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Posted 14 August 2012
by Martin Laver

Beware – zero-hours contracts

Q: When is a zero-hours contract not a zero-hours contract?
A: When it isn’t really a zero-hours contract

The case of Pulse Healthcare Ltd -v- Carewatch Care Services Ltd & 6 Others is a stark reminder to employers that an Employment Tribunal will be quick to find that the written employment contract does not reflect the true position between the parties.Zero-hours contracts can be very useful where work is infrequent and employers need a bank of casual staff who they can call up for irregular periods of work.  It is a feature of zero-hours contracts that work does not have to be provided, and the worker does not have to accept it.  Largely for this reason, workers with zero-hours contracts are not technically classed as employees and so have much less protection than workers, including, importantly, the right to claim unfair dismissal.  Breaks in the work also affect any continuity of service.Many employers have sought to exploit this point by classifying employees as workers, and giving them zero-hours contracts but in reality requiring them to work at particular times and for all intents and purposes, like employees.  Other employers have, accidentally, fallen foul of the tribunal’s critical approach to such practices.

In Pulse, the workers had zero-hours contracts but were obliged to provide work and could not turn it down.  The Employment Tribunal found that, despite the written contract, the staff were actually employees.  The Employment Tribunal found that, amongst other things, the staff could not turn down work when it was required of them.  This had some quite substantial effects in that case because it involved a TUPE transfer.

Accordingly, employers need to be aware that the traditional contract law approach of the written document prevailing does not always apply in employment cases.  The true position between the parties will govern how the law treats a particular employment relationship.  This will be of particular concern when looking at bringing a zero-hours contract to an end, or in redundancy and TUPE situations when you could inadvertently unfairly dismiss a worker, or a number of workers, who are actually employees and who have lengthy periods of service and, therefore, hefty compensation claims.

Mistake the true position at your peril.

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About the author

Martin Laver

Partner

Partner in the commercial litigation team specialising in disputed trusts and Wills