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2017 Common Misunderstandings Around Zero Hour Contracts

NB: Changes to the legislation were introduced from 1st September 2015 in respect of removing the 8 hour threshold for the purposes of calculating length of service and the right to claim for unfair dismissal. These changes are likely to mean that people working under zero hour contracts are employees and therefore will receive the same rights as all other employees. However this is likely to only be determined by the Tribunal.

JACS have set out below the most common queries received around zero hour contracts.

No Holiday - All employees are entitled to 2 weeks annual leave each year and this starts to accrue as soon as work commences.  Employers using zero hour contracts usually add an additional 4% to the hourly rate of pay, this is known as Rolled Up Holiday Pay and is paid each week/month.     The payslip and written terms should clearly state this as should the written terms.  When an employee takes a break from work, no further pay is due as this has already been earned and paid to the member of staff.

No Minimum Wage - All employees over school leaving age (usually 16) are entitled to receive the minimum wage for each hour they work - plus the 4% Rolled up Holiday Pay if on zero hour contracts.

No Sick Pay -The Law does not require any business to provide sick pay to staff, regardless of the type of contract they are working under. Whether an employee may receive payment for sickness is governed by the terms of employment issued by the company they are working under only which also applies to employees on other types of contract.

No pension - The same applies here as it does for sick pay, as the Law does not require an employer to provide a pension.

Obliged to Accept Work Offered - If there is a genuine zero hour contract in place where the work is casual/ad hoc; there is no obligation to offer work and no obligation to accept work offered.  JACS rarely sees an  exclusivity clause, they  do not appear to be the problem they were in the UK before the legislation change there earlier this year.

Cannot claim Unfair Dismissal - Unless the zero hours contract is genuine and operating on a casual/ad hoc basis an employee is likely be able to claim for unfair dismissal.  The key points that need to be considered are:

  • Is there an obligation to provide personal service; and
  • Is there mutuality of obligation;
  • How the employer controls the way the work is done; and
  • Other factors which point to employment ie, integration into the business, length of service, any benefits received etc.

The determination of the above tests could result in the employee having the rights (or otherwise) to bring forward a claim for unfair dismissal.  It is not just the written contract that will be considered but the operation of the terms in practice.

Redundancy & Maternity - The Law does not exclude zero hour contracts from these statutory rights.


JACS April 2017       


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