Zero Hours Contracts - What To Look Out For?

The topic of zero hours contracts has recently received considerable media attention in light of the publication of the Chartered Institute of Personnel and Development’s (CIPD) research paper which estimated that as many as one million workers are engaged on such contracts.

The CIPD’s estimated figures suggest such contracts are far more widespread than the Office for National Statistics’ 2013 prediction that only 250,000 people are engaged under zero hours contracts. The research paper suggests that employers in the voluntary sector and public sector are more likely to use such contracts than those in the private sector.

An employer may choose to engage a casual worker under the terms of a zero hours contract in cases where the demand for work fluctuates. The benefit to an employer of engaging a worker on a zero hours contract is that the employer has no obligation to provide the worker with a minimum number of hours work. In a number of cases, they suit both employer and employee alike.

Some organisations may want to engage a worker under a zero hours contract as if the individual is a worker rather than an employee they will not be able to make a claim for unfair dismissal, or be entitled to employment rights such as sick pay.

However, employers who engage workers under zero hours contracts need to be aware of the fact an Employment Tribunal has the power to look past the label applied to the relationship between the individual and the employer and will examine the reality of the situation, and could consequently decide the worker is in fact an employee.

This is likely to occur in cases where the employer has developed a pattern of providing the ‘worker’ with a minimum quota of work, amounting to a mutual obligation on the employer to provide such work and for the ‘worker’ to carry out the work. As a result employers need to ensure their workers are not in reality employees, otherwise they risk exposing themselves to potential claims for unfair dismissal in cases where the employee has obtained a sufficient amount of continuity of employment.

Employers also need to be aware that even though workers are not afforded the same level of protection as employees, they still have certain rights, such as protection from discrimination and whistleblowing.

For further information on the rights afforded to workers and the correct procedure to follow to engage casual workers please contact Peter Woodhouse, Partner at Stone King LLP, by email or telephone 01225 326753.