What Are Zero-Hours Contracts in England and Wales?

All employers will have different requirements in terms of staff, and this is not always as simple as needing a regular number of employees. For example, suppose you have just started your own business. In that case, you may not want to recruit a number of full-time employees until your workload becomes consistent. If your business caters for the holiday industry, there may be a time of the year when you need additional staff and other times of the year when you need very few staff. If you cannot commit to regular employees, you may find that hiring staff on a zero-hours contract status works for you.

This article will explain zero-hours contracts are. It will suggest when they may come into use, what the rules are about zero-hours contracts and what the actual contract might include.

What is a Zero-Hours Contract?

A zero-hours contract is not a legal term as such. Instead, it is a term that simply refers to various types of everyday work that a person does for you.

Typically, when a worker has a zero-hours contract, you do not guarantee a set amount of work hours. Instead, you offer them work when you have work they could complete, and it is up to the worker whether or not to take the work. They work for you as either an employee or a worker.

Why Might You Use Zero-Hours Contracts?

As an employer, you may find that zero-hours contracts come in useful if the workload of your business fluctuates. This can be the case, for example, in the leisure, catering and hospitality sector.

Zero-hours contracts could also be helpful for:

• new businesses still sourcing enough regular customers;
• seasonal work such as shop work during the Christmas period;
• staff cover when employees are suddenly sick;
• special events such as catering for a wedding; and
• testing new services you may wish to offer.

Whilst zero-hours contracts can be beneficial to you as an employer, you should not use them where you cannot justify them. Therefore, where a worker has regular hours, there should be no reason why you cannot offer them a standard type of employment contract rather than a zero-hours contract. 

Zero-hours contracts would also not usually be relevant to the daily running of your business.

What Are the Rules About Zero-Hours Workers?

1. Advertising a Vacancy

When you advertise a vacancy for a zero-hours contract, you must clarify that it is a zero-hours contract and what that means.

2. Rights and Responsibilities Associated With Zero-Hours Contracts

If you have workers who are on a zero-hours contract, you must still pay them an hourly rate of at least the National Minimum Wage (NMW). 

You are responsible for the health and safety at work of someone on a zero-hours contract and for paying the zero-hours contract holders’ wages through a PAYE scheme.

What Are the Entitlements? 

In addition to you paying the NMW, your worker has the right to:

• statutory rest breaks, which include at work, between workdays and shifts as well as weekly rest periods;
• not work more than 48 hours a week unless they wish to;
• protection if they disclose wrongdoing in the workplace;
• not to be discriminated against on the basis that they are part-time;
• not have unlawful deductions on their wage;
• statutory maternity, paternity, adoption and shared parental pay but not leave;
• paid statutory holiday leave; and
• protection against discrimination.

Your employee has the right to all that a worker has the right to. However, depending on the length of time you have employed them, they may also have the right to:

• statutory sick pay;
• statutory maternity, paternity, adoption, and shared parental pay and leave;
• a minimum notice period regarding dismissal and the right not to be unfairly dismissed;
• the right to ask for flexible working;
• the right to take time off if there is an emergency; and
• statutory redundancy pay.

A person on a zero-hours contract also has the right to pay for any travel related to their work and pay for being on call.

Where you use zero-hours contracts, you must not treat the person unfairly for working for another employer or dismiss them where they are an employee. 

3. Offering Work

It is advisable to offer work with as much notice as possible to accommodate the non-working lives of those on the zero-hours contract. 

Also, you should be transparent regarding your method for offering work to those on zero-hours contracts.

4. Breaks in Employment

Zero-hours contracts can sometimes result in breaks in employment. This is can sometimes apply when you cannot provide the person with any work for seven days in a row from a Sunday to a Saturday. 

If this happens, you must pay the person for any holiday accrued but not taken. You may also be required to pay them notice pay and outstanding wages. This applies where the contract states so, or where the person has been employed by you for over one month.

What Should a Zero-Hours Contract Look Like?

As an employer, you need to have a clear zero-hours contract with your employees or workers for them to understand their rights and expectations.

You may wish to insert the following into your a zero-hours contract:

• whether the person has employee or worker status as different rights are associated with each;
• the statutory employment rights which will be accrued for someone who is an employee;
• how work will be offered and state that they are not obliged to take it; and
• how the zero-hours contract can be terminated, such as the amount of notice you and your worker or employee should give, or whether it ends after a task.

Due to the nature of zero-hours contracts, an individual is likely to need to take on other work to ensure they always have enough work to do. If you do insert one, it will have no authority over the person.

You can also not include an exclusivity ban in a zero-hours contract. This is where you require the person to ask for your permission if they wish to take on or look for other work.

Key Takeaways

Zero-hours contracts can benefit you as an employer in various circumstances. However, if you have staff on zero-hours contracts or are considering doing so, there are rules relating to these which you should be aware of. For example, you are still required to pay at least the NMW. In addition, the person working for you will either be classed as a worker or an employee, so the rules will vary accordingly. There are also instances where you should not use a zero-hours contract if it is not justified, such as where the person working for you has regular patterned hours and should, therefore, be on a standard employment contract.  

If you need help with understanding zero-hours contracts in England and Wales, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So, call us today on 0808 196 8584 or visit our membership page.

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