Do zero hours contracts mean zero obligations?

11 June 2014 | Mandy Higgins

Mandy Higgins is an employment partner at WeightmansThe use of zero hours contracts by employers has once again been occupying media column inches recently.

ACAS reports zero hours workers are afraid to look for work elsewhere, turn hours down or question their employment rights in case their work is reduced or withdrawn. However, they are increasingly popular, with 1.4 million contracts in the UK according to figures from the Office for National Statistics.

Employers in the transport and logistics sector can experience significant peaks and troughs in demand throughout the year and while many welcome the flexibility that zero hours contracts provide, caution should be exercised to limit their potential unfairness.

The usual understanding of the term is a contract between an employer and a worker, under which the employer does not guarantee any work and, in the event that work becomes available, the worker does not guarantee their availability to work.

In the right circumstances, these contracts can be a useful tool for both employer and worker. Many workers welcome the flexibility to juggle work around other responsibilities, and many employers who use them do so responsibly. There are organisational and economic benefits they can bring. ‘Banks’ of workers are not uncommon and, given the sometimes sporadic nature of demand throughout procurement and supply chains, these contracts are of real benefit to employers in the travel and logistics sector.

However, less balanced contracts can penalise a worker who turns down work and some use exclusivity clauses which force workers to sit and wait to be called in while being forbidden from accepting other work offers. It is the inequality of bargaining power that fuels the bad publicity. They are seen by some as being exploitative of the most vulnerable area of the workforce; those who are low paid, unskilled and so transient there is unlikely to be any trade union presence.

So what should employers hold in regard when contemplating the use of zero hours contracts? Perhaps the most important is that a zero hour does not mean zero rights. Minimum wage legislation, Working Time Regulations (including holiday entitlement) and discrimination legislation all apply.

Procurement and supply chain employers who engage in zero hours contracts (or are considering doing so) should ensure they are carefully drafted and regularly reviewed. Although they have their advantages, the downside from an employer’s perspective is possible continuity in doing the work or finding that they have insufficient capacity at a time they need it most. Consideration should be given to engaging on short fixed term contracts or using agency workers to step in to deal with peaks in demand to supplement the core team of employees.

Mandy Higgins is an employment partner at Weightmans

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