News and Updates

Zero hours update

Regular readers will recall that the media turned on zero hours contracts in 2013, as being exploitative of workers who were required to enter into them.  For further details, please see our 2013 article on the subject which can be read here.

In summary a zero hours contract is one in which no fixed hours of work are guaranteed to the worker. The worker is only paid for work actually carried out. The worker is expected to be available for work when or if called on by the employer.

We argued in 2013 that the zero hours contracts were not inherently evil and that there were circumstances in which this kind of arrangement could suit both worker and employer.  Such contracts were only problematic if they were used inappropriately by the employer.

The Department of Business, Innovation and Skills produced a guidance note in October 2015 on the use of zero hours contracts in which it states that such contracts may well be appropriate in the following circumstances, where the amounts of work that the employer needs to have performed will vary:

·         New business starts up.

·         Seasonal work.

·         Unexpected sickness.

·         Special events.

·         Testing a service.

The BIS guidance can be viewed here.

It was reported at the end of 2015 that the use of zero hours contracts in the workplace, despite the negative press associated with them, is on the rise.  The Office of National Statistics said in September last year that: “There were 744,000 people on a zero-hours contract in their main job, as reported to the Labour Force Survey for April-June 2015. This is 2.4% of all people in employment.  The latest estimate for employees on a zero-hours contract is an increase from the 624,000 people who reported this at the same time last year, or 2.0% of those in work.”  This suggests an increase of 19%. 

After consultation, the government concluded that the true evil of zero hours contracts is exclusivity, i.e. they are unfair on the worker if the worker has no guarantee of work but is not permitted to work for anyone else.  Therefore, the government made exclusivity clauses in zero hours contracts unlawful in May 2015. 

Furthermore, the Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015 were brought into force on 11 January 2016.  The Regulations provide a remedy for zero hours workers against employers who include exclusivity clauses in their contracts of employment. They now have the right not to be unfairly dismissed and the right to not be subjected to a detriment for failing to comply with an exclusivity clause, these rights being actionable in the Employment Tribunals. 

It is presently unclear how helpful these measures will be to prevent exploitation of workers.  There remains an ambiguity regarding the fact that zero hours workers whilst they have no guarantee of work, are generally obliged to perform work if it is offered.  If that is the case, then there is an indirectly exclusivity effect as the worker may find it difficult to have any other job if he/she is required to be available for an employer under a zero hours contract.  It is also unknown as to the extent to which an exclusivity clause works in practice in any event.  It may be that workers find practical ways to work for more than one employer, even if they are technically bound to work exclusively for one.

Zero hours contracts remain a subject for media criticism, with Sports Direct being in the firing line at present and with Unite campaigning for a total ban on their use.

It is interesting to note that during the debate at committee stage of the Small Business, Enterprise and Employment Act 2015, by which exclusivity clauses in zero hours contracts were made unlawful, the government suggested that if a zero hours worker wanted a fixed working pattern, it could make a request for flexible working (specifying a fixed shift pattern or hours) under the Flexible Working Regulations 2014 and that an employer can only refuse if it has reasonable business reasons to do so. It had not been anticipated that the Flexible Working regime could be used in this way, but there appears to be no reason why it could not.  We await developments in this area with interest.

For further information on the issues raised in this article, please contact us on 020 7925 8080 or by email at info@spencer-wyatt.com.

+44 (0)20 7925 8080 info@spencer-wyatt.com