Zero hours contracts can deliver a flexible workforce, help avoid agency fees and provide an employer with an easily accessible pool of employees to call upon when the demand rises. Recent government guidance urges businesses to act with fairness when using such contracts.
A zero hour contract is an arrangement whereby the employer has full discretion of an employee’s working hours. An employer does not guarantee any minimum hours, and an employee is not obliged to accept any work offered and is only paid for work actually carried out. It is also important to note that an employer cannot restrict an employee under this contract from working elsewhere.
Recently, the Department for Business, Innovation and Skills (BIS) has published guidance on zero hour contracts. The guidance suggests that these contracts are appropriate for the following:
- New business start-ups when faced with fluctuating and unpredictable demands.
- Seasonal work where there are periods of time when additional staff are needed for surges, such as retail services at Christmas.
- Unexpected staff sickness.
- Special events when specially trained staff are required.
- Testing a potential new service and ad hoc staff are required.
The guidance asks employers to consider whether such contracts are the most appropriate. Alternatives could include offering overtime to existing permanent staff, recruiting a part-time employee, offering annualised hours contracts and perhaps using agency staff at short notice. Zero hour contracts are not appropriate for:
- Individuals working regular hours over a continuous period of time, for example on a 12 month period.
- Employees contracted to run the core business, particularly when a business provides a regular service on a predictable timetable.
Good practice, as suggested by the guidance, would be employers informing employees of their status as an ‘employee’ or ‘worker’, their statutory employment rights and any additional employment rights. The contract should be clearly advertised as such, and potential employees should be informed that hours are not guaranteed. Work should not be cancelled unless truly unavoidable, and it may be beneficial to implement a policy explaining when, how and under what circumstances work might be cancelled.
If you would like to discuss how zero hour contracts could be beneficial for your business, or if you require advice on implementing the BIS guidance please contact Colin Smith at firstname.lastname@example.org or on 01494 478625