There is no specific legal definition of a ‘zero hours contract’ but it is generally understood to mean an arrangement under which the worker has no set minimum hours and is only paid for hours actually worked. Typically the worker does not have to accept any work offered to him or her, but must carry out the work personally if they do.
Zero hours contracts are often used to create a pool of workers who are ‘on call’ to help cover unexpected surges in work, or for specialist staff who may be on leave or ill, or for on-call work such as care work. This negates the need of having to take on permanent employees or expensive agency workers.
There are many pitfalls and inappropriate use of zero-hour contracts, but the main areas of zero-hour contract guidance for employers are highlighted here.
Status
Most zero hours contracts will give staff ‘worker’ status, which entitles them to rest breaks, annual holiday, sick pay and, importantly, to be paid the national minimum wage. However they will not have ’employee’ status, which carries further rights such as the entitlement to claim for unfair dismissal, to maternity pay and leave, to ask for flexible working, to statutory minimum notice periods, and to redundancy payments.
However if the contract is too prescriptive, there is a risk (whatever it may say) that it in fact gives rise to an employment relationship. Examples of provisions which can suggest the contract is one of employment are where the contract provides that the worker must be available for work whenever it is offered, cannot work for anyone else (this type of prohibition is actually unlawful), where the organisation exercises a high level of control over the individual when they are working, or if the individual can be disciplined if they refuse work.
For further help on worker and employee status and rights, please seek specific advice from our expert Employment lawyers.
Rest breaks
Zero hours contract workers have the same right to a 20-minute break in every six hours worked, and 11 hours’ uninterrupted rest in every 24-hour period, and 24 uninterrupted hours in every seven-day period as other workers.
Also, like other workers, they are not allowed to work more than 48 hours per week unless they have contracted out of that requirement.
Annual leave
Zero hours contract workers have the same statutory right to at least 5.6 weeks’ annual leave each year, including bank holidays. Calculating annual leave for those who work irregularly can be tricky; there are no regulations on how to convert the entitlement into days or hours for workers with irregular hours. Often the best option is to calculate average days or hours worked each week based on a representative reference period.
Sick pay
Zero hours contract workers must be paid statutory sick pay from the fourth day of their sickness absence, if they have been ill for at least four days and their average weekly earnings over the last eight weeks has been at least as much as the lower earnings limit per week.
National Minimum Wage
The national minimum wage must be paid to zero hours contract workers who are on your work premises, even if they are only there waiting to be allocated work. The NMW is revised every year; current rates can be found here: National Minimum Wage and National Living Wage rates - GOV.UK (www.gov.uk).
Discrimination
Zero hours workers are protected by discrimination laws too. Employers whose zero hours workers are generally of a particular age, sex or race (or any other protected characteristic) should ensure that any additional contractual rights enjoyed by permanent workers are also given to zero hours contract workers, or (in the absence of a good reason why they are not) risk discrimination claims.
Find out more
If you would like further advice you can contact our specialist employment team.
