What is a zero-hours contract?
A zero-hours contract is a casual agreement between a business and an individual. The individual generally works for the business but the business does not guarantee any set hours or future work. Similarly, the individual is not obliged to accept particular offers of work from the employer. Zero-hours contracts are particularly useful for organisations whose workforce requirements are variable. For example, businesses that provide event staff.
There are different types of zero-hours contracts. Under some, individuals are legally defined as 'employees'. More commonly, under others (including our Zero-hours contract), the individual will be legally defined as a 'worker'. You should ensure that written contracts contain provisions setting out the employment status, rights, and obligations of your zero-hours staff.
What is a worker under a zero-hours contract entitled to?
A zero-hours worker must be paid at least the national minimum wage for each hour worked under a zero-hours contract, unless they are genuinely self-employed.
Workers are also entitled to:
paid annual leave
their hours being capped at 48 hours on average per week (unless they’ve opted-out of this right)
protection from discrimination
Workers don’t normally have 'employee' status, which would allow them to claim for unfair dismissal, claim maternity pay and leave, apply formally for flexible working, and be given statutory minimum notice in case of dismissal. However, zero-hours workers have the right not to be unfairly dismissed or subject to a detriment for failing to comply with an exclusivity clause (see ‘Can zero-hours contracts include exclusivity clauses?’ for more details).
If you are unsure if somebody is legally a worker or an employee or self-employed, you should check the employment status of the individual you are engaging.
How much notice are zero-hours workers entitled to?
As outlined above, individuals classed as employees are entitled to statutory minimum notice periods. This means that they must be given, and must give, the minimum amount of notice required by law. This minimum notice period will depend on how long they have been working for the employer. For more information, read Notice periods.
If an individual is a worker, they are not entitled to be given the statutory minimum notice period when their zero-hours contract is ending. In fact, the standard position under the law is that neither the employer nor the zero-hours worker has to give notice. This means that employers can end a worker’s zero-hours contract without notice and the worker can leave without giving notice.
A zero hours worker’s contract, however, may specify differently. The employer can require either party to give notice of termination. This must be recorded in the worker’s contract or, at the very least, in their written statement of employment particulars. Such ‘contractual notice periods’ must be at least the length of statutory minimum notice periods. If a worker’s contract sets out a notice period the worker and the employer must comply with it.
When should zero-hours contracts be used
A zero-hours contract should be used where the employer simply wishes to engage a worker on a casual basis and would benefit from the flexibility of not promising a set number of hours and days of work in the future.
A zero-hours contract is suitable for businesses which need a flexible supply of workers because they may experience changing demands or cannot predict the exact levels of staffing that they will need at all times.
new businesses or businesses entering a new market - such businesses may be unsure of how well they will do and so it is not known how many staff members are needed
seasonal work/special events - in some industries (eg hospitality, catering, and leisure) there may be an increase in demand for temporary staff to cover busy periods (eg the Christmas shopping period in retail, or during the summer or special events for hotels)
unexpected absence - it can be helpful to have experienced staff available to cover sudden sickness or other emergencies
Zero-hours contracts can also offer welcome flexibility to workers who wish to work irregular hours around their lifestyle (eg if they are studying or have childcare responsibilities).
When should zero-hour contracts not be used?
Zero-hours contracts should be a temporary or backup measure and should not be relied upon to staff the main functions of a business. They should not be used where an individual will work regular hours over an extended period of time.
Zero-hours contracts shouldn’t be used where there is a better alternative, such as:
overtime for existing staff members to meet peaks in demand
offering contracts of employment which meet business needs, for example contracts which:
do not allow staff to take annual leave during busy periods
require leave to be taken whilst the business is quiet
require different working hours at different times of the year
using agency staff on a temporary or short notice basis
Can zero-hours contracts include exclusivity clauses?
In 2015 the Small Business, Enterprise and Employment Act 2015 banned exclusivity clauses in zero-hours contracts. This means that employers cannot use clauses in zero-hours contracts that prevent the worker under the zero-hours contract from working for another business. Employers cannot attempt to avoid this prohibition by making the worker ask for permission before working elsewhere. Therefore, employees can ignore exclusivity clauses as they are not enforceable.