Is contract clarity a step closer?

Regulation on zero hours contracts could help provide clarity for employees and businesses, said Dawn Robertson.
Regulation on zero hours contracts could help provide clarity for employees and businesses, said Dawn Robertson.

A new Westminster consultation on ‘zero hours’ could help staff and employers, writes lawyer Dawn Robertson

THE Department for Business Innovation and Skills launched the much-publicised consultation paper on zero hours contracts last month.
It is estimated that anywhere from around 250,000 to 1 million zero hours contracts are in use in the UK today.
Traditional contracts, at their most basic, entitle the employee to expect a minimum number of hours’ work, in return for a minimum amount of pay.
In contrast, the underlying premise of a zero hours employment contract is that there is no expectation of a minimum number of hours to be performed and paid for. One would expect, then, that the individual would be (a) free to contract to do other work and (b) free to refuse work offered to them under the contract when it does not suit.
Running until March 12, 2014, the consultation paper seeks views on a number of options for regulating zero hours contracts. In particular, it seeks views on two main issues: exclusivity and transparency.
Turning to exclusivity first, the consultation document states that there are circumstances where exclusivity clauses are useful and justifiable, for example where an individual is entrusted with confidential information. However, in many cases it is not clear why the employee should be barred from other work.

Dawn Robertson
Dawn Robertson

The consultation sets out four broad options to address the use of exclusivity clauses, ranging from banning their use altogether, to doing nothing and leaving individuals to rely on existing redress available under the common law.
In between, the government suggests providing businesses with guidance on the fair use of exclusivity clauses in employment contracts or, alternatively, seeking employer-led codes of practice, possibly on a sector-by-sector approach.
On the issue of transparency, the government’s intention is for individuals on zero hours employment contracts to be given a better understanding of their employment rights.
The government found during its information gathering exercise that some individuals were unclear of their rights and even the terms of their engagement.
In my own professional experience, this is often the case.
It is not unusual for an individual to think – notwithstanding the terms of any contract they have signed – that they are being employed for a specified position (and specified hours of work) by an organisation, only to discover later that their actual (zero hours) employment contract is with the intermediary employment agency which set up the interview.
With a view to providing individuals with a better understanding of what they might be agreeing to, the government has made three proposals for improving transparency:
• improving the content and accessibility of information, advice and guidance on (a) employment contracts and rights, and (b) entitlement of zero hours workers to benefits;
• encouraging an employer-led Code of Practice on the fair use of zero hours contracts;
• government-provided model clauses for zero hours contracts.
On this last proposal, the government has suggested that the format of the contract could include a simple ‘key facts’ section to help individuals understand the key terms within the contract.
Given the publicity generated by zero hours employment contracts over the last year – and possibly in anticipation of a General Election next year – the government will be keen to be seen to be ‘clamping down’ on abuses while at the same time being fair to businesses.
As such, while the status quo will not continue, there is no suggestion that zero hours contracts will be outlawed altogether.
It is far more likely that a degree of regulation based on the proposals in the consultation will be introduced.
What difference – to the employer or the individual – such regulation may make is, at this stage, anyone’s guess.
• Dawn Robertson is a partner in the hospitality and leisure team at Tods Murray.