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Zero-hour contracts: Redress the balance

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The law recognises the value of zero-hour contracts to both employers and casual workers, but new rules mean firms will need to provide greater clarity around terms and conditions.

A zero-hour contract is a contract between a business and a casual worker in which the worker is engaged on an ad hoc basis, with no guarantee of work from the business and no guaranteed minimum number of hours’ work. 

Due to the insecurity and uncertainty around the availability of work within zero-hour contracts, there has been a lot of focus on the ethics of engaging workers under these types of contracts. Some evidence of exploitation has been reported in the media. 

There has also been a significant amount of case law, which has sought to determine the employment status of zero-hour workers on a case-by-case basis in terms of whether they are employees, with the full set of employment rights, or fall under the intermediate status of ‘workers’, who benefit from certain worker rights, such as the right to receive the National Minimum Wage, paid holidays and sick pay.


The Government has recently responded to recommendations put forward by an independent review into modern working practices that it commissioned. In a nutshell, there is no proposal to legislate against the use of zero-hour contracts. The Government continues to recognise that it is appropriate to use zero-hour contracts in some circumstances. Examples of appropriate use include where the work is seasonal. An example of inappropriate use is where the worker will work regular hours over a continuous period of time. 

However, there is recognition that workers require greater certainty regarding their rights. All workers, including zero-hour workers, are now entitled to receive payslips showing the number of hours paid for, where a worker is paid on an hourly rate basis.

The Government has produced detailed guidance on the information that must be contained in payslips to reflect the new provisions introduced for workers.  

Upcoming legislation

 
Currently, the majority of zero-hour workers do not have a legal right to a written statement of the terms and conditions that apply to their engagement because, in most cases, they are not employees. 

From 6 April 2020, in a significant amendment to legislation – particularly for small businesses with fewer administrative resources – for workers employed on or after that date, employers will be required to provide written contracts containing a greater amount of minimum information by the date the worker starts work (rather than within two months of starting work, which is currently the case), i.e. this becomes a ‘day 1’ right. This right will apply to all workers, including zero-hour workers, from that date, and not just to employees, as is currently the case.  

Workers already employed before this date may request an amended, more detailed contract after this date. From 6 April 2020, in addition to the current minimum information that employers are required to provide in writing, the additional written information to be provided in the written statement (or contract of employment) includes details of:

 The days of the week the worker is required to work, whether the working hours may be variable and how any variation will be determined;
 All paid leave to which the worker is entitled (this includes parental paid leave, such as maternity leave);
 Details of all remuneration and benefits;
 Any probationary period; and
 Any training entitlement provided by the employer, including whether any training is mandatory and/or must be paid for by the worker.

In complying with these changes, FSB members will benefit from access to our updated employment contracts on the Legal Hub.   



Future proposals

To address the perceived problem of ‘one-sided flexibility’ for zero-hour workers, the Government will introduce a right for all workers to request a more predictable and stable contract, with guaranteed working hours, after 26 weeks’ service. As yet, there is no date set for the introduction of legislation to address this.

Also, it is not yet known how the employer’s duty to consider the request for fixed hours will be regulated, but it is anticipated the employer will have the right to reject the request, providing they can evidence certain business reasons for rejecting it. 

Hannah Thomas is an employment solicitor at FSB Legal. FSB Essential members should ring the FSB Legal Helpline on 03450 727 727 to discuss legal issues