Zero hours contracts - what are they and what are staff entitled to?

Zero hours contracts. They often get bad press, and those who are not in the know might assume that zero hours equals zero employment rights. This is far from the truth. As long as they are used appropriately, and employers are aware of the rights and responsibilities surrounding zero hours work, these contracts offer a level of flexibility that can benefit both employer and worker. Here, we take you through the government guidance for zero hours contracts - what they are, when they should be used, and how to ensure workers receive the correct statutory employment rights. 

What are zero hours contracts?

Zero hours contracts may also be called 'casual contracts'. Both are non-legal terms which describe any form of casual agreement between an employer and an individual. This usually refers to an agreement in which:

Zero hours contracts - what are they and what are staff entitled to?

  • The employer has no legal responsibility to offer work
  • The individual does not have to accept the work offered

In practice, this usually means the worker is on call to work when the employer needs them, but does not have to accept work if they are not available for any reason. For the worker, the advantage of this is that it allows for flexibility around other commitments such as childcare or study. For the employer, labour costs can be managed more effectively by only paying staff when there is work for them to do. 

Casual contracts- when are they appropriate? 

Government guidance makes it clear that it is important to avoid the improper use of casual contracts. But how do you discern when a zero hours contract can be used, and when is a permanent fixed-hours arrangement more appropriate? 

The official recommendation is that zero hours contracts are justified when work fluctuates in demand, usually for reasons outside the employer's control, for instance:

  • Seasonal work and special events: If an employer can foresee a temporary surge in demand they may require more staff than usual. Examples include a hotel or bar when weddings and functions are booked, or a garden centre selling Christmas trees and decorations over the festive period.  
  • New businesses: While a new business is establishing its client base, work may be irregular. A viable solution might be to employ casual workers to manage the busy periods.
  • Sickness: A business may need a bank of experienced staff on-call in the event of an unexpected staff sickness, for instance carers in a nursing home. 

Whatever their reputation, zero hours contracts are not an opportunity for employers to avoid their responsibilities. If a business supplies a stable and predictable service, or an individual is being offered regular hours over a longer period of time, the government guidelines state that a casual arrangement is not necessarily justifiable. In these instances, a permanent or fixed-hour contract may be more appropriate.

What employment rights are zero hours staff entitled to?

If you decide that employing staff on a casual basis is the way forward for your business, it is vital to understand that these workers are entitled to basic statutory employment rights. 

These rights differ depending on the employment status of the individual, which for casual staff will be either 'worker' or 'employee' (see the government's employment status guidance for clarification). Regardless of status, the individual will always be entitled to:

  • The National Minimum Wage 
  • Statutory minimum holiday pay for every hour they work
  • Statutory minimum length of rest breaks
  • Protection from unlawful discrimination
  • Treatment on comparable terms with permanent staff members

It is important to keep up to date on legislation and guidance surrounding casual work. Exclusivity clauses on zero hours contracts were banned in May 2015, meaning a casual worker has the right to ignore any clause in their contract which prevents them from finding supplementary work elsewhere. 

This is an evolving area of employment law, so it's critical to get it right, both for company credibility and staff satisfaction. If you would like further advice about zero hours contracts, our experienced team is here to help. Give us a call on 01892 559490 or get in touch using our online enquiry form.

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