28/08/2015

By Philippa Wood, Consultant Solicitor for the Employment team at Keystone Law

The debate surrounding zero-hours contracts has been raging on for some time now. Many take the view that these agreements provide employers with the opportunity to take advantage of employees – bringing them on board when they want them, only to spit them out when they’ve gained what they need. Despite many workers refuting this idea, explaining that they like and even prefer working these contracts, what is the truth about how they work and how they can benefit business?

Zero hours contracts are those created by businesses who want the option of bringing in workers only when they need them, instead of being obligated to give or promise regular work. They differ from fixed term contracts or consultancy agreements only in that they give companies complete flexibility over when and how they utilise workers whilst giving them absolutely no obligation to offer work. Whilst the engaging company has no obligation to offer work, until recently, workers had no such flexibility in turning down work as employers learned they were able to “lock in” zero hours’ workers to exclusivity. This meant that workers were not able to take work elsewhere for fear of not being able to do the work for the “locked-in” employer and thus losing this contract, but then they may not have been offered enough work by the one locking them in. And so in May this year, exclusivity agreements within zero hours contracts were finally banned.

But this doesn’t mean that zero hours contracts can’t still be useful. Some industries may find themselves using them less and finding instead that a series of short or fixed-term contracts, rolling consultancy agreement that relates to project work as and when it becomes available, or even going back to good old agency staff, becomes more suitable. However, it looks likely that industries such as retail and catering and anyone who does not know from one day to the next how many they will need in – but will want to know who they are if they want them - will still obviously benefit from the zero hours’ arrangements.

But now that employers cannot guarantee certain people, will zero hours’ contracts simply be used less and less? There are of course, still benefits. If you are already regularly utilising zero hours’ contracts workers, then you probably already have a good bank of contacts on whom to call if needed. So if one worker can’t do the work, there will be another available, who you know and trust already, who can.

Furthermore, there are arguably fewer employment rights to worry about. Historically, zero hours’ workers have not been full-blown-employees, sitting instead within the category of “workers”. Workers do benefit from some employment rights but not all - for example, some of the main claims at Tribunal that employers worry about most, such as unfair dismissal, and some of the fiddly day-to-day claims like sick pay. However, with previous lock-in arrangements and certain faces naturally becoming more and more established at one location, this led to a lot of businesses worrying that the golden rule of what deems employment status – mutuality of obligation – may be developing. Now the worker does not have to take the work when offered and businesses will also be looking at ways of getting a better bank of different people to rely on and still have flexibility to take staff on only when they need them, then the less risk of mutuality of obligation evolving between one company and one worker and therefore the less likely the worker is an employee.

There will still be obligations, of course. For example you need to keep track of what and when they are doing work for you whilst making them aware that they need to be informing you of what else they are doing and for how long. This way, you ensure that you don’t fall foul of Working Time Regulations, since unless they opt out of the 48 hour working week, this part of the Regulations applies to all their jobs as one. As always, the best way to do this and keep track of all other important issues at the same time is, as ever, to have good, solid terms and conditions, agreed from the outset.