What is a zero hour contract?

The subject of zero hour contracts is one of those subjects that just won’t go away in employment law circles. Earlier this year the Government put together some draft legislation surrounding this subject and they defined a zero hour contract as:

(i) the undertaking to do or perform work or services is an undertaking to do so conditionally on the employer making work or services available to the worker, and

(ii) there is no certainty that any such work or services will be made available to the worker.

In the legislation the Government has confirmed that it will ban the use of exclusivity terms that prevent zero hour workers working for another employer even when no work is guaranteed by their existing employer.

The Government has also pledged to work with unions and businesses to formulate a best practice code of conduct aimed at employers who wish to use zero-hour contracts.

Many employees in the UK are engaged in zero hour contracts because they offer the employer flexibility to manage shifts in demand, recruitment costs and can allow businesses to expand their services whilst avoiding the costs of employing staff who they do not need on a permanent basis. However, unscrupulous employers have been accused of using this to their advantage, disregarding the status of the employee and the rights they are entitled to.

The Government is unlikely to ban the use of zero hour contracts completely but there is likely to be legislation brought in to address those employers who abuse it. Imposing financial penalties, paying compensation to zero hour workers and creating additional rights for zero hour workers are all on the table to be discussed so it will be interesting to see how the legislation develops over the next few months – a code of practice on the use of zero hour contracts is due by the end of the year.