Do you employ staff on zero-hour contracts?

Protection for zero-hour contract workers comes in to force today under the Zero Hours Contracts (Redress) Regulations 2015

Rules regulating the use of exclusivity clauses in zero-hour contracts came in to force today under the new the Zero Hours Contracts (Redress) Regulations 2015.

This Article provides an update as to the current position concerning zero-hour contracts and highlights the key developments that Employers who utilise zero-hour contracts must be aware of to ensure that, when drafting zero-hour contracts, they do not fall foul of the new Regulations as of today.

What are zero hour contracts? 

Zero-hour contracts are defined in The Small Business, Enterprise and Employment Act 2015 s153 (Part 2A, 27A (1))  as, to put the definition simply,  a contract of employment or other worker’s contract where the work is conditional upon the employer making work or services available to the worker. Therefore, under a zero-hour contract, there is no certainty that any work will be made available to the worker.

Zero-hour contracts are commonly used by employers for casual worker of the business. Under a zero-hour contract, the employer has no obligation to provide work to the worker unlike in situations where there is continual demand for the worker.

What are the advantages & disadvantages of zero hour contracts 

The advantages of zero-hour contracts for employers are that they allow flexibility and freedom to employ workers as and when they are required. This in turn means less of a financial burden on the employer as the worker will only be paid for the hours worked.

The advantage for the worker is that a zero-hour contract does not tie the individual to continuous hours of work and allows them to work only when requested to do so.

There are however disadvantages to such an arrangement. Due to no guarantee of work, many workers try and find alternative employment to ensure they have income whilst not working under their zero-hour contract, but it can often be the case that the contract will contain an exclusivity clause.   

Previous position 

Previously, exclusivity clauses meant that employers could prevent, or purport to prevent, individuals doing work under any other contract or arrangement. This in turn meant that workers were denied the freedom to find work with more than one employer. 

As a result of workers suffering detriment at the hand of exclusivity clauses, an investigation was launched by the Department of Business, Innovation & Skills. Exclusivity clauses which prohibited the worker from doing work or performing services under another contract or without the employer’s consent were deemed to be unenforceable by the Small Business, Enterprise and Employment Act 2015 s153 (Part 2A, 27A (3)), as part of a “clamp down on abuses to ensure people get a fair deal”.

The Government at the time were aware that secondary legislation would be required, as employers could bypass section 153 (27A (3)) by offering for example, just one hours work.

Current position

As of today the Zero Hours Contracts (Redress) Regulations 2015 come in to force.

The Regulations go even further to protect zero-hour contract workers by providing a remedy for zero-hour workers against employers who include exclusivity clauses in their contracts of employment. Under Section 2, the Regulations give zero-hour workers the right not to be unfairly dismissed and the right to not be subjected to a detriment for failing to comply with an exclusivity clause.

Impact on employers

Under Section 2(5) of the Regulations, the worker does not have to be working for any particular length of time to inherit this protection from dismissal. Employers who use zero-hour contracts will therefore have to be aware that this right “kicks in” from the first day of work and will have to ensure they can accommodate workers that may have more than one job at a time. This will require flexibility and staff management, which may be difficult when the need for workers fluctuate in accordance with an unpredictable customer demand.

Impact on zero hour workers 

Zero-hour workers will benefit from the Regulations as they are now entitled to seek other employment in tandem with their zero-hour contract as they are now awarded protection from dismissal for the reason of being employed by two people at once.

With zero-hour contracts on the increase, with 744,000 (2.4%) of the UK workforce employed under these in April-June 2015, compared to 624,000 (2%) at the same time in 2014, will be seen as a welcome development in ensuring zero-hour workers are offered more protection from the misuse of such contracts whilst ensuring employers still have the ability to engage workers on a zero-hour basis.

If you require advice in connection with zero-hour contracts generally or on the impact and extent of the new Regulations, please do not hesitate to get in touch with any member of our Employment team or our Head of Department Stephen Elliott.

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