July 25, 2013

Employment e-Brief – The increase of zero hours contracts

Zero hours contracts: the cost-effective way to meet short-term staffing needs or the guarantee of a demoralised workforce?

The use of zero hours contracts is on the increase, especially in the retail and hospitality sectors, where businesses often see peaks and troughs in demand.

PROS AND CONS

The benefit for an employer in offering zero hours contracts is that there is no guarantee of work.  The contracts ensure flexibility and help to prevent unemployment figures.

For an individual, however, they provide no guarantee of income and a lack of job and financial security.  Also, hours of work often vary.

LEGAL RIGHTS

A zero hours contract is not a legally defined term.  From a legal perspective, an individual’s legal rights depend upon whether they are an employee, a worker or genuinely self-employed.

The essential requirements of an employment relationship are:

  • personal service (the employee must personally do the work);
  • mutuality of obligations (the employer must be under an obligation to offer work and the employee to accept it); and
  • control (the employer must control how the work is performed).

The essential requirement of a worker is an individual who works under a contract of employment or performs work personally for another person or business, who is not a client or customer of any profession or business carried out by that individual.

An individual is self-employed if they perform work or carry out services under a contract for a client or customer of their profession or business.

It is worth bearing in mind that if an individual works for a company on a regular basis under a zero hours contract, there is a greater chance they will be an employee.  A Tribunal will look behind the ‘label’ applied by the parties to ascertain the true position.  If you are unsure of the possible implications of your zero hours contacts you should seek further advice on this.

CONCLUSION

Whilst the debate on fairness rages on, it seems clear that, particularly in these difficult financial times, zero hours contracts are here to stay.

If you have any questions about this e-brief or would like further advice about zero hours contracts please do not hesitate to contact Philip Paget, employment partner on 0113 227 0212 or at philip.paget@gordonsllp.com.