In recent years there has been a sharp increase in zero hours contracts as employers seek cost-effective solutions to their short-term staffing needs. Despite zero hours contracts being common in the modern workplace, very few people understand exactly what they are and how they work.

Here we will provide an overview of zero hours contracts and why businesses benefit from utilising them.

What is a ‘zero-hour’ contract?

Employers that employee people on zero hours contracts do not guarantee that they can give individuals any set hours or times of work. Basically, people working on zero hours contracts agree to be available for work as and they are required. However, just as employers are not obliged to offer work to workers on zero hour contracts, employees on zero-hours contracts are not obliged to accept the work offered either.

Many employees on zero hours contracts are contacted, often at short notice, when they are needed by their employer and are only paid for the hours they work. According to the provisions of the National Minimum Wage Regulations, workers on ‘standby time’ or ‘on call time’ must be paid minimum wage if they are at their place of work and required to be there. Workers cannot be asked to ‘clock off’ if they are required to wait on premises. Sick pay is often not included in zero hours’ contracts, though holiday pay is, as it is part of the working time regulations.

Which businesses use zero hour’s contracts?

According to figures released last August by the Office for National Statistics, two hundred and fifty thousand UK workers were employed on zero-hours contracts, which represented about one percent of the UK workforce. Around the same time, a survey of employers by the Chartered Institute of Personnel and Development was released which claimed the real number was more than one million employees, with one in five employers hiring at least one person on a zero-hours contract.

The survey also found that a third of organisations in the UK voluntary sector used zero hours contracts, along with a quarter of public sector employers and seventeen percent of private sector firms.

Two well-known businesses that make use of zero-hour contracts include retailer Sports Direct which employs twenty thousand people on zero hours contracts and JD Wetherspoon which employs eighty percent of its staff on zero hours contracts. Even Buckingham Palace uses zero contracts, so they are certainly not limited to a particular sector.

Short-term staffing solution

One of the main benefits of zero hour’s contracts to businesses is that they provide them with a short-term staffing solution. This is particularly beneficial in the retail and hospitality sectors where the volume of customers fluctuates throughout the day. Zero hours contracts provide employers with a pool of people who are ‘on call’ and can be used when needed. They allow them to benefit from having a flexible workforce and perhaps fewer responsibilities than employers hiring people on set hourly contracts.

Is it just employers that benefit from zero hours contracts?

Zero hours contracts have caused much controversy, as many people believe they only really benefit employers. It could be said that some individuals may benefit from zero hours contracts if they are only looking occasional earnings and can be flexible about when they work, but it is definitely fair to say that zero-hour contracts are more beneficial to employers.

The issue that many people have with zero hours contracts is the fact that the employees on them do not have the same employment rights as those on traditional contracts. Many argue that employers are therefore using these contracts to avoid their responsibilities and obligations to employees.

Whilst zero hours contracts are legal and do have their benefits if you are going to employ staff on them, it is important to make sure that they are clear about how they work before you let them sign the contract.

For more information contact Alistair Booth at

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