Zero hours contracts – what’s the problem?

Zero hours contracts have been grabbing the headlines periodically over the last 18 months or so. Hitting the headlines again in the past few weeks amid recent statistics suggesting that 2.5% of the British workforce is now employed on such agreements, we thought we would provide an update as to the current standing of this type of employment contract.

What is a zero hours contract?

A zero hours contract is a contract between an employer and a worker, where the employer is not obliged to provide any minimum working hours and the worker is not obliged to accept any work offered. These types of contracts have been around for many years and are particularly popular in industries such as retail, hospitality and the care sector.

Why are zero hours contracts controversial?

The controversy surrounding zero hours contracts developed as it became apparent that some staff employed on such grounds were being exploited. Despite not guaranteeing any work on a weekly or monthly basis, some employers were insisting on exclusivity; therefore rendering some people unable to work at all. Other stories began to surface that workers on zero hours contracts would arrive at the workplace in the morning only to be sent home again if their services were not required.

Where does the law stand?

Employing staff on zero hours contracts is perfectly legal. However, it is now illegal for employers to include an exclusivity clause that restricts workers from undertaking other employment whilst on such a contract with them.
Employers also need to watch out for instances where irregular shift patterns of workers on zero hours contracts actually turn into regular hours. In such circumstances, workers are in effect acting as normal employees and should therefore be afforded the relevant employment benefits, such as holiday entitlement.

Can zero hours contracts work?

Despite the negativity surrounding zero hours contracts in the press, this type of employment agreement (when used legally) can and does work well for many employers and workers. The key is for employers not to abuse the agreement they have with staff and to review employment contracts on a regular basis to ensure they remain fair and effective.

For more help and advice in relation to zero hours contracts or contracts of employment generally, please contact either: Pam McColl or Amanda Houlgrave or call us on 0161 312 1864.