Zero Hour Contracts: What You Need to Know

From Sports Direct to Buckingham Palace, the press coverage of businesses employing staff on zero hour contracts has been widespread in recent weeks. The Chartered Institute of Personnel and Development has reported the use of these contracts has increased over recent years, leaving many employers and employees wondering what the implications of a contract like this are, and whether a zero hour contract could work for them.

Here’s some practical information about zero hour contracts for employees and employers:

Benefits for Employers

Zero hour contracts are heavily weighted towards employers, especially those whose businesses experiences variations in demand which are difficult to predict. These contracts provide an effective and efficient way of matching resource to changing demand.

These types of contracts can be appropriate when you have unpredictable levels of work, the work is irregular or the need for work is very short term.

There is a mutuality of obligation in that the employee is obliged to work upon the demand and the employee is obliged to come to work subject to a minimum notice requirement.

Disadvantages for Employers

The downsides for using this type of contract are that the contract will be a contract of employment as opposed to a contract of services and that the employee will accrue continuity of service (whether or not they are actually working) and thus gain over time

Benefits for Employees

The main benefit for the employee of a zero hours contract is that it may suit their personal circumstances and suit individuals who want occasional work.

It also gives the employee continuity of service and allows them to accrue statutory unfair dismissal and redundancy rights as well as accrue annual leave under the Working Time Regulations.

Disadvantages for Employees

The disadvantages for employees are numerous, zero hour contracts are inherently weighted towards employers and are often considered exploitative. Employees on these kinds of contracts have complete lack of stability, no consistency in income and unpredictable workload. Zero hour contracts may be useful initially to decipher when regular working hours should be, then arrange further contractual hours on this basis.