HR & Employment Law Insights

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Zero-hours contracts have received lots of criticism in recent months.

Zero hours contracts have received a mauling in the press in recent months and if you’ve previously offered this kind of work, you may now be reluctant to offer this to new starters.

The criticism zero hours contracts have received is rather extreme and although it’s well-intentioned if these types of contracts are managed responsibly there’s no reason why they can’t still be included.

Here’s a look at how and when zero-hours contracts could be used to great effect in the workplace.

The problems

Before taking a look at how zero hours contracts can be used responsibly, it’s worth examining where the problems have arisen in the past.

Less than honourable employers have exploited zero hours contracts, deliberately leaving employees in an insecure position with no certainty on what their earnings will be every month or whether they can pay the bills.

Many employers were trying their staff on zero hours contracts into an exclusivity deal, preventing them from seeking work elsewhere even though they were unable to guarantee them any work at all on a monthly basis.

This type of unfair contract is one of the reasons why zero hours contracts have gained such a poor reputation for only being of use to the employer. When they’re used fairly, both the employer and the employee benefits from the flexibility they offer.

Changes to the law

With effect from May 2015, the law changed to remove the right for employers to insist that employees on zero hours contracts remain at their sole disposal. This means that individuals can now seek work elsewhere if their employer is unable to provide them with any guaranteed hours.

This removal of the exclusivity rights gets rid of a number of the objections to zero hours contracts as it leaves employees free to seek security elsewhere should they need to do so.

Employees must also receive the same rights as those with more fixed contracts too. This means they must be paid at least the National Minimum Wage (which increased at the start of October 2015) and must receive all the usual statutory employment rights including breaks, paid annual leave and protection from being discriminated against.

How to use zero-hours contracts

Around 1 in 4 unemployed people are offered zero hours contracts

Although they remain controversial, it is still possible for employers to use zero-hours contracts responsibly. The Department of Business, Skills and Innovations has emphasised the importance of those that choose to use them understanding where and when they are appropriate, and not misusing them avoid giving staff the protection they are entitled to.

A zero-hours contract means that an employee could end up working almost full-time hours every month but without any of the security that a colleague on a fixed hours contract would be entitled to. For this reason, they should only be used as a last resort and where other options aren’t viable.

In particular, if an employer decides that a zero hours contract is necessary to cover the needs of the business, they must try to give the individual as much notice as possible about their likely working hours. They must also make it clear that the individual is free to either decline or accept the hours offered without any negative consequences.

This last point is imperative: employers must not intimate to employees that they must accept whatever work is offered in order to keep their contract.

Alternatives which should be considered before offering a zero hours contract include overtime, annualised hours to deal with seasonal fluctuations, the use of temporary agency staff or employing a part-time member of staff if the need is likely to be permanent.

Conclusion

Zero hours contracts will continue to offer flexibility to both employer and employee and providing they are used fairly and responsibly they can be useful for both sides. If you’re not sure how to implement this type of contract, we can help provide you with professional advice and guidance; just get in touch with us today.

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