What are Zero Hour Contracts?
A zero hour contract has no minimum amount of contractual hours in comparison to a full-time or part-time contract, the individual will be asked to perform work when needed and will be paid based on the work is completed. If you have a zero hour contract:
- The organisation does not have to give you a minimum amount of working hours; and
- You do not need to accept the work offered.
Zero hour contracts, otherwise known as casual contracts, may include:
- NHS bank work
- Casual hours (students working during term holidays)
- Care work
- Delivery drivers (For example gig economy workers from Deliveroo, UberEats or JustEat)
- Warehouse work (For example Amazon)
Are Zero Hour Contracts Legal?
Although zero hour contracts are not legally defined, a zero hour contract is understood to be an agreement between two parties where one is asked to perform work for the other, with no minimum set contractual hours (as defined by the CIPD, see here.
Zero hour contracts are used in a variety of industries which include retail, leisure or food. Unlike traditional employment contracts, zero contracts offer no guarantee of future work and are often used in industries where there are fluctuations in demand for work. Currently there is no legal definition of zero hour contracts under UK law, employers must be careful when setting out employment specifics in their zero hour contracts.
Zero Hour Contracts Rights
If you have a zero hour contract, you have the right to:
- National Minimum Wage
- Paid Holiday/Annual Leave
- Pay for work-related travel
- Pay for on-call work
What rights and benefits you have are dependent on your employment status. It is important you check your employment status coincides with your contract. The 3 main types of employment status under employment law for zero-hour contract workers are:
Your contract of employment/work will stipulate what your employment status is, however the way you work with the organisation will ultimately determine what your status is for the purpose of your employment rights. There are many factors that could impact your employment status, which include:
- How dependant you are on the organisation for work
- The amount of control the organisation has over you and the work you carry out
- Whether you are expected to carry out the work independently.
For more information on your employment status you can find the gov.uk guidance here.
Individuals engaged on a zero hour contract may be employees or workers, as mentioned above which they are will depend on the written agreement between the parties and the relationship/working arrangement between the parties. Although in most cases, individuals on a zero hour contract will be considered workers due to the absence of mutuality of obligation (the employer is obliged to offer work and the individual is obliged to take the work offered).
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Benefits of Zero Hour Contracts
- Zero hour contracts can be particularly useful for people who need flexible working hours and the option to turn down work, for example students.
- As zero hour contracts do not provide fixed hours, you can take on as many hours as you’d like, alongside working for multiple companies. Provided each company allows this and does not have an exclusivity clause preventing you from working for any other company or a minimum number of companies. This provides for a boosted income.
Disadvantages of Zero Hour Contracts
- It may be difficult to plan life around a zero hour contract as you do not have a specified number of hours, regular hours or guaranteed hours and may be offered work at short notice or at the last minute.
- Although you will have the opportunity to work extra hours you may find you are struggling to find enough hours of work for example if you are working for a small business. Before joining a company you can ask how many hours you should anticipate being offered as this will allow you to plan your finances better.
Zero Hour Contract Holiday Pay
Individual’s on a zero hour contract are entitled to holiday pay and it is an average of their pay from the previous 52 weeks (which only includes weeks in which they were paid).
A week usually runs from Sunday to Saturday, alternative days may be used if the individual’s pay is calculated differently i.e. from Wednesday to Tuesday. If an individual has less than 52 weeks of pay, the average pay rate for the number of weeks they have worked must be used. For more information, see the gov.uk page here to identify your legal rights with regards to zero hour contract holiday pay.
Recent Changes in the Law for Zero Hour Contracts
From 6 April 2019, all workers are entitled to a payslip which itemises any variation in pay for the time they have worked.
In line with the Good Work Plan, the government passed legislation on the 6th April 2020 which gives workers the right to a written record of their core terms of employment from the first day of employment.
With regards to holiday pay the government has provided guidance to calculate holiday pay entitlement for irregular working hours, the legislation implemented from April 2020 increases the pay reference period from 12 to 52 weeks. For more information you can find the guidance note here which specified the rights of zero hour contract individuals and casual workers.
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The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.