Nikki Duncan
Posted on 22 Sep 2014

Zero Hours Contracts

Zero hours contracts (ZHCs) are a recurring topic in the run up to the General Election, and the subject of a lot of rhetoric from each of the main parties.

There is no legal definition of ZHCs, and they cover a very wide range of arrangements including casual workers, bank staff, pool staff and some 'on-call' workers.  

At one end of the spectrum there are the long-established nursing banks in the NHS.  At the other end, are what the Government have dubbed more 'abusive' arrangements, where despite giving no guaranteed hours, they contain exclusivity clauses, tying the worker to the employer, and preventing them working elsewhere.  

The Office of National Statistics have recently given a, conservative, estimate that at least 1.4 million workers are currently working on ZHCs, which often suit both parties. Certainly many manufacturers use such arrangements to provide the required flexibility to match staffing levels to changing production requirements.

Therefore whilst both main political parties are talking about tightening up on ZHCs, doubtless neither party would want to do anything which might seriously undermine this competitive tool for UK manufacturers.

That said, the Coalition has completed a consultation paper, focusing on the key 'abuses', namely exclusivity clauses, and also the current lack of transparency around terms and conditions, and employment status. 

For example, there is a common misconception that workers do not have employment law rights, whereas many definitely will. The uncertainty may then be how to count their continuous service, and whether there might be a deemed umbrella contract, bridging gaps in employment. Each case will turn on its own facts. However, even if not technically "employed", most ZHC staff will still have 'worker' rights, such as the right to paid statutory minimum holiday, and whistle blower protection.  

The Coalition are talking about taking a light touch approach, via codes of practice, guidelines and the possibility of providing sample contracts, On the other hand, Labour are talking of taking tougher action, including the possibility of deeming such contracts regular employment, after either six or twelve months regular work.  

These deliberations come at the same time as various test cases, currently working their way through the Court system, on minimum holiday rights, under the Working Time Directive. Currently the decisions in the lower courts have been veering towards granting statutory minimum holiday in relation to regular overtime, and including certain employment benefits in calculating holiday pay entitlement.

It is therefore worthwhile employers keeping an eye on both strands, reviewing all such ZHC arrangements, to ensure awareness of the correct legal status of the worker, and to budget for holiday pay arrears if the current challenges succeed. 

If you would like more information in relation to any of the issues discussed in this article, please contact Nikki Duncan, Partner in the Employment Team - nikki.duncan@michelmores.com.