Kate Brooks
Partner, Solicitor & Head of Employment/HR Services
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Date Published:10 Mar 2016 Last Updated:22 Jul 2021

The truth behind zero hours contracts

Employment Law Advice

Recently, there has been lots of press about the use of zero hours contracts where employers are criticised for exploiting workers.

A government consultation was launched which identified 2 major problems – the use of exclusivity clauses and the lack of transparency in the relationship.

Generally speaking the aim of a zero hours contract is to provide an employer with a great deal of flexibility whilst at the same time creating as little employment rights as possible.

The problem is that there is no definite legal meaning of zero hours contract which can mean that employers and employees are sometimes left in the dark about rights and obligations and this in turn can lead to arguments.

The following is usually present in a zero hours contract:

  1. Casual contract;
  2. No guarantee of work;
  3. Paid for work done.

A zero hours contract creates worker status and not employment status. This means that the worker does not enjoy all of the rights associated with employee status but enjoys more than a self employed person. For example a worker will be entitled to holiday pay, notice and rest breaks. However the worker does not get employment rights such as the right not to be unfairly dismissed or to a redundancy payment.

Ultimately it would be up to a tribunal or the revenue to determine the true status of a worker to see if they had crossed over into employment. For example if an employer regularly offers work there is a risk that an umbrella contract will be established and the worker will gain employment status.

Exclusivity clauses are not conducive to genuinely creating a worker status. Exclusivity points towards an employment relationship.

If employers wish to use zero hours contracts they are well advised to take some advice about the true substance of the arrangement and also to put in place a zero hours contract setting out the intentions.

Details of the BIS consultation can be found here.

Please follow the links to see the responses on the consultation from Acas and CIPD.

Should you have any questions on this topic please contact me at kate.brooks@ellisjones.co.uk.