Everything you need to know about zero hour contracts

News on 29 October 2018

You’ve probably heard people talking about zero-hours contracts or casual worker contracts, but what exactly are they and would they work in your business?

When would you use a zero hours contract?

A zero hours contract is one that you can use for when you are looking at having someone to help you on with odd hours here and there, or even a one-off project. The great thing about zero hours contracts is that it gives you and the person you take on flexibility.

How do you decide that zero hours is the right way to go?

First, you need to look at your business’ recruitment needs.

Do you need someone there permanently?

Do you need someone for just for a short period of time to cover absence or holidays or for seasonal influx of work that is only for a short period of time?

Perhaps you need a bit of help from time to time, but you are not able to guarantee someone regular contractual hours.

If any of these situations sound familiar to you, then a zero hours contract may be the way forward for you.

If you need a more permanent solution to managing workload, then you need to consider giving an employee a different type of contract, that guaranteed their contractual hours.

After all, a worker on a zero hours contract is under no obligation to turn up to work and may well have a number of other work commitments to juggle.

Exclusivity clauses in zero hours contracts

On 26 May 2015, new regulations about zero hours contracts were brought in.

This means that employers cannot use zero hours contracts that have 'exclusivity clauses' in them.  An exclusivity clause is something that seeks to restrict a worker from working for another organisation.

The Exclusivity Terms in Zero Hours Regulations 2015  state:

it will be automatically unfair if someone is dismissed if they have breached a contractual clause stopping them from working for another employer

it is unlawful for a worker to suffer a detriment because they work for another employer.

What rights do zero hours workers have?

Zero hours contracts are great for flexibility of both the worker and the organisation.

However, zero hours contracts should not curtail the worker’s rights.

Zero hours workers are still entitled to accrued holiday pay, statutory sick pay, national minimum wage and statutory rest breaks.

Zero hours workers are not classed as employees, so there is no right to maternity leave and pay and no right to claim for unfair dismissal.

If zero hours contracts are used improperly, then in the event of a dispute an Employment Tribunal has the right to look beyond the actual document and to look at what is really going on and if the worker is really an employee, and therefore entitled to all the same rights as an employee.

It’s important to use the right contract for the right situation.

Here are some examples of when a zero hours contract is appropriate:

Sally is a chef and runs a successful catering business. She has a core team of permanent employees who work in the kitchen and in the administration team. When they cater a wedding she used zero hours contracts for the waiting staff. Most of the waiting team are students or people who really only want to work very part time hours – so zero hours contracts suit the workers and suit Sally’s business model.

Bob runs a caravan park by the sea. The park is closed between November and March. He only has a skeleton staff employed during the winter months. There are significant seasonal fluctuations with staffing requirements and the summer months are really busy. Bob uses zero hours contracts for the additional catering staff and cleaners in the summer months.  

Who are the workers on zero hours contracts?

The Office for National Statistics says that the people who are mainly working under zero hours contracts are the under-25s and the over 65s.

This tells us that these people want to have the option to do some work, when it suits them, but want flexibility around other obligations (full time education or retirement activities).

Could zero hours contracts benefit your business?

One way of looking at zero hours contacts is that you can have a potential pool of “on-call” workers.

For example, if you need to flex up and flex down with your staffing numbers fairly frequently.

They are there to use as and when you need them, but you don’t have to give them work all the time (like you do with your employees).

You also only have to pay them when you use them.

Think about the times when you’ve needed extra staff in the past. What’s the first thing you’ve done; call an agency? If that’s what you’ve done before, then you’re more than likely going to follow the same path. But, look at the cost. Agencies will add their fees on top of the wages you’re paying these workers. So, cutting out the middleman and having your own bank of “on-call” workers, will save you money. If it’s not working for you because the person isn’t good at the job, then don’t have to offer them any more work.

Zero hours contracts can be a useful resource for your business, when they are used correctly.


If you would like help with zero hours contacts, don't hesitate to get in touch with our experts on 03300 414 636.