HR topic of the Month: Zero hours Contracts
- hrbytara
- Jan 24
- 4 min read
Zero-hours contracts - what are they and can we still use them?
There’s been a lot of discussion in recent years about the concept of “zero-hours contracts”. As is common the media has been divided, along political lines, on this issue with the louder voices portraying them as evil in some way. I suggest that, like anything, they can be a bad thing in the hands of a bad employer - but if you’re a good employer then zero-hours contracts can be a reasonable way for you to engage staff.
Some background about contract types
When you engage someone to do work for you this can be as an employee or a self-employed contractor. It’s really important that you get this decision right, as there can be significant legal and tax implications if you end up with a “disguised employee” (someone who is actually an employee, but you’re treating as self-employed) ***
If someone is an employee then they could be on an indefinite contract (with no planned end date) or on a fixed term contract (with a planned end date).
They could be employed with a regular work pattern (same days and hours of work each week - or on a rotating basis) or with a fixed number of hours per week and a flexible schedule of when those hours are worked.
They could also be employed on an irregular hours basis, with perhaps a guaranteed minimum number of hours per week, or a non-guaranteed “typical” number of hours, but lots of variation in how many hours are worked and when.
If you’re not able to guarantee a minimum number of hours per week, or per month, then you may use a zero-hours contract instead. This means that you don’t have to give them work unless it’s available and they don’t have to accept work when you offer it to them. You offer them work when you have it and they tell you whether or not they can do it.
A zero-hours contract can be offered as an employment contract or a worker agreement, with workers having fewer rights. In general, I’d stick with the employment contract in most cases and use a casual worker agreement only when the person works for you on a very ad hoc basis ***
Rights for zero-hours staff
Even though there’s no guaranteed regular work pattern, people on a zero-hours contract still have rights. Whether they're an employee or a casual worker, you still have to:
Give them a written statement of terms and conditions
Pay them at least the national minimum/living wage for work they do
Pay them through PAYE and give them payslips
Automatically enrol them into a workplace pension
Provide paid holiday or holiday pay
Pay SSP if they’re off sick (if they meet the eligibility criteria)
If they fall into the category of employee (even though they are on a zero-hours contract), then they also get:
Statutory family leave (maternity, paternity, adoptive, etc.)
Statutory notice periods if you terminate the contract
The right not to be unfairly dismissed
Redundancy pay if you no longer need their role
Do be aware that there is already legislation in place to prohibit exclusivity clauses in zero-hours contracts - so you can’t ban staff from working for other employers.
What may change in the future
In March 2024, over 1 million people reported that they were engaged on a zero-hours contract - particularly young people and those also in some form of education.
Whilst many employers use zero-hours contracts in a positive way, offering flexibility on both sides, the government is concerned that they can be exploitative, with all the power held by the employer. However, the government is NOT looking to ban zero-hours contracts - despite some of the headlines. Instead they want to provide the right to:
Guaranteed hours of work for people who work regular hours over at least a 12 week period
Reasonable notice of shifts to be worked
Payment for shifts cancelled or curtailed at short notice
The legislation for this is under consideration and, as yet, we have no dates for when it will even be put before parliament. It’s unlikely that any changes that do get approved would be implemented until at least 2026.
So what should I be doing now?
If you have people on zero-hours contracts then review:
How often they work and how many hours per week they work on average
Whether they could actually be offered a guaranteed minimum hours contract
If not, whether they should be a worker or an employee
What written terms and conditions you have in place with them
In particular, how and when you offer shifts and what you do if a shift is cancelled
How can HR by Tara help?
We can discuss all this with you, help you make informed decisions and create all the appropriate documentation for your staff. Just get in touch.
*** Deciding between self-employed and employed status or between zero-hours employment or casual workers is a complicated area - do contact us if you’d like to discuss specific situations.
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