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Website URL : http://www.acas.org.uk/index.aspx?articleid=4468

Zero hours contracts

Key points:

  • Zero hours contracts normally mean there is no obligation for employers to offer work, or for workers to accept it.
  • Most zero hours contracts will give staff 'worker' employment status.
  • Zero hours workers have the same employment rights as regular workers, although they may have breaks in their contracts, which affect rights that accrue over time.
  • Zero hours workers are entitled to annual leave, the National Minimum Wage and pay for work-related travel in the same way as regular workers.

What are they?

The term 'zero hours' is not defined in legislation, but is generally understood to be a employment contract between an employer and a worker, which means the employer is not obliged to provide the worker with any minimum working hours, and the worker is not obliged to accept any of the hours offered.

It is important that both the employer and worker are aware of the fact that a zero hours contract can make their relationship different to other employment contract arrangements.

When are zero hours contracts used?

Zero hours' contracts can be used to provide a flexible workforce to meet a temporary or changeable need for staff. Examples may include a need for workers to cover:

  • unexpected or last-minute events (e.g. a restaurant needs extra staff to cater for a wedding party that just had their original venue cancel on them)
  • temporary staff shortages (e.g. an office loses an essential specialist worker for a few weeks due to bereavement)
  • on-call/bank work (e.g. one of the clients of a care-worker company requires extra care for a short period of time).

It is important for employers to actively monitor their need for zero hours contracts. In many cases, it may be more effective or appropriate to make use of agency workers, or recruit staff on fixed-term contracts - or it may turn out that the need is permanent and therefore a permanent member of staff can be recruited.

Considerations for the employer

Considerations for the worker

  • Easily accessed pool of staff to assist when demand arises
  • No ongoing requirement to provide guaranteed levels of work for staff
  • Can be cheaper alternative to agency fees
  • Provides flexible employment on same basic terms as most workers
  • No ongoing requirement to accept offers of work and no consequences
  • Gives employment experience and skills

Breaks between employment

Depending on the specific agreements in the contract, a 'zero hours' contract might mean that the contract only exists when the work is provided.

Where a zero hours contract does mean that the contract only exists when the work is provided, a full calendar week without work from Sunday to Saturday is required to bring about a break in employment.

When employment is continuous, certain employment rights accumulate over time. For example, after their first year, workers don't need to accrue their annual leave before taking it.

Equally, when employment is broken, an employer has certain responsibilities too. This includes a need to pay the worker for any accrued and untaken holiday pay.

Employment status

In most cases zero hours contracts mean that an employer recruits a 'worker.' However the way the relationship with that worker develops may enhance the employment status to that of an 'employee', who has additional employment rights. For example, employee status provides statutory notice rights. Developments that contribute to such a change could include subjecting the worker to disciplinary procedures or punishing them in some way if they don't accept all the hours they are offered.

Zero hours status also has to stand up on paper (in the contract) as well as in practice. Where there is a dispute over this, an employment tribunal may decide for themselves what contractual relationship exists between employer and worker and any associated employment rights, including enhancements such as accruing the right to take maternity leave or pay and the right to ask to request flexible working.

To learn more, see our Zero Hours Myth Busting page.

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