What is a Zero-hour Contract?
A zero-hours contract is a type of contract between an employer and a worker, where the employer is not obliged to provide any minimum working hours, while the worker is not obliged to accept any work offered.
They are also known as casual contracts.
Zero-hour contracts are usually for ‘piece work’ or ‘on call’ work, e.g., season work, such as Christmas when businesses enter a busier period, especially in the hospitality industry.
- Zero-hour workers are entitled to statutory annual leave and the National Minimum Wage in the same way as regular workers.
- Zero-hour workers have the same employment rights as regular workers, although they may have breaks in their contracts, which affect rights that accrue over time.
- The worker is not obliged to accept any work offered
- It will be automatically unfair if someone is dismissed if they have breached a contractual clause stopping them from working for another employer
- It is unlawful for a worker to suffer a detriment because they work for another employer. (Small Business, Enterprise, and Employment Act 2015)
- Workers on these contracts may be less likely to feel involved at work and see fewer opportunities to develop and improve their skills than employees as a whole.
- All workers should be legally entitled to a written copy of their terms and conditions on day one of employment.
- Have a right to request a more predictable contract for all workers, including those on zero-hours contracts and agency workers contracts after 26 weeks’ service.
The following rights apply to zero-hour workers:
- Protection from unlawful deductions from their wages.
- Protection from unfavourable treatment if they work part-time.
- Statutory minimum amount of paid holiday
- The right to work no more than 48 hours on average per week.
- The right to opt out of only working 48 hours on average per week.
- Statutory minimum length of rest breaks.
- Protection for any whistleblowing.
- Protection from unlawful discrimination.
Employers should consider whether a zero-hour contract is the best type of contract for their business needs depending on the nature of the work to be offered and the specific circumstances. Alternatives might include:
- offering overtime to permanent staff to ensure experienced staff deal with temporary fluctuations in demand
- recruiting a part time employee or someone on a fixed term contract if regular hours need to be worked to adapt to a change in the business needs
- offering annualised hours contracts if peaks in demand are known across a year
- using agency staff can be a quicker and easier way to hire someone if staff are needed temporarily or at short notice
Pros of a Zero-hour Contract- for the worker
- May lead to permanent work
- Freedom to find extra work elsewhere
- No consequence if you are unable to except the work offered
Cons of a Zero-hour Contract- for the worker
- Not guaranteed work
- No fixed income
- Impact on social life
- Regularly turning down work may lead the employer to terminating your contract
- Permanent position is not guaranteed
Pros of a Zero-hour Contract- for the employer
- No obligation to provide hours
- Cheaper alternative to agency fees
- Flexible workforce
- Can help with unexpected staff shortages
Cons of a Zero-hour Contract- for the employer
- The worker is entitled to certain employment rights which may put strain on the business
- The worker is not obliged to agree to the work which may lead to staff shortages at certain times
- Could be more beneficial to recruit staff on fixed term contracts
- The workers interests could be elsewhere if they have various zero-hour contracts with other employers
A zero-hour contract worker that is on PAYE with their employer, in most cases they are eligible for the Employee Furlough Scheme (CJRS).
Employees and workers whose pay varies, if the employee has been employed (or engaged by an employment business) for a full 12 months prior to the claim you can claim for the higher of either:
- The same month’s earning from the previous year
- Average monthly earnings from the 2019-20 tax year
If the worker has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
If the worker only started in February 2020, the employer could use pro-rata for their earnings so far to claim.
Should the employer choose to ‘top up’ salary in addition to the grant (this is not a requirement) – any Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions on any additional top up will not be funded through this scheme.
Nor will any voluntary automatic enrolment contributions above the mandatory minimum contribution.
In some cases, rather than furloughing zero-hour contract workers, the employer may opt to stop offering shifts to these workers.
Workers on zero-hour contracts are entitled to SSP too. To be eligible, the criteria is that:
- They must have done some work for the company.
- Been ill for at least four days in a row, including their days off.
- Have earned more than £120 a week after tax over the past eight weeks from a single employer.
But due to coronavirus, the legislation states that those who qualify for SSP, including zero-hour workers, and who self-isolate due to coronavirus, will get sick pay from day one.
This means they will not have to wait the usual four days before benefiting.
If an individual is not eligible to receive sick pay, they could get benefits such as Universal Credit or contributory Employment and Support Allowance.
Does your business need Employment Law help?
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A valued member of the Wurkplace team providing administrative and coordinating skills for the HR department and also overseeing the accounts department of the business whilst carrying out key bookkeeping tasks and conducting payroll.
Georgia holds a level 3 in Business Administration and AAT level 2 whilst continuing to work towards gaining a diploma in AAT.