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02nd November 2015

Government Guidance on Zero Hours Contracts

‘Zero-hour contracts’ provide the employer and the individual with a casual agreement which does not guarantee any hours of work, but allows the employer to offer the individual work when it arises which they can choose to accept or reject. The Department for Business Innovation & Skills recently published guidance for employers on the use of zero-hour contracts.

Zero-hour contracts can be useful where work demands are irregular, notably in sectors where the level of work is necessitated by external factors outside of the employer’s control, such as hospitality, leisure and catering. The guidance suggests examples of when zero-hour contracts might be appropriate: new businesses, seasonal work, unexpected sickness, special events and when an employer is testing a service. The examples provided suggest that the appropriate use of these contracts is when workers are needed on an ad-hoc basis, during a surge in demand, or when it is unknown when demand might rise or fall, and more generally to satisfy work that was traditionally filled by ‘casual’ workers.

While offering flexibility, zero-hour contracts should not be considered as an alternative to proper business planning, or be used as a permanent arrangement if it is not justifiable. If an individual is asked to work set hours on set days for a fixed period of 12 months, then it would be more appropriate to offer the individual a permanent part-time or fixed term contract. Zero-hour contracts are rarely appropriate to run the core business, and their use should be limited to satisfying unexpected or irregular events to deliver sufficient customer service.

The guidance suggests that zero-hour contracts should be clear and transparent so that the individual can understand their rights such as: employment status, any accrual of statutory entitlements, process of offering work and termination. It suggests that employers should plan ahead and give as much notice as possible when offering work. Cancelling at late notice or when the individual turns up at the place of work is unacceptable unless truly unavoidable. Zero-hour contracts should be clearly advertised as such and the individual should be clear that hours are not guaranteed and that work may cease if there is a fall in demand. Use of exclusivity clauses is now prohibited in any zero-hour contracts.

This is useful and long overdue guidance on this type of contract.

*All information is correct at the time of publishing. Use of this material is subject to your acceptance of our terms and conditions.

Chris Boyle

Napthens LLP – Employment Law Specialist

Chris is head of Napthens’ employment law team. He acts for businesses on a full range of employment law issues ranging from day to day HR advice through to Employment Tribunal claims including unfair dismissal, discrimination, TUPE and breach of contract. He also deals with commercial agents’ disputes and High Court breach of contract claims. Chris acts for all types of businesses and organisations from SMEs through to public companies, across industry sectors and also acts for individual directors and senior employees.

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