Zero hours contracts

A zero hours contract is a casual agreement between a business and an individual.

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What is a zero hours contract?

A zero hours contract is a casual agreement between a business and an individual, generally where the individual works for the business, but the business does not guarantee any set hours or future work.

There are different types of zero hours contract, some where the individual is legally defined as an "employee", or more commonly, as with our zero hours contract, where they are a "worker". You should ensure that written contracts contain provisions setting out the employment status, rights and obligations of yours zero-hours staff.

What's a worker under a zero hours contract entitled to?

An individual must be paid at least the National Minimum Wage for each hour worked under a zero hours contract, unless they are genuinely self employed.

Workers are also entitled to:

  • annual leave;
  • sick pay;
  • rest breaks; and
  • protection from discrimination.

They don’t normally have the “employee” status, which would allow them to claim for unfair dismissal, maternity pay and leave, flexible working or statutory minimum notice. 

However, zero hours workers have the right not to be unfairly dismissed or subject to a detriment for failing to comply with an exclusivity clause, and to claim compensation.

If you are unsure, you should check the employment status of the individual you are engaging.

When should zero hours contracts be used

A zero hours contract should be used where the employer simply wishes to engage a worker on a casual basis and would benefit from the flexibility of not promising a set number of hours and days of work in the future.

A zero hours contract is suitable for businesses which need a flexible supply of workers because they may experience changing demands or cannot predict the exact levels of staffing that they will need at all times.

Examples include:

  • New businesses or when entering a new market: where a business is unsure of how well it will do and so it is not known how many staff members it needs.
  • Seasonal work/special events: in some industries, such as hospitality, catering and leisure, there may be an increase in demand for temporary staff to cover busy periods, such as the Christmas shopping period in retail, hotel staff during the summer or a special event.
  • Unexpected absence: it can be helpful to have experienced staff available to cover sudden sickness or other emergencies.

Zero hours contracts can also offer welcome flexibility to workers who wish to work irregular hours around their lifestyle (eg if they are studying or have childcare responsibilities).

When should zero hour contracts not be used?

Zero hours contracts should be a temporary or back-up measure and should not be relied upon to run the main functions of a business or where an individual will work regular hours over an extended period of time.

Zero hours contracts should not be used where there is a better alternative, such as:

  • A part time or full time fixed term or permanent contract;
  • Overtime for existing staff members, to meet peaks in demand;
  • Offering contracts of employment which meet business needs (e.g. contracts which do not allow staff to take annual leave during busy periods, or require for leave to be taken whilst business is quiet, or different working hours at different times of the year); or
  • Using agency staff on a temporary or short notice basis.

Exclusivity clauses?

Exclusivity clauses in zero hours contracts have now been banned by the Government under the Small Business, Enterprise and Employment Act. This means that you cannot use clauses that prevent a worker under a zero hours contract from working for another business or even attempt to avoid this by making the worker ask permission before doing so. An exclusivity clause can be ignored and is therefore not enforceable.

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