When a business has peaks and troughs in projects and workload, it can utilise zero-hours contracts to help them manage situations more effectively by reducing overheads.
These are zero-hours contracts, they allow employees to work on a flexible schedule and allow them to find suitable work hours that fit their needs.
This type of contract also means that employees don’t have to be fully committed to working arrangements with you and can work multiple jobs if they want.
If you need immediate advice on contracts, get in touch with one of our experts here on 0800 470 0619.
What is a zero-hours contract?
Simply put zero hour contracts are an agreement between two groups (for example, employee and employer), that there isn’t a set amount of hours they need to work, and neither is there a guarantee of work.
These contracts will outline what the possible working hours of the employee are and what the individual will be paid. This contract will also include what could happen if the work the employee is offered is turned down.
This type of contract is casual which means,
- They are on call to work whenever you need them.
- Employers don’t have to give them work.
- They don’t have to work when they’ve been asked to.
There is no legal definition for zero hours contracts. As an employer, you should ensure that you set out your employee’s employment status, rights and obligations. Regardless of what kind of employment contract your employees or workers are on, you are still responsible for their health and safety while they are at work.
Why are zero-hour contracts used?
As an employer, you can utilise zero-hour contracts to adapt to the requirements you need and to better manage the fluctuations of work your business may experience.
This type of contract can be utilised to provide their employees with flexible working.
Industries that may utilise zero-hour contracts are:
- Retail.
- Delivery.
- Care workers.
- Warehouse workers.
- Hospitality.
There are sometimes external factors that are out of employers’ control. These could be to do with staff wellbeing or creating a better work-life balance.
These factors can affect some industries more than others, for example, employees in these industries:
- Catering.
- Leisure.
- Hospitality.
Employers and employees in these particular areas can see an increase in irregular work hours, meaning that they don’t need to have their employees present all the time. A reason to use zero-hour contracts here could be beneficial for employers to save money and reduce the amount they are relying on agency workers.
What are the employment rights of zero-hour contract workers?
According to UK law, employees on a zero-hours contract are still entitled to annual leave and must be paid the national minimum wage. This is regardless of the hours they’ve been offered.
This helps to ensure that all employees are treated the same regardless of whether they are an employee on a zero-hours contract or full/part time contract.
Depending on what your employees’ employment status is, they can be classed as an employee and receive more employment rights. Your employees have the added protection of not being unfairly dismissed or experiencing detriments.
When we say ‘experience detriments’ we are referring to treatment that leaves your employees worse off. This can include.
- You reduce an employee’s work hours.
- An employee experiences bullying or harassment while at work.
- You turn down a request for training without a valid reason.
What are my zero-hour employees entitled to?
All of your zero-hour contract employees are entitled to the following:
- Statutory sick pay (SSP).
- Holiday pay.
- Statutory maternity pay and paternity pay.
- Statutory redundancy pay.
It’s important to note that employees will also need to meet relevant criteria for each.
Can employers add an exclusivity clause to the employment contract?
As a zero-hour contract allows your employees to have flexibility in their working hours. You may find that some of them are working a second job.
An exclusivity clause gives you exclusive distribution or license. These can also be used in an employment contract for employees to work exclusively for one employer. It’s important to remember that if your employees aren’t receiving regular hours, they may decide to get a second job.
If you are considering offering your employee a zero-hours contract you must not:
- Stop individuals from working multiple jobs by adding an exclusivity clause to their employment contracts.
- Treat them unfairly if they do decide to get a second job.
- Dismiss them for having a second job if they are classed as an employee.
What’s the employment status of a zero-hours contract worker?
The employment status of your employee’s legal status will affect their rights and what it is they are entitled to. Your employees can fall into one of the following employment statuses;
- Employee.
- Worker.
- Self-employed.
The status of your zero-hour contracts will be determined by their contractual terms, working arrangements, and statutory tests needed to determine their employment status.
What are the employer advantages of using zero-hour contracts
The main advantage for employers is a zero-hour contract is that it offers you flexibility.
You’re able to adapt your workforce to suit the needs of your business each day or week. If you need more staff in a particularly busy time you can offer potential employees a zero-hour contract.
These will let you do the following:
- Cope with unforeseen events at short notice.
- Cover events such as promotional events.
- Manage absences, such as staff being ill or on maternity leave.
- Cope with busty periods throughout the year.
Zero-hour contracts will reduce the cost of staff, as you won’t be paying staff members that aren’t needed at a particular time and agency fees.
What are the employer disadvantages of using zero-hour contracts?
There are some downsides to hiring employees on a zero-hours contract. Your employees are required to accept any hours that you offer them, but your workers aren’t obligated to. This can make it difficult to find someone to carry out particular tasks.
This can mean that you have a dip in the quality and productivity of your workplace. It’s your responsibility as an employer to make sure your staff are meeting quality standards and performance goals.
Another big disadvantage is that it can become more difficult to determine the employment status, relationship, holiday pay and annual leave for employees on this type of contract.
Is there a difference between casual workers and zero-hours contract workers?
Defining zero-hour casual workers and zero hour employees can often be confusing. where both are similar, there are some slight differences.
Your zero-hour contract employees will have an agreement with you that ties them to you as an employee. it’s important to remember that you have no obligation to offer any work.
A casual worker contract has a varied agreement, which is similar to a zero-hour contract where you don’t have to offer your workers any hours, and they don’t have to accept the work. This type of agreement can also be ended at any time.
Do zero-hour contract workers have notice periods?
No. There is no statutory right to notice periods for zero-hours workers. This allows employers to end employees’ contracts without notice, likewise, the employee can leave whenever without notice.
If your staff members are on worker status, they aren’t eligible for:
- Flexible working.
- Protection against unfair dismissal.
- A minimum notice period.
Would giving a notice period help employers?
You can offer your employer a notice period to give them time to find another job, but it’s important to remember that your employees don’t have to pick up any shifts during their notice period.
What if there are breaks in a worker’s employment history?
Having zero-hour contracts could mean that the contract or work is only in effect when work is provided, depending on what you and your employees have agreed on.
A break in employment is when there is a full calendar week where no work has been provided. This week is considered to be a break in continuous service.
If, through your recruitment process, you find that a candidate has a period where they haven’t worked, you should try and find out the reason why. This could be problematic for your business if the candidate isn’t fully committed to their role.
What are the employer’s responsibilities for zero-hour contracts?
As an employer, you still have the responsibility for your zero-hours contracts employees. This includes:
- Health and safety in the workplace.
- Pay wages through PAYE (tax and national insurance deductions).
Speak to an expert
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With over 80 years of experience in helping employers take the stress of handling their HR and employment law obligations.
Get in touch with one of the Employer Advice experts on 0800 470 0613.