won’t be shorthanded. But, in turn, this means that workers are offered fewer hours and inconsistent work patterns. So even though the flexibility of a zero hours contract can be good for a worker, it can also lead to unreliable income levels.
Appropriate And Inappropriate Use Of Zero Hour Contracts
Despite the drawbacks, when zero hour contracts are used responsibly by an employer, they can do away with some of the major disadvantages. The government has laid out a number of situations where the use of zero hour contracts is deemed to be “appropriate”:
For new businesses
Anyone who has started a business will know that it can be tough to afford full time salaries before a customer base has been built up. Zero hours contracts are a great solution in this case businesses can get people into work when they need them without shelling out for full time employees.
For seasonal work
Any seasonal work or jobs where there is fluctuating demand are also ideal for zero hours contracts. Retail stores may build up a bank of zero hours workers for surges during sale periods, for example. Since seasonal work is generally considered a casual arrangement, workers will also appreciate the opportunity to choose flexible hours.
For sickness cover
It is also considered appropriate for employers to have zero hours workers ready to cover unexpected staff sickness. This is particularly common with specialist roles, where other employees at the business can not easily step into the missing staff member’s shoes. For workers, sickness cover offers the chance to earn extra income whenever their services are required.
For specialist events
Similarly, employers might want to have specialist workers on the books for irregular events. For example, a restaurant could benefit from having zero hours staff available for wedding receptions and catering events.
For service testing
Businesses often want to test their services before rolling them out to a broader market. Having staff available on flexible contracts is an easy way to get people in for ad hoc testing.
What Rights Do Zero Hour Contract Workers Have?
Anyone who’s working under a zero hours contract is entitled to a range of employment rights, including all of the same legal rights as a permanent worker. This section breaks each of them down and explains what a zero hour worker should expect to receive from their employer.
National Minimum Wage
Firstly, all zero hour workers are entitled to the National Minimum Wage or National Living Wage. Zero hour workers are no different from regular employees in this regard and must be paid in line with their age band.
Workers over 23 are entitled to the National Living Wage, whilst those under 23 are entitled to the National Minimum Wage. The government updates these wages every year, so employers must always know what they should be paying at any time.
Statutory Sick Pay
Most people on a zero hours contract are also entitled to Statutory Sick Pay (SSP). In the event that a worker is not able to come in due to illness, sick pay must be paid in line with their hourly rate. Zero hour workers are entitled to SSP if they meet the following criteria:
- They’ve done work for the employer previously.
- They’re sick for at least four days in a row (including regular days off).
- They stick to company guidelines when reporting sickness.
- In the past eight weeks, they’ve earned at least £120 per week on average.
This minimum weekly income must all come from the same employer. So if an employee works for more than one employer but does not earn £120 per week at any of them, they won’t have the right to sick pay.
Our comprehensive guide on zero hour contract sick pay breaks down how to work out your entitlement to sick pay.
Just like regular employers, workers on a zero hours contract have the right to to paid annual leave. However, the exact number of days off that a worker can claim will depend on how many hours they’ve worked and any agreements in place with the employer.
At a minimum, zero hour workers are entitled to 5.6 weeks of paid holiday. This is Statutory Annual Leave and applies to all workers regardless of their contract.
Zero hour workers “accrue” their holiday leave as they work. If they work enough days or hours, then their holiday entitlement will surpass the statutory minimum. Zero hour workers should also accrue paid holiday when they’re on:
- Sick leave.
- Paternity, maternity, adoption, or shared parental leave.
- A probation period.
Our guide on zero hour contract holiday pay entitlements has more on how to work out paid holiday rights.
Zero hours workers are entitled to the same rest breaks as other employees. These include standard rest breaks during a day, rest between days or shifts, and weekly rest allocation.
Specifically, workers have the right to an uninterrupted break of 20 mins if they work 6 hours or more in a day. This break shouldn’t be at the very beginning or very end of the day, and the worker should be able to leave their workstation for the full break duration.
Between working days, a worker should get at least 11 hours of uninterrupted rest. If there is an emergency exception, the employer must make other break allowances to account for the lost rest time.
Finally, an employee is entitled to either 24 hours of rest in a 7 day period or 48 hours of rest in a 14 day period. The employer can choose to split the 14 day break allocation into two 24 hour chunks if they prefer.
Rest breaks are typically unpaid unless the worker has a contractual agreement with the employer.
For zero hours shift workers, rest breaks work slightly differently. In this case, the worker is not always entitled to the full legal breaks for their day or week. For example, this can happen if a worker’s hours change from a day shift to a night shift.
Refusing Hours on a Zero Hours Contract
Many workers wonder if they can refuse hours and shifts whilst on a zero hours contract. If you have a zero hours contract you can refuse any shift you are offered. Many employees are told by managers they have to work the shifts the employer requires. However this is not the case. The contract works in the same ways for both parties, and as a worker you have the right to refuse any hours offered to you.
Zero Hour Contract Notice Periods
If you decide to give notice on a zero hours contract role, you can use the flexibility of the contract to refuse any shifts offered during your notice period. Your employer cannot withhold any wages for hours already worked in this circumstance, even if they have added contract clauses to that effect.
UK Law Changes in 2021 on Zero Hour Contracts
At the moment you are protected under UK law and have the same rights as other workers to receive:-
- National Minimum and Living Wage.
- Pay For Work Related Travel During Shifts.
- Holiday Pay & Sick Pay.
- On Call Pay.
In 2021, the UK government has passed legislation following advice in the Good Work plan, which gives workers on zero hours contracts the right to written terms of employment from day one in a job.
Later in 2021 the Employment Bill is expected to be published. This will implement more recommendations from the Good Work Plan including:-
- Compensation for shift cancellation without resonable notice.
- Giving workers a right to reasonable notice of shift times.
- Giving workers the right to switch away from a zero hours contract after 26 weeks continuous employment. The new contract would reflect regular hours worked during that 26 week period.
The aim of the planned changes is to even up the one sided nature of zero hour roles, giving workers additional rights and greater employment security.
Additional Rights For Workers Classed As “Employees”
In the world of zero hours contracts, employment status is an important factor to consider. If you work under a zero hour employment contract, you can be legally classed as either a “worker” or an “employee”. If you’re an employee, then you’re entitled to additional employment rights.
Most importantly, employees have extra protection against being unfairly dismissed by their employer or experiencing “detriment” if they:-
- Believe their work tasks would put them in imminent and serious danger.
- Take reasonable action with regards to a health and safety concern, such as making a complaint about an unsafe workplace.
- Let their employer know about any health and safety concerns in the appropriate manner.
If an employee is dismissed or experiences detriment in any of these cases, the employee will have grounds for an unfair dismissal case. “Detriment” is any negative treatment that makes you worse off, such as reducing hours, bullying at work, or turning down training requests without a good reason.
For any further queries surrounding your contract and employment rights, you can receive independent and free advice from Citizens Advice Bureau in England or Wales. If you’re working in Scotland, the CAS can provide legal advice.
Can Zero Hours Contract Workers Work For More Than One Employer?
Under a zero hours contract, you are free to work for as many employers as you like. Legally, an employer cannot stop you from working for another, nor can they treat you unfairly if you do so. If you’re classed as an employee, the employer can also not dismiss you on these grounds.
Some employers attempt to put an “exclusivity agreement” in their zero hours employment contracts. However, these clauses have no legal basis. An employer cannot claim the contract has been broken if a zero hours worker looks elsewhere for work.
What Is Classed As A Break In Employment?
Another important phrase surrounding zero hours contracts is “a break in employment”. A break in employment is when a worker on a zero hours contract is not given work for a full calendar week. A break in employment can affect the worker’s employment contract.
If there is a break in a worker’s employment, then the employer has to pay them for any holiday they’ve built up and not yet taken, as well as any outstanding wages.
There are some exceptions to this, such as when the worker is off work with injury or sickness, or it’s a seasonal job without guaranteed hours. Additionally, a worker and employer may have an agreement in the zero hours contract that allows a break in employment.
Zero hours contracts are generally considered to be more beneficial to employers. This is because it helps them avoid paying full time contracts whilst having workers on hand whenever they need them. Zero hour contracts are particularly great for new businesses, which may not have the capital to take on full time staff straight away.
Despite the lack of guaranteed work hours, zero hours contracts can also benefit workers too. For one, their flexibility cannot be matched by any other type of contract. Workers are free to turn down any working hours they’re offered, meaning they’re never locked into any set shifts. This also allows workers to use their zero hour contract work around other jobs for extra income.
Any business can choose to use zero hours contracts within its labour force. However, this contract arrangement is not always the best choice. Companies cannot guarantee that their zero hours contract workers will be available when they need them, which can make projects and operations more challenging.
Zero hours contracts are better suited to companies looking for a flexible workforce. Businesses that require delivery drivers, seasonal workers or service testers may benefit from offering zero hours contracts, for example.