What to do with employees on zero-hours contracts

If your organisation employs workers on zero-hours contracts, then you need to ensure your business is compliant with the latest employment law legislation, or face the possibility of costly legal litigation and reputational damage.

What are the rules on zero-hours currently?

Zero-hours contracts are designed to be a flexible option for both employers and workers. This generally means:

• you don’t have to offer staff any minimum working hours
• staff have the right to decline any work offered

Currently the rules on zero-hours contracts means staff can be legally classed as employees or workers. This means under staff on zero-hours contracts have the rights to:

• be paid the national minimum wage
• holiday entitlement and holiday pay
• rest breaks
• protection from discrimination
• receive pay slips

Note: This is not an exhaustive list of rights. Employers should ensure they know the status of their staff to ensure they are legally compliant, when it comes to their rights.

As an employer you currently have a set of responsibilities that you must adhere to or risk being in breach of employment legislation. If you employ staff on zero-hours contracts, you must ensure that you:

• grant employees their statutory employment rights
• uphold protected employment rights
• pay the national minimum wage at the very least, regardless of the hours offered or worked 
• clearly inform and define whether a member of staff is classed as an employee or a worker
• communicate to staff what their rights are – sick pay, holiday entitlement etc 
• let staff know how the contract will end
• use PAYE to disburse wages, including tax and National Insurance (NI) deductions

It is also good practice for employers to make clear to staff:

• work is not guaranteed
• work can end quickly
• the worker or employee isn’t obliged to accept any work offered
• there is a fair and transparent process for dividing the work among staff, based on each individual’s circumstances 

As an employer you must ensure that you don’t cause an employee or worker ‘detriment’ if they exercise their statutory rights, for example for demanding the national minimum wage.

An example of causing an employee detriment could be if you treat an employee poorly, such as bullying, harassment, refusing training without good reason, overlooking an employee for development, and reducing their hours without good reason.

If an individual’s employment status is classed as an employee, dismissing them for asserting their rights is grounds for an automatic unfair dismissal claim. While those classed as workers can’t claim for unfair dismissal, they might be able to claim ending their contract was a detriment. 

By law you can also not stop a worker or employee on a zero-hours contract from working for another employer while also working for your business. This applies even if you have included an exclusivity clause in the employment contract. 

What’s set to change with zero-hours contracts?

While the details have yet to be finalised and given an enforcement date, there will be several changes to zero-hours contracts under the new bill. These include:

• a contract that reflects the worker’s regular hours of work (referenced over a 12-week period)
• ad-hoc flexibility where there is a worker preference – this can be done through request and opt-in
• reasonable notice of any changes in the workers shifts 
• proportionate compensation of cancelled or curtailed shifts

These changes seek to offer all workers a baseline level of job security and ensure that they have predictable hours. Employers will still have the ability to hire workers on fixed-term contracts. This will include seasonal work. 

How can employers prepare for the new legislation?

Even though there has been no date given by the Government on when these changes will come into force, employers should start preparing now. This will make the transition much simpler and ensure compliance from the day one of its introduction.

Failure to ensure compliance with the new legislation could result in costly legal expenses and reputational damage to your business. If you’re unsure about how the new legislation will affect your practice, talk to the employment law advisers at Croner for professional advice.

You can help prepare for the changes by taking the time to review your current workforce and identify those on zero-hours contracts, and the nature of the work that they undertake. Consider offering other types of contracts to workers in those roles and how this would benefit your business.

You should also take the time to assess the potential impact the 12-week reference period will have on both your workforce and your organisation. You should review the shift request and cancellation process, to assess whether there are areas for improvement. 

As with all major changes in the workplace you should communicate and consult with your staff on the new changes and how best to facilitate their implementation. 

If offering alternatives to zero-hours contracts, there are several avenues that you can explore, including:

• temporary or permanent part-time contracts
• fixed-term contracts – these can be used to cover seasonal demands
• hiring freelancers and agency staff
• employing additional staff for cover purposes
• training existing staff to enable them to cover other roles
• using overtime as an incentive to existing employees

Are you prepared for the changes in the Employment Rights Bill?

Your Medical Protection membership includes free access to the business advice line run by our partners at Croner. To prepare your practice for the changes in the Employment Rights Bill, contact Croner’s employment law and HR specialists on 0844 561 8133