Zero hours under the spotlight

Contracts can offer employers and employees flexibility if handled properly, writes employment lawyer David Hoey

Zero hours contracts are seen to offer a degree of flexibility due to the absence of specific hours, says David Hoey.

SO-CALLED ‘zero hours contracts’ have been in the spotlight recently, with the government indicating that the issue is to be reviewed.

A zero hours contract is a contract entered into between two parties (the employer and the worker) whereby the employee agrees to provide services, whether or not in writing.
It may be possible for the terms of the contract to be identified from what the parties have said/how they acted.
Usually the agreement covers the work to be done, rate of pay and commonly makes it clear that the employer is under no obligation to provide any work.
The worker may be able to refuse any work that is offered.
So what’s all the fuss about?
It has been suggested that these arrangements are unfair on workers since workers may be exploited. For example, there is no certainty as to what, if any, hours will be provided and so the worker’s income is not guaranteed.
Some employers may use these contracts on a large scale rather than to meet a particular business need.
But such arrangements can be attractive given the flexibility and absence of specific hours.
There might also be no restriction on working for other employers too.
So what rights do such workers have?
This depends on the specific circumstances in each case.
Also, whether or not an individual has the right to make a claim for unfair dismissal, unlawful discrimination, breach of contract, etc. will depend on whether the worker satisfies the eligibility criteria for each claim. For unfair dismissal, a claimant requires to be an employee and have sufficient continuous service.
Case law has developed such that certain characteristics need to be present to be “an employee”.
One important ingredient is that the worker is required to personally provide their services. Another is that the employee must be under an obligation to carry out work when required (with a similar obligation on the employer to provide work). A zero hours worker might not be able, therefore, to claim unfair dismissal.
To claim unlawful discrimination and holiday pay, claimants require to satisfy the definition of a “worker”, which is a more widely defined category and includes those engaged to provide services personally who are not genuinely self-employed.

Zero hours contracts are seen to offer a degree of flexibility due to the absence of specific hours, says David Hoey.
Zero hours contracts are seen to offer a degree of flexibility due to the absence of specific hours, says David Hoey.

Zero hours workers might be able to satisfy this definition and could have the right to claim unlawful discrimination and accrued holidays (which is not a straightforward matter).
Problems arise where the written agreement between the parties (if any) does not reflect the reality of the situation in practice.
If, in practice, a zero hours worker is actually expected to work 40 hours every week, a court or tribunal might conclude that the parties had agreed to vary their relationship so that the worker was a full-time employee.
There can be much uncertainty if the terms of the contract are not implemented in practice (even if the terms are in writing).
Care is needed when engaging workers to ensure that thought has been given to the precise nature of the contractual relationship and what the consequences might be.
Consider what the specific need is and prepare a properly worded agreement covering the main practical and legal issues. What rights would such workers have? How will holiday pay be dealt with?
Given the risks in this area and potential challenges that exist, the need for specialist employment law advice has never been greater.
• David Hoey is a partner and accredited specialist in employment law at BTO Solicitors.