Zero-Hours Contracts, quite simply, are what they say. There is a relationship between an individual and a company where an individual agrees to make themselves available to the company for work, although they are not obliged to accept any work that is offered to them, and there is no obligation on the company to provide a specified or guaranteed number of hours work to that individual.
The Office for National Statistics Labour Force Survey: Zero-hours contracts data tables most recently show that the number of people on zero-hours contracts in April to June 2016 is 903,000, accounting for around 2.9% of those in employment. This figure looks set to increase with recent trends showing an increase from 747,000 in April to June of 2015 up from 624,000 in the same period in 2014.
With more than a 30% increase in the number of people on zero-hours contracts in two years, what explanation is there for their popularity?
The benefits to employers in having staff on zero-hours contracts are clear; employers are only obliged to pay staff on zero-hours contracts for the time that they work and are under no obligation to provide work and so are of great benefit for seasonal work or work which has particularly busy periods. Usually a zero-hours contract will not give rise to an employee-employer relationship and so individuals employed on a zero-hours contract will be workers and not employees so have fewer employment rights. However, this does leave employers vulnerable as many workers on zero-hours contract cannot be completely relied upon as they have the option to take the work when required and refuse it if they wish or have another job that they prefer.
The benefits for individuals taking up zero-hours contracts are that there is no onus on them to commit to particular or regular hours and they can have the flexibility to take up work when they are able to or require work but also refuse work if they want to. However, the income from zero-hours contract cannot be relied upon because the availability of hours will depend on the work available and this can be dramatically different from one month to the next.
This type of contract is often popular among students (with 36% of those on zero-hours contracts in April to June 2016 being aged 16-24) as they can fit the work around studying and, as zero-hours contracts cannot contain exclusivity clauses, an employer is unable to prevent anyone working under a zero-hours contract from working for another company. This gives people the flexibility to carry out work under a number of zero-hours contracts and be offered work from multiple sources to generate more work and increase the chances of a steady income.
It is important for employers to ensure that anyone carrying out work under a zero-hours contract is doing so as a true reflection of the working relationship, and that there is no guarantee of work and no obligation upon the individual to accept any work that is offered to them, so as not to become an employee and thus be entitled to employment rights as an employee if this is not the employer’s intention.
Individuals employed under a zero-hours contract are still entitled to National Minimum Wage and so those aged 21 to 24 are entitled to at least £6.95 per hour, those aged 18 to 20 should be paid at least £5.55 per hour and those under 18 years of age are entitled to a minimum of £4.00 per hour. Holiday will accrue for those working under a zero-hours contract and this will have to be calculated in each individual case considering the number of hours worked. Those employed under a zero-hours contract will also be entitled to Statutory Sick Pay and although most individuals will simply refuse any work offered if they are ill they are able to claim Statutory Sick Pay, subject to a qualifying period of incapacity to work, and are most likely to do so if they have accepted an offer of work and then are unable to perform this because they subsequently become ill.
Zero-Hours Contracts and Unfair Dismissal
If an individual is genuinely employed under a zero-hours contract and this is a true reflection of the working relationship then they will not be an employee and so are not be entitled to bring a claim for unfair dismissal.
However, if an employer includes an exclusivity clause within the zero-hours contract they open themselves up to a potential claim for unfair dismissal.
If an individual has an exclusivity clause within their zero-hours contract, stating that they are unable to work for another employer or look for alternative work, then they will be entitled to bring a claim for unfair dismissal, regardless of how long they have worked for their employer, if they are dismissed for breaching an exclusivity clause or if they suffer a detriment because they work for another employer in breach of an exclusivity clause.