The use of zero-hours contracts has been a common feature in the press during 2014, with parliamentary allegations being levelled at such contracts for being “a throwback to the 1930s”. However, the use of such contracts is widespread and commercially vital for seasonal businesses in particular in the retail and leisure sectors.
Broadly speaking, the term ‘zero-hours contract’ describes an arrangement where an individual agrees to be available for work as and when required by the ‘employer’, but has no guaranteed hours and will be paid only for those hours actually worked.
There are clear benefits of such contracts to employers, with the high degree of flexibility enabling them to meet seasonal demand with an experienced workforce, whilst not having to pay for the additional staff in quieter periods. Further, there are benefits of such contracts for the individual – many individuals are not able to commit to a full time job and the flexibility that a zero-hours contract offers is therefore appealing.
However, there is of course the potential for zero-hours contracts to be exploited by unscrupulous employers trying to minimise or avoid their legal obligations.
Earlier in the year, the government carried out a consultation on the use of zero-hours contracts with the result being that the government now intends to prohibit employers from including ‘exclusivity clauses’ in such contracts (clauses which effectively prevent the worker from working elsewhere).
The proposed ban will apply to contracts where there is no certainty that work will be provided. However, this has led to concerns being raised that the proposed ban will be ineffective as employers can simply guarantee a base level of work – for example, 1 hour per week – to avoid the ban.
Accordingly, the Government is conducting a second consultation as to how anti-avoidance measures can be introduced. The consultation includes questions such as ‘How potential avoidance could be dealt with’ and ‘whether there should be consequences for an employer if they circumvent a ban on exclusivity clauses and, if so, what those consequences should be’. The consultation is due to close on 3 November 2014.
Nevertheless, despite the considerable publicity and concern surrounding the use of these contracts, provided an employer is happy for the casual worker to work elsewhere during their engagement, then the recent legislative changes will not cause an issue.