Pros and Cons of Zero Hour Contract for employers and workers
What is a Zero hour contract?
A zero hour contract is a contract between an employer and a ‘worker’ where there is no obligation for the employer to offer work, or for the employee to except it.
Am I classed as a ‘worker’?
According to Gov.UK you are classed as a worker if the following applies to you:
- you have a contract or other arrangement to do work or services personally for a reward (your contract doesn’t have to be written)
- your reward is for money or a benefit in kind, e.g. the promise of a contract or future work
- you only have a limited right to send someone else to do the work (subcontract)
- you have to turn up for work even if you don’t want to
- your employer has to have work for you to do as long as the contract or arrangement lasts
- you aren’t doing the work as part of your own limited company in an arrangement where the ‘employer’ is actually a customer or client
As a worker you are entitled to certain employment rights these are stated as:
- receiving the National Minimum Wage
- protection against unlawful deductions from wages
- the statutory minimum level of paid holiday
- the statutory minimum length of rest breaks
- to not work more than 48 hours on average per week or to opt out of this right if you choose
- protection against unlawful discrimination
- protection for ‘whistleblowing’ – reporting wrongdoing in the workplace
- to not be treated less favorably if you work part-time
You may also be entitled to:
- Statutory Sick Pay
- Statutory Maternity Pay
- Statutory Paternity Pay
- Statutory Adoption Pay
- Shared Parental Pay
Be aware that as a Worker you are not usually entitled to:
- minimum notice periods if your employment will be terminated
- protection against unfair dismissal
- the right to request flexible working
- time off for emergencies
- Statutory Redundancy Pay
You are a worker if most of these apply:
- you occasionally do work for a specific business
- the business doesn’t have to offer you work and you don’t have to accept it – you only work when you want to
- your contract with the business uses terms like ‘casual’, ‘freelance’, ‘zero hours’, ‘as required’ or something similar
- you have to agree with the business’s terms and conditions to get work – either verbally or in writing
- you are under the supervision or control of a manager or director
- you can’t send someone else to do your work
- the business deducts tax and National Insurance contributions from your wages
- the business provides materials, tools or equipment that you need to do the work
What should I be aware of as a worker or an employer of zero hour contracts?
As of 26th May 2015 new legislation came into force prohibiting employers to enforce an exclusivity clause which restricts works to work for other employers. This is beneficial for the worker as they can now have a number of zero hour contracts giving them the opportunity of more work. For the employers this will limit a workers availability and may make zero hour contracts less attractive.
There is a lot of negativity around zero hour contracts. However, if used and monitored carefully by the employer and worker they can be very beneficial to both parties involved. The majority of zero hour contracts will give the individual worker employment status giving them the same employment rights as regular workers however they may have breaks in their contracts affecting the right to accrue overtime.
As stated above in some cases the contract only exists when work is provided therefore if there is a break in the work of 7 days (Sun-Sat) then that would bring about a break in employment. During this time the worker does not accrue any holiday, however, any holiday they have accrued will need to be paid to them by the employer.
After a year of continuous employment the worker is entitled to some extra employment rights such as taking holiday before it has been accrued.
To ensure zero hour contracts are advantageous to both parties it is important to have a clear understanding of what you the worker and you the employer want from the relationship and that can be outlined in a comprehensive contract.
What are the pros and cons for my business for employing workers on a zero hour contract?
If you want to take on workers using a zero hour contract make sure you are aware of all your employer responsibilities and set out a clear contract.
What are the pros and cons for me as a ‘worker’ to be employed on a zero hour contract?
Depending on your circumstances a zero hour contract could be a good way of getting back to work after a long period of time out without being committed to contracted hours of work. Zero hour contracts are suitable for people who want occasional earnings and want to be flexible about when they work such as students. A zero hour contract is not for everyone as there is a lack in security and stability.