Zero Hours Contracts – Still Useful to the sector?

Zero Hours Contracts – Still Useful to the sector?

October 8, 2016

There has been many occasions over recent months when I’ve been asked whether we are still allowed to use zero hours contracts. They have definitely been given a bad reputation by big firms misusing them and MP’s have even spoken out against their use. They are still legal and very useful to many employers and employees who use them for period of peak demand. The Department of Business (BIS) has published guidance for employers about zero hours contracts and how they can be used appropriately. The guidance suggests what the alternatives to issuing zero hours contracts are and give best practice guidelines. You can get the guidance here Zero hours contracts do have a downside. You are not guaranteeing hours to the employee, who is not therefore going to be able to guarantee you availability. You will offer, they can accept or decline. There is a lack of what we call a mutuality of obligation. If you want to be able to guarantee you will have someone for 4 hours every Monday, you would be better off giving them a part time contract of employment. Employees on zero hours contracts are accumulating service. So technically someone employed for 2 years on a zero hours contract, could be eligible for a redundancy payment if you no longer required their services. It would depend on many factors, but its a possibility. I’ve definitely had experience of zero hours contracts where an organisation closed and the staff were entitled to Statutory Redundancy Payments when they left. There is a ban on exclusivity clauses in zero hours contracts. Employees who are working on a zero hours contract are free to take employment elsewhere. This clause can be crossed through if it is still in your old zero hours contracts. This was introduced under the Small Business and Employment Act 2015. Where work demands are irregular, particularly where an employer may experience peaks and troughs in demand, the zero hours contract is still very useful. We have many Early Years’ employers using them to cover holidays and long term sickness absence. New nurseries may find it essential to have bank staff when children are literally enrolling on a daily basis, and hours each week are fluctuating. Holiday clubs find them useful too. The key principles with zero hours contracts are:

  • Advertise them as zero hours contracts, don’t be dropping the bombshell later in the day.
  • Make sure you draw up proper zero hours contracts. If in doubt get them checked out.
  • Make sure you apply them properly, so hours vary and not permanent shifts of 10-2 Monday to Friday. This isn’t zero hours, its part time work dressed up to be zero hours.
  • Make sure you calculate holiday fairly using 12.07% of hours worked. Pay holiday in each payroll, or after 13 weeks what ever suits all parties best.
  • Don’t cancel what you’ve booked. If you have rota’d someone, and they show up, they get paid. Don’t be the bad employer that sends the zero hours person home to save money. Not cool!


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