Employer obliged to pay zero hours contract employee average earnings while suspended

Summary

In Rice Shack Ltd v Obi the Employment Appeal Tribunal rejected an appeal from an employer (“the Respondent”) concerning an Employment Tribunal decision, which held that the Respondent was obliged to pay its zero hours contract employee her average earnings while the employee was suspended.

Facts

The Claimant was a student working for the Respondent at one of their food outlets on a zero hours contract. The Claimant usually worked around 15 hours a week, although she was not guaranteed any hours. The Claimant was suspended by the Respondent after an altercation at work but no disciplinary procedure was invoked.

As the Claimant was on a zero hours contract, the Respondent was not paying her whilst she was on suspension, which lasted for 40 weeks. The Claimant submitted a grievance about her ongoing suspension and not being paid during her suspension. The Respondent did not investigate or reply to the grievance. The Claimant was 5 months into her suspension when she found another job elsewhere, which she did not let the Respondent know about.

Outcome

The Claimant brought a claim in the Employment Tribunal for unauthorised deduction of wages whilst she was on suspension. After the Claimant submitted her claim, the Respondent offered her a shift. The Claimant told the Respondent she was willing to accept the work provided the Respondent paid her wages for the time she was on suspension.

The Claimant’s claim was accepted by the Tribunal which held that although the Claimant did not work set hours being on a zero hours contract, she was entitled to her average pay she received before her suspension, which was for 15 hours a week over 40 weeks, that being the amount of time she was on suspension.

The Respondent appealed the Tribunal decision to the EAT on the basis that they believed they only had a legal duty to pay the Claimant up until the point when she took other employment. The EAT rejected the Respondent’s appeal on the basis that an employer cannot have exclusivity with workers who are on a zero hours contract with the employer.

Her Honour Judge Eady commenting “ultimately the problem the Respondent has identified in this case is entirely one of its own making. It chose to enter a contract with the Claimant of a zero hours’ nature, such that there was no obligation on her not to accept work for others or to tell the Respondent if she did… Certainly, from the Claimant’s perspective it meant she was free to take on other commitments and to then accept or decline such shifts as the Respondent offered, at her convenience. It was then the Respondent’s decision to suspend the Claimant and to continue that disciplinary suspension, without resolution, from March to December. The (unforced) error made in respect of the continuation of the disciplinary suspension may not have been intended by the Respondent, and is no doubt a matter of some regret, but is the real explanation for why the Claimant’s claim succeeded before the ET”.

Implications for Employers

If you engage casual workers on zero hours contracts, you should treat any disciplinary issues in the same way as you would do with your permanent staff. Certainly you should avoid suspending your zero hours worker for an indefinite period of time as you may find yourself having to pay that worker their average pay whilst they are on suspension.

The law and practice referred to in this article or webinar has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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