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Changes to zero hours contracts and National Minimum Wage
In the run up to the election, zero hours contracts were a very topical subject. A report from the Office for National Statistics (ONS) says that 697,000 people were employed on zero hours contracts for their main job between October and December 2014.
Lack of security and stability
Sadly, as we know, zero hours contracts do attract some controversy, e.g. lack of financial stability and security for employees. Some employers have been known to use them to avoid their responsibility to employees too.
To address issues with these contracts, the provisions within the Small Business, Enterprise and Employment Act 2015 came into force on the 26th May 2015. It also ‘ups the ante’ for those who, by accident or design, avoid paying the National Minimum Wage.
What the changes mean
What does this change mean for small to medium size employers, and what action do you need to take to ensure keep out of trouble?
• The most important change to the Act is that exclusivity clauses in zero hours contracts are no longer enforceable.
• In a nutshell, this means that employers can no longer restrict an employee from completing work for another employer.
• Check the confidentiality clauses in your contracts to ensure that you have sufficient in there to cover any information that may be at risk.
• Employees can now choose to complete work for competitors too, so ensure you are protected.
• The QCS policy PC16 Self Employment and Zero Hours Contracts Policy and Procedure has been amended to reflect these recent changes
• Finally, the Act introduces a maximum financial penalty for underpayment of the National Minimum Wage of £20,000 per worker. Previously, there was a maximum fine of £20,000 per employer, so now fines could really add up. Costly errors are easy to make, so it might be wise to run some checks on how you pay your employees – there is guidance here. Don’t be caught out. See information on the increases in the National Minimum Wage for October 2015 here.
Anita Manfredi of Employer Solutions – QCS HR Expert Contributor