Zero-hours contracts

A zero-hours contract is a casual agreement between a business and an individual, generally where the individual works for the business, but the business does not guarantee any set hours or future work.

There are different types of zero-hours contracts, somewhere the individual is legally defined as an 'employee', or more commonly (as with our Zero-hours contract) where they are a 'worker'. You should ensure that written contracts contain provisions setting out the employment status, rights and obligations of your zero-hours staff.

An individual 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:

• annual leave

• sick pay

• rest breaks

• protection from discrimination

Workers don’t normally have the 'employee' status, which would allow them to claim for unfair dismissal, maternity pay and leave, flexible working or statutory minimum notice. 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 and to claim compensation.

If you are unsure, you should check the employment status of the individual you are engaging.

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 that 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.

Examples include:

• new businesses or when entering a new market - where a business is unsure of how well it will do and so it is not known how many staff members it needs.
• seasonal work/special events - in some industries, such as 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, hotel staff during the summer or a special event).
• 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).

Zero-hours contracts should be a temporary or backup measure and should not be relied upon to run the main functions of a business or 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:

• a part-time or full-time fixed-term or permanent contract
• overtime for existing staff members, to meet peaks in demand
• offering contracts of employment which meet business needs (eg contracts which do not allow staff to take annual leave during busy periods, or require for leave to be taken whilst business is quiet, or different working hours at different times of the year)
• using agency staff on a temporary or short notice basis

Since April 2015, exclusivity clauses in zero-hours contracts have been banned by the government under the Small Business, Enterprise and Employment Act. This means that you cannot use clauses that prevent a worker under a zero-hours contract from working for another business or even attempt to avoid this by making the worker ask permission before doing so. An exclusivity clause can be ignored and is therefore not enforceable.