Zero Hours contracts – what’s the fuss?

15 January 2016

What is a zero-hours contract?

A "zero hours" contract is a contract under which the individual is not contracted to work a set number of hours and is paid only for the number of hours that he or she actually works. Likewise, casual workers are not generally guaranteed a fixed number of hours of work. The terms "casual" and "zero hours" are often used interchangeably and, in practical terms, there may be little to distinguish between these types of working arrangements.

Why have zero-hours contracts been making the news?

As the employer cannot and does not guarantee the individual any work, it was argued that it is unfair for the employer to restrict the individuals’ working for other employers. In other words, the employer should not prohibit the individual from working elsewhere at the same time as being engaged in a zero hours contract with them. Typically such restrictions are included in the contractual term commonly referred to as an “exclusivity clause”. From 26 May 2015, under s.27A of the Employment Rights Act 1996, the following has been inserted into the legislation:

Section 27A(3)(3) of the 1996 Employment Rights Act 

Any provision of a zero hours contract which—

(a) prohibits the worker from doing work or performing services under another contract or under any other arrangement, or

(b) prohibits the worker from doing so without the employer’s consent, is unenforceable against the worker. 

This means that clauses in zero hours contracts that prohibit workers from working or performing services under a contract for another employer or that prohibit workers from doing so without first obtaining employer's consent are unenforceable.

Further changes

Further changes came into force on 11 January 2016 with introduction of “The Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015” that protect workers on zero hours contracts from detriment and dismissal. The Regulations provide redress for workers who are subjected to a detriment or are dismissed for breaching an exclusivity term in a zero hours contract. Employees who are dismissed for breaching an exclusivity term in a zero hours contract do not need a minimum period of continuous service with their employer to claim unfair dismissal.

Unfair dismissal and the right not to be subjected to detriment

2.—(1) An employee who works under a zero hours contract is to be regarded for the purposes of Part 10 of the 1996 Act as unfairly dismissed if the reason (or, if more than one, the principal reason) for the dismissal is the reason specified in paragraph (3). 

(2) A worker who works under a zero hours contract has the right not to be subjected to any detriment by, or as a result of, any act, or any deliberate failure to act, of an employer done for the reason specified in paragraph (3). 

(3) The reason is that the worker breached a provision or purported provision of the zero hours contract to which section 27A(3)(3) of the 1996 Act applies. 

(4) Paragraph (2) does not apply where the detriment in question amounts to a dismissal of an employee within the meaning of Part 10 of the 1996 Act. 

(5) Section 108 of the 1996 Act (qualifying period of employment and upper age limit) does not apply in relation to a dismissal to which paragraph (1) applies.

How does this impact you?

If you employ or are thinking of employing individuals under a zero hours agreement, you should:

  • Carefully review the contract you give them to ensure any exclusivity clauses typically found in contracts are removed. 
  • Where the exclusivity clauses are still present you need to pay attention that you don’t enforce them and don’t subject the individuals to any detriment because of the fact that they are working elsewhere at the same time, and of course, don’t dismiss them primarily for this reason – they will be able to claim unfair dismissal even if they have been with you for les than 2 years which is normally the continuous service required to make such a claim.

 

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