Zero hours contracts - the facts and the alternatives

HR Expert David Wright looks at the pros and cons of zero hour contracts. The first thing to say is that zero hours contracts aren’t new. Staff have been employed on a “casual basis” for many years. Recently, zero hours contracts have had some really bad press. This is particularly the case where employees are working regular hours on a regular basis but contractually don’t have any guaranteed hours. In some cases, they are told they can’t work for other employers - the term used is “exclusivity”. Zero hours contracts can be highly appropriate in situations where you want an individual or a small pool of staff to cover peaks of work, or holidays or sickness. But, generally you might expect one or two staff to be on zero hours, not all of them. Equally there are employees in the workforce who, for a variety of reasons, like the facility to be able to pick and choose when and if they wish to work, they simply advise their employer of their availability. Generally though zero hours aren’t attractive and, at best, they are used as a stepping stone into permanent work. The Myths Sometimes employers contact me and believe that staff on zero hours do not have employment rights but this is incorrect. If someone on zero hours works regularly and earns more than the earnings requirement they are eligible for statutory sick pay and similarly statutory maternity pay. Zero hours doesn’t mean zero holidays or holiday pay. Zero hours staff are entitled to both. If someone works for you continuously on zero hours for two years they have the normal right to claim unfair dismissal The Law/The Future While zero hours contracts have become high profile recently, one change already planned under the zero hours workers (exclusivity terms) Regulations 2015 is that there will be a legal definition of what a zero hours worker is .The definition is shown below

• the undertaking to do or perform work or services is an undertaking to do so conditionally on the employer making work or services available to the worker, and
• there is no certainty that any such work or services will be made available to the worker.

The use of exclusivity clauses where employees aren’t guaranteed hours but can’t work for other employers will be banned. This was in the Conservative Party Election Manifesto. There has also been the high-profile case involving Sports Direct where 200 zero hours workers made claims relating to the fact they were excluded from bonuses paid to permanent staff. It isn’t difficult to see a case where a zero hours worker can claim some form of discrimination based on some unlawful criteria eg age, race or sex. The Alternatives If an employee genuinely is only employed to cover ad hoc sickness, holidays or workload peaks then there might not be an alternative to a zero hours or casual contract, but when an employee works 40 plus weeks a year there are a number of alternatives to zero hours which can be beneficial to both employer and employee Firstly you can still offer them a number of guaranteed hours that in your experience will always be available eg an average of15 hours per week. After six months, typically staff will have built up some sort of client base. Once you have a core or average hours agreed the employee has some form of guaranteed income and you can calculate their holiday entitlement. Another option is instead of guaranteeing 15 hours a week you could pay 15 hours per week but specify in the contract the employee will work 60 hours over four weeks or 150 hours over 10 weeks. This would similarly give quite substantial flexibility. Finally, some salons employ staff on an Annual Hours Contract. Once again the employee receives a regular weekly wage but there is a projected annual number. So based on 15 hours the employee would work 782 hours in 12 months. They would be entitled to a minimum of 5.6 weeks holiday based on 15 hours a week i.e 84 hours a year All the above give considerable flexibility and the actual figure could be reviewed annually. David Wright advises Habia and a range of salons across the UK. For an all-inclusive fee of £225, plus VAT, per annum you are able to contact him with all your employment queries and he will guide you through difficult staff issues. The fee is all inclusive no matter how many times you need him. Contact David on 07930 358067, 01302 563691 or visit www.davidwrightpersonnelsupport.co.uk