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Richard White of Withy King

Should you be using zero hours contracts?

We’ve all been reading the press and watching the news on zero hours contracts, and many businesses are wondering whether they are going to be targeted for employing staff on these contracts in circumstances where both they and their employees have until now been happy with them.

Before getting too concerned, it’s worthwhile considering what zero hours contracts are, how they can be used and the pros and cons of using them.

Despite an increase in their use there isn’t a definitive definition of a zero hours contract, and the employment status of the recipient can be an issue: are they a worker, where there is no obligation to provide work, or have they gained employment status because, in practice, work is offered to them and accepted? If there is a difference between the wording of the contract and the actual day to day practice a legal dispute can easily arise. It’s important from the outset of the relationship to record what the day to day practice will be and to revisit this from time to time to ensure that it reflects the reality of the relationship. 

A particular issue with zero hour worker contracts is exclusivity. Increasingly contracts say that even though the contracts do not guarantee work, the worker cannot seek extra work with another employer. This again may lead to a legal dispute – the worker can argue that they are an employee because of this exclusivity requirement.

A large-scale claim has just been launched against, raising the legality of its treatment of its part-time workers, one of the arguments being that they are in effect employees, and that they should be entitled as part-time employees to sick pay, paid annual leave and other bonuses such as the recently-announced Company bonus share scheme.

So, if you do use zero hours contacts, it’s worthwhile checking that their terms are genuinely consistent with ‘worker status’, including no obligation on the employer to give work or the worker to undertake it and allowing the worker the freedom to undertake work with other companies. Companies which don’t regularly review their contracts may find themselves with a difficult legal claim to defend.

Please contact a member of our employment law team if you have any queries about zero hours contracts.