Day one right to claim unfair dismissal for employees sacked for working elsewhere
The draft Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015 have been published, along with new government guidance on when zero hours contracts should and should not be used.
The regulations, which don’t yet have an enforcement date, are intended to tackle avoidance of the ban by employers, and provide:
- a right for employees working under zero hours contracts not to be unfairly dismissed if the reason, or principal reason, is that the employee has failed to comply with an exclusivity clause
- a right for workers working under zero hours contracts not to be subjected to any detriment by, or as a result of, any act, or deliberate failure to act, done by an employer for the reason that the worker has failed to comply with an exclusivity clause.
A zero hours contract is an arrangement whereby an employer has no obligation to provide work to a worker and, therefore, only offers work when it is available, and the worker has no obligation to accept the work. The use of zero hours contracts has become increasingly common across a number of industries and, when used appropriately, can provide a valuable level of flexibility for both employers and employees alike. Employers may not have a constant demand for staff that would justify guaranteed hours, and workers may want the freedom of accepting work only when it is convenient to them, often fitting it around other obligations, such as study and childcare.
In May 2015, the Small Businesses, Enterprise and Employment Act 2015 brought into force a ban on exclusivity in zero hour contracts, following significant media coverage of the apparent abuse of these contracts by some employers. The ban means an employer cannot stop an individual on a zero hours contract from looking for or accepting work from another employer.
The law states that even if an employer has included an exclusivity clause in a zero hours contract, it is unenforceable and so those working under these contracts are within their rights to ignore it. This applies both to new zero hours contracts and to those already in place.
Crucially the right not to be unfairly dismissed contained in the draft regulations would be a “day one” right, and not subject to the usual qualifying period of two years’ continuous service. In the event of a breach by the employer, employees would have the right to issue a claim in the employment tribunal seeking a declaration and/or compensation.
The new regulations highlight the fact that while zero hours contracts can be highly effective to deal with irregular events such as seasonal peaks, unexpected sickness cover and special events, they are rarely appropriate to run a core business. This fact is reinforced in the recently published Department for Business and Skills guidance for employers on zero hours contracts. Employers are reminded of best practice when operating zero hours and other casual worker arrangements, in particular the importance of considering from the outset what legal rights and obligations apply to the relationship and incorporating them into the contractual documentation.
Bearing in mind that zero hours employees and workers have the same statutory entitlements to receive the national minimum wage, rest breaks and employment rights as any other employee, employers should consider carefully whether a zero hours contract is in fact the best model for them or whether other alternatives might meet their business needs more effectively. Alternatives might include offering fixed term contracts, taking on part time workers, or offering overtime or annualised hours, depending on the specific circumstances of the business and the work required.
Shivali Chaudhry is a solicitor at Hamlins LLP
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