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Posted on 25 July 2018
Kenny Scott, a senior associate in the employment team at Shoosmiths in Edinburgh considers the issues that often surround this form of employment arrangement.
We are in the midst of a traditionally very busy period for Scotland’s hospitality and tourism sectors. It has also seen the issue of zero hour contracts (ZHC) once again in the spotlight, with the recent widely publicised news of a ZHC worker in the hospitality sector in Inverness having successfully settled a claim brought following the cancellation of shifts at short notice.
The use of ZHC’s by employers has attracted criticism for over a decade, with calls for their use to even be banned. However, for many sectors and from both the perspective of the worker and individual business, the ZHC has its merits. Research by the Chartered Institute of Personnel and Development (CIPD) suggests that ZHC’s often provide a better work life balance and job satisfaction compared to more traditional employment arrangements.
It may be useful to clarify precisely what a ZHC is, the rights and obligations it offers and possible future developments.
Zero Hour Contract is not a legal term. ZHC’s are contracts for work under which there is not an obligation by the business to provide a minimum (or any) amount of work to the worker and he or she is not obliged to accept any work offered. Consequently, a ZHC usually offers both parties flexibility and can ensure lower hiring and employment costs for the business. Research by the Office for National Statistics (ONS) in 2017 also suggest that ZHC’s may be more prevalent in the younger segment of the workforce (33% aged 16-24), among females (57%) and part-time workers.
Despite the political furore around ZHC’s, a key development in recent years has been the 2016 ban on exclusivity clauses or the individual requiring consent (from the business) to take up other work. As a result of this ban (under the Small Business, Enterprise and Employment Act 2015), any such term that restricts the individual from accepting work elsewhere will be void and unenforceable. The limited restrictions on ZHC’s probably reflect that workers under ZHC’s already have a number of potential rights. These include: to be paid the National Minimum Wage or National Living Wage, 5.6 weeks holiday pro rata depending on their hours worked, rest breaks, protection from discrimination, protection from unlawful deduction of wages and pension auto-enrolment.
Based on the above, employers may wish to consider the following advice:
In 2017, the employment law landscape was transformed by the Supreme Court when it ruled that the requirement to pay a fee (since July 2013) in order to bring claims in an employment tribunal was unlawful. That decision is of great significance to those working under ZHC’s. Such individuals now have free access to enforce the rights referred to above, whereas under the fee regime it was often prohibitively expensive to make a claim. Moreover, from April 2019, it is anticipated all workers including those with ZHC arrangements, will be entitled to an itemised payslip.
In addition, the UK government recently consulted on some of the recommendations coming out of the Taylor Review. This includes a possible right to request “more predictable and stable” working arrangements (mirroring EU Commission proposals). It has also asked the Low Pay Commission to report in Autumn 2018 on possible higher rates of pay for workers not on guaranteed hours, to incentivise the provision of guaranteed hours and to address the perceived one-sided flexibility of such arrangements.
Loved by some for their flexibility, loathed by others for their apparent insecurity, it’s more important than ever for the worker and business alike to understand the rights and obligations offered within a ZHC arrangement.
Kenny Scott a senior associate in the employment team at Shoosmiths in Edinburgh
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