Zero Hours Contracts - The Facts

There has been increased media attention on the use of zero hours contracts over the past few months. On the 16 September 2013 the government announced that they intend to  consult on the “best mechanism to tackle abuse” of individuals engaged on zero  hours contracts.  
 
My clients often ask me questions relating to zero hours contracts so I thought it would be helpful to provide you with answers to some of the common questions…

Are zero hours contracts legal?
Yes, employers can engage individuals on a zero hours contract.  This means that there is no obligation for the employer to offer work to the individual, however, normally the individual is obliged to accept work if it is offered.

Are those engaged on a zero hours arrangements classed as employees?
The answer to this question will depend on the relationship between the organisation and the individual.  The individual may be classed as a
“casual worker” if they are offered work on an ad hoc basis but there is no obligation for the individual to accept this work .  They are likely to be classed as a “worker”.

If there is what is known as “mutuality of obligation” i.e. the individual is offered work and there is an expectation that they are obliged to
accept this work then this is likely to result in the individual being classed as an employee.

In what circumstances may it be appropriate to use zero hours contracts?
Zero hours contracts can also be very helpful where organisations need to have a “bank” of relief staff to cover for holidays and  sickness absence.  This type of  contact can also be helpful
where the business owner knows they need to take on employees but are not sure what the customer demand will  be. Zero hours contracts can be a very useful arrangement for those looking for flexible working options. This can
suit students, older workers or those looking to manage their  working lives round family commitments. 

Why is it important to have a written contract in place?
The employer will find it very difficult to prove that a zero hours contract is in existence if there is no written contract in place and the employee has consistently worked regular hours over a period of time.  However, if there is a zero hours contract in place this can protect the employer.

In the case Davies v Hertz (UK) Ltd
Mr Davies was employed by Hertz from 2003 until 2009 on a zero hours contract. During this time Mr Davies was consistently given full time work.   Hertz decided to reduce Mr Davies days of work from 5 days per week to 2 days per week and relied on the fact Mr Davies was employed on a zero hours contract to allow them to make this change.  Mr Davies contract came to an end for
unrelated reasons and he decided to bring a claim to tribunal for unlawful  deduction from wages.  He argued that by offering him full time work for a period from 2003 until 2009 Hertz had  indicated that they were not applying the zero hours clause in his contract and instead by custom and practice he was actually a full time employee.  The Tribunal considered the case and  concluded that although Hertz were able to offer Mr Davies full time work for a  long period of time this did not mean that the zero hours did not apply
therefore Mr Davies’ claim failed.
 

If you would like further information on the use of zero hours please contact me