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Zero Hours Contracts

Zero hour contracts in the spotlight

Zero hour contracts have received considerable attention in recent years due to an increasingly mobile and flexible workforce, media coverage about the so-called gig economy, and unscrupulous employers taking advantage of workers employed on zero hour terms.

Zero Hour Contracts

Zero hours contracts have been described by some as a way for businesses to abuse vulnerable, low income workers by providing no job security, rights or guaranteed hours or income. However, others reference individuals preferring the benefits that come with having a zero hours contract in terms of flexibility and choice. Certainly, businesses do benefit from using such contracts. For example, both private and NHS hospitals frequently engage workers on zero hours contracts, sometimes known as “bank contracts”, in order to fill gaps on an ‘ad hoc’ basis caused by staff absences. However, depending on the terms of the contracts they are also open to abuse, which is one reason zero hours contracts providing for exclusivity (ie the inability to work elsewhere) are unlawful.

Whilst there is no legal definition for a zero hour contract, they are generally understood to be a contract between a business and an individual where the individual is engaged on an “as and when” basis, without any guarantee of work from the business.

The overriding theme of zero hour contracts relates to the parties’ obligations to one another. More specifically, it usually means that the business has no obligation to provide work to the individual. Whether the individual has the obligation to accept any work offered, or to be ‘available’ to work depends on the terms of the agreement.  However, if an individual is obliged to accept the work offered it significantly curtails that individual’s ability to find other part time work. Whilst the law is clear that zero hours contracts must not contain exclusivity clauses, it is less clear whether “requirement to be available” clauses would fall into this prohibition.  In some instances they must.

Employers wishing to engage individuals on zero hours contracts should give careful consideration to the inequality of bargaining power between them, and draft a contract which is fair to the employee, enabling them to find other work if none is available from the employer from time to time.  Businesses will also want to consider whether such workers should be employees, workers or self-employed contractors.

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