A government consultation is underway, but what are the existing holiday, wage and discrimination rights guaranteed by these contracts?
For several months now, there have been two more or less diametrically opposed views on what zero hours contracts mean for employees and employers.
On one side of the debate, some claim zero-hours contracts are tantamount to exploitation. The Resolution Foundation think-tank, among others, has argued that workers on these contracts live with permanent uncertainty and earn significantly less compared with employees on other deals. On the other hand, the Institute of Directors has claimed they are vital to UK industry.
A recent survey by the CIPD showed that workers on zero-hours contracts are more likely to be happy with their work-life balance than other staff. The same poll also found that over half of respondents on these contracts didn’t want more hours.
Consultation
Business secretary Vince Cable has now ruled out a complete ban on this form of employment and has begun a formal consultation process on the use of zero-hours contracts, which is open until March 13 2014. Among other proposals, the government is considering banning the use of exclusivity clauses in zero-hours contracts which prevent workers from working for alternative employers.
Meanwhile, a private member’s bill – the Zero Hours Contract Bill – sponsored by Labour MP Andy Sawford, will have its second reading on January 24 2014. Both processes look set to ensure that questions about the use of zero-hours contracts will continue for some time yet.
In the midst of this lively debate, many of the facts have become obscured by political mudslinging. To get a clearer understanding, it’s worth looking again at what a zero-hours contract actually entails.
Contracts
Zero-hours contracts, in their most basic form, are terms of employment that do not guarantee staff a set number of hours, and only entitles them to be paid for work carried out. Whether zero-hour workers are actually considered employees, in the commonly accepted sense, largely depends on the wordings of their contracts, given there is usually no obligation on either side to offer or accept work. Nevertheless, there are other aspects to these contracts which employers also need to consider.
Holidays
Lost in much of the recent debate was the fact that zero-hours workers are still entitled to paid annual leave through the Working Time Regulations 1998. This can be tricky to calculate, and employers have come up with a number of ways of doing so. Some allow workers to accrue holidays on the basis of the hours they have worked each month, meaning they can take days when they choose. This, however, potentially contradicts the legal position that holidays should not have to be accrued before they are taken. An alternative is to estimate how much holiday a worker will accumulate over a particular period and then adjust final pay according to holidays taken.
Minimum wage
Zero-hours workers are entitled to the national minimum wage while they are working, but this doesn’t include rest breaks. Likewise, workers are entitled to be paid for any time they have to be available at, or near, a place of work. However, this does not apply to workers who are on standby or on-call at home.
Discrimination
Statistics show that it is overwhelmingly women who require part-time work to meet childcare and other carer commitments. As most zero-hours contracts afford workers few contractual benefits, businesses that only offer their part-time staff these forms of contract will need to be able to objectively justify this policy or risk claims of indirect gender discrimination. Equally, such arrangements that require workers to be available at all times put those with caring responsibilities at a distinct disadvantage.
Jacqueline McCluskey is an employment partner at law firm HBJ Gateley.
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